Meet Kali, the sweet and silly Frenchie bringing joy to the home of Partner Michele Borens! Kali is a five‑year‑old French Bulldog. While she may be small in stature, she’s already made a big impression in the Borens household. She joined Michele’s family just five months ago after being surrendered to a rescue organization. She arrived with her name already chosen – and it fit her perfectly, so it stayed.

Since settling in, Kali has proven to be a cuddly, affectionate companion who lights up for treats, toys, car rides, and, of course, snuggle time.

She’s especially proud of her “babies” – her toys – which she loves to parade around the house like prized treasures. She has also become fast friends with her Frenchie sister Frankie, the two of them romping and playing as if they’ve been together forever. Their other Frenchie sister, Ollie, is still evaluating whether Kali can stay… but signs point to yes.

We’re so happy to feature Kali as our February SALT Pet of the Month. Welcome to the family, Kali!

Calling all trivia fans! Don’t miss out on a chance to show off your SALT knowledge!

We will award a prize for the smartest (and fastest) participant.

This week’s question: Under Kansas’ proposed H.B. 2631, how much of a home’s appraised value would be exempt from school property tax starting in 2027?

E-mail your response to SALTonline@eversheds-sutherland.com.

The prize for the first response to today’s question is a $25 UBER Eats gift card. This week’s answer will be included in our SALT Shaker Weekly Digest, distributed on Saturday. Be sure to check back then!

In this episode of the SALT Shaker Podcast, Partners Jeremy Gove and Chelsea Marmor break down a recent New York Appellate Division decision addressing a longstanding question in New York: Is providing a license to software always the sale of software?

Jeremy and Chelsea unpack the Appellate Division’s answer to that question in Beeline, who offered its customers a license to taxable prewritten software and nontaxable professional services. Applying New York’s primary function test, and relying on the extensive record developed below, the court concluded that the transaction’s objective was the taxable sale of software rather than nontaxable professional services.

This week’s overrated/underrated question takes on a fun one: birthdays. Are they overrated or underrated?

For questions or comments, email SALTonline@eversheds-sutherland.com. Subscribe to receive regular updates hosted on the SALT Shaker blog.

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On January 26, 2026, SB 277 was introduced on behalf of Alaska’s Governor. This bill would, among other things, enact a temporary statewide sales and use tax on personal property and services. Currently, Alaska is one of five states (along with Delaware, Montana, New Hampshire, and Oregon) that do not impose a broad-based state sales tax (note that some Alaska localities currently impose a sales tax). If enacted, SB 277 will impose a sales tax and also change other Alaska tax provisions, including adopting the following changes to its corporate income tax: implementing market-based sourcing, expanding the scope of income apportionable to Alaska, and phasing out the corporate income tax by 2031.

State-level sales tax

The state-level regime proposed by SB 277 generally resembles most other states’ sales and use tax structures – with one very notable exception mentioned below. For example, SB 277 adopts a Wayfair economic nexus threshold: a remote seller would be required to register, collect, and remit the state sales tax if it has Alaska gross revenues from goods and services of more than $100,000 during the current or immediately preceding calendar year. Accordingly, a remote seller would calculate its proposed nexus threshold by including not only taxable retail sales sourced to Alaska, but also tax-exempt sales including resales and other non-taxable transactions. A marketplace facilitator that meets the $100,000 economic nexus threshold must also register, collect, and remit tax on taxable sales made through the marketplace.[1] However, a seller that makes sales “exclusively” through a registered marketplace facilitator is not required to register, collect, or remit the tax.

SB 277 imposes a highly unusual tax rate structure. Unlike all other states that impose a single, general tax rate, Alaska sales and use tax rates vary depending on the time of the year[2]:

  • 4% from April 1 through September 30, and
  • 2% from October 1 through March 31.

The tax rate would change to 0% on January 1, 2034. The higher tax rate is intended to hit the influx of Alaska summertime tourists. 

As noted, SB 277’s sales and use tax would be imposed on personal property and services.  “Personal property” is broadly defined to mean property that is perceptible to the senses and explicitly includes, among other things, electricity, Internet services, electronic or digital goods, and prewritten computer software. The term “Internet services” is not defined but as noted below, the sale of Internet access is exempt (presumably to comply with the Internet Tax Freedom Act). The term (and the tax) excludes real property and intangible property. And “services” generally means an activity engaged in for another person for consideration. While the “services” definition includes examples of taxable services (e.g., professional services, cable subscriptions, and telephone or other communications services), the definition is not limited to those examples. Of note, “services” includes “the use of a computer, computer time, a computer system, a computer program, a computer network, or any part of a computer system or network,” which would likely include SaaS, PaaS, and other remote access software models.

The bill provides for several common sales exemptions, such as sales for resales, Internet access, isolated or occasional sales, and food – but with notable deviations. For example, the resale exemption applies to the resale of personal property – but not resale services. Likewise, SB 277 limits “isolated or occasional sales” to “fundraising activities conducted by a nonprofit organization that do not exceed 60 consecutive days in duration.” Finally, the exemption for food only applies to purchases made with subsidized federal government resources like WIC or SNAP. Thus, all other food purchases (whether groceries or prepared food from a restaurant) would be subject to the tax.

Under the bill, the Alaska Department of Revenue is authorized, but not required, to enter into the Streamlined Sales and Use Tax Agreement, or a substantially similar agreement. Ironically, however, Alaska would have to make several changes to its sales and use tax law, as currently drafted in SB 277, to comply with the Agreement. For example, the proposed rate structure and “personal property” definition, among other things, would not substantially comply with the terms of the Agreement.

SB 277 also makes changes to Alaska local sales and use tax. The bill specifically makes a local sales and use tax subject to “exemptions, definitions, sourcing rules, and regulations” under the state sales and use tax. This means that, for example, localities could no longer determine which sales are exempt from their local sales and use tax. SB 277 also requires that all local sales and use taxes “shall be administered and collected by the state[.]”

Lastly, SB 277 only goes into effect if HB 274 (amending the legislative audit powers), HB 275 (relating to changes to the permanent fund dividend calculation), and HJR 30 (proposing constitutional amendments to the Alaska Permanent Fund) or such similar bill/resolution is enacted into law this year. The sales tax would go into effect 12 months after enactment, assuming all of the other requirements are satisfied.

Corporate income tax changes

On January 22, 2026, the Alaska Legislature failed to override the Governor’s veto of SB 113 from late last year. SB 113 would have adopted market-based sourcing and created an apportionment method for “highly digitized businesses” based on a single-sales factor. The Governor vetoed SB 113 because he was unwilling to approve any tax measure that was not part of a comprehensive, long-term plan intended to balance revenue and expenses.

SB 277 also adopts market-based sourcing but does not create a special apportionment method for “highly digitized businesses.” The bill also expands the scope of income apportionable to Alaska by including income arising from tangible and intangible property if the employment or development of the property is or was related to the operation of the taxpayer’s trade or business.

Currently, Alaska has a graduated corporate income tax rate that tops out at 9.4% for taxable income over $222,000.[3] SB 277 would permanently reduce the corporate income tax rate to 0% beginning January 1, 2031 (i.e., there would be no phasedown of the rate).

The Eversheds Sutherland SALT Team will monitor the progress of SB 277 throughout the legislative process.

[1] SB 277 defines “marketplace facilitator” as “a person that contracts with sellers to facilitate the sale of the seller’s product through a physical or electronic marketplace operated by the person and collects the payment from the purchaser.”

[2] Some states do have varying tax rates for other classifications. For example, Hawaii’s version of the sales tax (the general excise tax), has a general rate of 4% but also has a reduced rate of 0.5% for certain services (e.g., wholesaling and manufacturing). Haw. Rev. Stat. § 237-13. In 2025, Maryland enacted a legislation to expand the definition of services to include certain data services, information technology services, and other similar services but only imposed a tax rate of 3% or half the general sales and use tax rate. Md. Code, Tax-Gen. § 11-104(l)(1). While Connecticut only imposes a 1% rate on computer and data processing services. Conn. Gen. Stat. § 12-408(1)(D).

[3] Alaska Stat. § 43.20.011(e).

Calling all trivia fans! Don’t miss out on a chance to show off your SALT knowledge!

We will award a prize for the smartest (and fastest) participant.

This week’s question: Alabama House lawmakers recently passed a bill that would create a tax credit program for the donation of what food byproduct?

E-mail your response to SALTonline@eversheds-sutherland.com.

The prize for the first response to today’s question is a $25 UBER Eats gift card. This week’s answer will be included in our SALT Shaker Weekly Digest, distributed on Saturday. Be sure to check back then!

The Wisconsin Court of Appeals upheld a sales tax assessment against StubHub for the sale of tickets made through StubHub’s online marketplace. Between 2008 and 2013, more than $150 million tickets sales occurred between ticketholders and ticket buyers on StubHub’s platform for events that took place in Wisconsin. StubHub earned revenue from listing fees and commissions when a ticket sold through the platform. The Wisconsin appellate court determined that StubHub was a “seller” subject to sales tax because StubHub “effected the actual transfer” of the tickets sold on its website in exchange for payment. The court also rejected StubHub’s argument that a 2019 amendment to Wisconsin’s sale tax statute to specifically subject “marketplace provider” and “marketplace seller” to the tax meant StubHub was not subject to tax under the prior law because the court found the amendment merely clarified the law to end ongoing controversy and noncompliance.

Additionally, Court of Appeals upheld the imposition of a 25% negligence penalty on StubHub for failure to file and pay the sales tax. Specifically, the court looked to a Wisconsin Tax Bulletin from 2011 that provided guidance on how the sales and use tax applied to admissions, including an example on online “ticket brokers.” The court concluded that StubHub’s decision to ignore the guidance amounted to willful neglect.

StubHub, Inc. v. Wisc. Dep’t of Rev., Appeal No. 2024AP455; Cir. Ct. No. 2023CV665 (Wis. Ct. App. Jan 13, 2026).

The Wisconsin Tax Appeals Commission held that a taxpayer could not look through an intermediary and source receipts to the location of software use by end-users.

The taxpayer created database management system software to be used by the software developers. Epic Systems Corporation (Epic), a Wisconsin-based software developer, created and licensed software used in the healthcare community. The taxpayer’s agreement with Epic granted Epic the right to use taxpayer’s database software in developing Epic’s own software. The taxpayer’s database software was used in conjunction with Epic’s healthcare software.

The parties agreed that amounts Epic paid to the taxpayer for Epic’s use of the internal development licenses should be sourced to Wisconsin, but the dispute related to amounts paid to the taxpayer that were generated as part of Epic’s sale of Epic’s own healthcare software to end-users. End-users purchasing Epic’s healthcare software were required as part of their purchase to acquire the separate right to use taxpayer’s database software in order for Epic’s software to function. The department framed this transaction as Epic selling a sublicense of the taxpayer’s database software to its end-users, and therefore, the department argued, the state sourcing provision focusing on the end-users of software did not apply as it only relates to licensors and licensees, instead of sub-licensors and sub-licensees. The taxpayer countered that, because Epic did not have the authority to independently issue license keys, end-users had a direct relationship with the taxpayer, and therefore receipts from these transactions should be sourced to the location where the software was used by end-users. The Commission determined that since there was no valid contract between the taxpayer and end-users, the end-users of Epic’s software were not licensees of the taxpayer, and therefore sourcing receipts to their location of use was inappropriate. Instead, the Commission determined that because Epic was billed at a Wisconsin address, this income was appropriately sourced to Wisconsin under the second and third factors of the provisions for sourcing royalties and intangible property (i.e., billing address and commercial domicile, respectively).

Intersystems, Docket No. 20W174 (Wis. Tax Appeals Comm’n Nov. 20, 2025).

As we welcome the new year, we are also excited to give a warm welcome to our January SALT Pets of the Month, Joey and Layla! This charming duo resides with SALT Counsel Diane Beleckas and her family.

Joey, a six‑year‑old Schnoodle, joined the family in 2020 as a surprise for Diane’s kids after months of them lobbying for a furry friend. Layla, a four‑year‑old Shih‑Poo, arrived on Easter weekend 2022 after a spontaneous decision during holiday errands. The idea was sparked when one of Diane’s kids joked about “picking up a bunny,” which quickly turned into bringing home Layla instead.

Thanks to Layla’s allergies, the dogs are on a strict diet, but chicken breast is their special‑occasion favorite. Joey is so motivated by it that the family learned to yell “chicken!” instead of his name when coaxing him inside.

In the summer, Joey and Layla love lounging by the pool and exploring nearby hiking trails. Joey is the resident barker, while Layla famously stayed silent for months, until one of Diane’s kids practiced his saxophone, prompting her first-ever bark.

We are so happy to feature these siblings. Welcome to the SALT Pet of the Month family, Joey and Layla!

The Washington Court of Appeals held that, for purposes of the Business and Occupation (B&O) Tax, a law firm’s gross income from insurance litigation services were properly sourced to the state where litigation occurred. A law firm with offices in Washington and Oregon that provides insurance defense litigation sought a refund of B&O Tax on the basis that its insurance litigation and defense service receipts were apportionable to the insurance company customers’ legal departments’ billing addresses, rather than the state where the litigation occurred. The taxpayer appealed the Washington Department of Revenue’s denial of its refund request.

To compute the B&O Tax, taxpayers must apportion their gross income such that the tax applies to only gross income apportioned to Washington. In 2010, the Washington legislature changed the method of apportioning gross income from services from where the services were performed to where the customers received the services’ benefit. The court held that the gross income related to Washington litigation was properly soured to “where the case is litigated” (i.e., Washington) because the benefit of the litigation is “immediately realized upon disposition of the case,” not “once the legal department of the insurance company is made aware of the results.”

Betts Patterson & Mines, PS v. Washington Department of Revenue, No. 86756-3-I (Wash. Ct. App. Nov. 3, 2025) (unpublished).

On January 20, 2026, New York Governor Kathy Hochul released her FY 2027 Executive Budget proposal. Unlike prior years’ proposals seeking sweeping tax reforms, the FY 2027 proposal contains more narrowly targeted changes to New York’s Tax Law. A focus of the proposal is the decoupling from certain Internal Revenue Code provisions enacted by H.R. 1 (OB3), as well as maintaining policies from prior years.

The Governor’s proposal decouples from OB3’s provisions allowing immediate expensing for qualified production property, as provided in IRC §§ 168(a) and (n), and domestic research and experimental (R&E) expenditures under IRC § 174A.  When calculating entire net income for tax years beginning on or after January 1, 2025, the Executive Budget proposes to maintain New York’s current treatment of depreciation for qualified production property and allows deductions for both qualifying foreign and domestic R&E expenditures over the same 5-year term.  In contrast, New York does not conform to IRC § 168(k), which federally provides for accelerated depreciation of certain qualified property in the year it was placed in service, and, instead, provides for depreciation deductions consistent with the iteration of IRC § 167 in effect as if the property were purchased on September 10, 2001.  Per the revenue estimations featured in the Executive Budget Briefing Book, the Governor’s proposal to decouple from OB3 is estimated to save the state $1.68 billion during FY 2027.

The New York State legislature controls New York City’s corporate franchise tax law, so the Executive Budget likewise proposes to decouple New York City’s corporation franchise tax’s entire net income computation from OB3.  Under the Executive Budget, New York City would (i) allow both foreign and domestic R&E expenditures to be deducted over a 5-year period, (ii) maintain the City’s current treatment of qualified production property, business interest expenses, and depreciable business assets, and (iii) decouple from OB3’s deduction limit increase for qualifying equipment and software purchases.

Governor Hochul’s FY 2027 Executive Budget also extended the current Article 9-A Franchise Tax rates for three more years, declining New York City Mayor Mamdani’s invitation to raise the state’s corporate franchise tax rates.  The FY 2022 budget established a temporary tax rate for corporations with business income bases over $5 million and reinstated the capital base tax rate in the same year.  These rates were also extended in the FY 2024 budget.  In addition to maintaining the current corporation franchise tax rates, the Executive Budget also did not change the state’s personal income tax rates.

Other notable components of the proposal include:

  • Eliminating state income taxes on tipped wages, consistent with OB3 and the federal level elimination of income tax on tipped wages.  Here, employees will not be subject to income tax on tips up to $25,000 per taxable year for single filers earning $150,0000, and joint filers earning up to $300,000;
  • Establishing a sales tax exemption on the retail sale of electricity by commercial EV charging stations; and
  • Preserving the deductibility of charitable contributions to certain tax-exempt entities at risk of losing their IRC § 501(c)(3) tax-exempt status.

Governor Hochul’s Executive Budget is only the first step in the New York budget process. The legislature will now analyze the Governor’s budget, hold public hearings, and seek out further information from state agencies.  After such review, both houses of the legislature must reach an agreement on spending and revenue recommendations that may result in an amendment of the Governor’s proposed appropriations bill and other related legislation.

It is possible that some significant tax proposals could arise during this process. New York’s fiscal year begins April 1, 2026, thus, the timeline for the legislature to review and approve the Executive Budget is limited. The Eversheds Sutherland SALT team will continue to monitor the Executive Budget and keep you apprised of any relevant updates as it progresses through the legislature.