To submit your pet for our SALT Pets Working from Home series, send us a photo of your pet working from home on Twitter using #SALTPets or email

Oscar and Duke had a lot to review so they lobbied to join their friends Rebecca Siegel and Jordan Scheer from Cox Enterprises (along with Atlanta Partner, Maria Todorova) to let them join a SALT video conference.

Once on the call they were finally able to discuss their favorite pawed-casts, the interesting odors of the Atlanta outdoors and being good dogs. We hope they get another chance to bark together again very soon.


On a recent podcast, our State and Local Tax team discussed the Maryland digital advertising tax, which proposes a first of its kind state tax on digital advertising imposed on gross revenues of up to 10%. The bill awaits Governor Larry Hogan’s signature – and he is expected to veto it.

Here are ten things that you need to know about the recently passed Maryland Digital Advertising Tax:

  1. First in the nation
    Maryland’s digital advertising tax is the first in the nation to target digital advertising and is unlike anything we have seen in the United States before.
  2. What’s next?
    The Maryland digital advertising tax passed with three-fifths support in both the House and the Senate. Governor Larry Hogan is expected to veto the bill, as he has been very vocal about his disapproval of any tax increases. The legislature can override his veto by a three-fifths vote in both chambers. Three senators or 10 delegates would need to change their minds in order to sustain the Governor’s veto. The Maryland legislature is planning to convene for a special session at the end of May.
  3. Effective date
    The tax will applies to all taxable years beginning after December 31, 2020.
  4. Unclear language
    The bill does a bad job of explaining what a digital advertising service is, or who actually does it. The bill defines digital advertising service as including advertisement services on a digital interface. It is not clear what is considered a digital interface because it is vaguely defined.
  5. What ads are taxable?
    Taxable ads include banner, search engine ads and very broadly, “other comparable” ads. There is no explanation of what makes an ad “comparable.” It does not apply to traditional print advertisements, like classified ads, circulars and newspaper ads.
  6. Ambiguous tax base
    There is very little description as to how to determine digital advertising taxable by Maryland. Instead of creating clear rules for how much and what revenue can be taxed, the Maryland legislature punted responsibility to the Comptroller to issue guidance. The Comptroller will need to issue regulations (or some other type of guidance) before taxpayers can actually determine how to calculate their tax liability. This legislative “lateral” to the Comptroller is an abandonment of the legislature’s responsibility to actually draft tax legislation.
  7. Who will be taxed?
    The tax will apply to any company that meet two thresholds – $1,000,000 of gross revenues in Maryland derived from digital advertising services and $100,000,000 of global annual gross revenues.
  8. Varying tax rates
    The tax rate varies from 2.5% to 10% depending on a company’s global annual gross revenues. The tax rate is not determined with respect to Maryland digital advertising. Rather, it focuses on global revenues from any source and any activity.
  9. Legal challenges
    The Maryland digital advertising tax – if enacted – will face a number of legal challenges, including a violation of the Internet Tax Freedom Act, which prohibits states from imposing discriminatory taxes against electronic commerce. The tax also likely violates the Commerce Clause of the United States Constitution. The tax’s high thresholds, especially for the elevated tax rates, are targeted at out-of-state companies. Plus, there is a mismatch between the elevated tax rates and advertising activity in the state. The high tax rates apply to large companies, but not necessarily ones that engage in Maryland digital advertising.
  10. What you can do!
    There is still time to stop the digital advertising tax from being enacted. A veto override requires three-fifths support in each chamber. Taxpayers can still lobby the legislature’s members to oppose the tax.

The Supreme Court of Idaho upheld the lower court’s judgment that the Idaho Reimbursement Incentive Act (“IRIA”) does not violate the separation of powers provisions of the Idaho Constitution because the IRIA does not delegate lawmaking powers to an administrative body and the IRIA does not limit judicial review. An administrative agency created under the IRIA is tasked with approving and denying applications for refundable tax credits based on statutory requirements. After a $6.5 million tax credit was granted to an out-of-state corporation under the IRIA, an Idaho-based company filed a declaratory relief action claiming the IRIA was providing its competitor with an unfair economic advantage and is unconstitutional under the Idaho Constitution. Having already established that it had competitor standing to challenge the refundable tax credit in a previous appeal (Employers Resource Mgmt. Co. v. Ronk, 162 Idaho 774, 405 P.3d 33 (2017)) the Idaho-based company argued that the IRIA conferred “unbridled discretion” to an administrative agency because it does not contain standards and guidelines to evaluate businesses. However, the court found that the administrative agency merely acts in a “fact-finding” capacity, citing guidelines the IRIA places on the agency to evaluate specific facts and conditions of businesses applying for refundable tax credits. Because the agency “can only approve the issuance of a tax credit when all the statutory conditions are met,” the court held that the IRIA does not delegate lawmaking powers to another administrative body. Additionally, the court concluded that the IRIA does not unconstitutionally limit judicial review because although the Idaho-based company was barred from seeking judicial review of the tax credit granted to an out-of-state corporation in this matter pursuant to the Administrative Procedure Act, the Idaho-based company was not barred from filing a declaratory judgment action.

Employers Resource Mgmt. Co. v. Kealy, — P.3d —, 2020 WL 1178665 (2020).

This podcast discusses the recently passed Maryland digital advertising tax, which proposes a first of its kind state tax on digital advertising imposed on gross revenues of up to 10%. The bill awaits Governor Larry Hogan’s signature – and he is expected to veto it. Our State and Local Tax team provides a ten minute update on everything you need to know about this first-of-a-kind state tax, including its status, applicability and the legal challenges that are expected if it becomes law.

Listen to the full podcast:

COVID-19 is impacting many aspects of everyday business, and state taxes are not immune. The Eversheds Sutherland State and Local Tax team has put together the following list of considerations that businesses may want to keep in mind from a state and local tax perspective as the Coronavirus crisis continues to play out.

State Tax Incentive Packages

Some state and local officials are looking to large corporate taxpayers for ideas on how to retain employees and incent investment. We are working with taxpayers to identify options that accomplish these goals that take into account current fiscal conditions.

Property Taxes

Valuation – Taxpayers should consider whether they may have reason to decrease the value of their assets for property tax purposes. Even if assets are not impaired for book purposes, taxpayers may be entitled to substantial reductions in value. Taxpayers should review the property tax lien dates for each state. While most states have a valuation date of January 1, there are some states with non-January 1 lien dates where action may be required in 2020. Otherwise, taxpayers should consider any impact based on their January 1, 2021, lien date.

Credits and Incentives

Incentive Agreements­ – Some employers may have difficulty meeting near-term capital and employment commitments under negotiated incentive agreements. We are assisting taxpayers with revising incentive agreements—including avoiding clawbacks—by invoking force majeure and material adverse change clauses often associated with such agreements. Taxpayers may have opportunities to request relief or renegotiate certain deals.

Income Tax/Withholding

Nexus & Apportionment – Employees working from home may generate nexus exposure for employers. One employee working from home within a state has the potential to trigger nexus for income tax and/or sales tax purposes. Working from home arrangements may also impact sales, property, and/or payroll apportionment factor calculations.

In General

State courts, legislatures, and administrative agencies have either fully or partially closed to the public or are otherwise operating in a reduced capacity. As a result, it is likely that we will see tax return due dates postponed and court filing deadlines or time requirements modified or temporarily suspended. Taxpayers currently under audit should consider state requests to extend statutes of limitations.


COVID-19 is likely to impact taxpayers for 2020 and beyond. Businesses may generate unexpected net operating losses in 2020 or have significant unforeseen expenses. However, following the Tax Cuts and Jobs Act, nearly all states will not permit a carryback of net operating losses and instead will allow taxpayers to use 2020 losses only against future income. Further state tax considerations will likely arise as the Coronavirus crisis unfolds. Taxpayers should check into this space regularly for additional crisis-related updates and to learn how to best posture themselves for a positive state tax outcome in 2020.

On March 7, 2020, Governor Andrew Cuomo issued Executive Order No. 202, declaring a State disaster emergency in New York in response to the COVID-19 outbreak. Since that date, Gov. Cuomo has issued a series of Executive Orders providing New York taxpayers with some initial relief in response to the COVID-19 health crisis.

Read the full legal alert here.

The California Office of Tax Appeals (OTA) has announced an Interested Parties Meeting to discuss, in an informal proceeding, proposed changes to its rules for tax appeals. The meeting is scheduled for April 3rd and will be held telephonically and live streamed. Both the Notice and the proposed changes can be found on the OTA website.

This podcast discusses the Seventh Circuit Court of Appeals’ recent decision in A.F. Moore v. Pappas, which permitted a group of taxpayers to challenge their Cook County property tax assessments in federal court notwithstanding the Tax Injunction Act. It discusses:

  • the Tax Injunction Act’s bar on litigating state and local tax cases in federal courts
  • the plain, speedy, and efficient remedy exception to the Tax Injunction Act
  • the Seventh Circuit’s decision to allow the taxpayers to pursue their local property tax case in federal court

Listen to the full podcast here.

The Florida Department of Revenue determined that a platform software company should source its income from user fees and from its sale of services on a market basis, based on the location of the customer to which the services are provided. The platform software company provided a platform for developers to create and sell software applications, collecting user fees for access to its platform and for purchases from the platform. Florida law sources such sales to Florida if the “income producing activity” is entirely or predominantly performed in the state. Under the Department’s ruling, the income producing activity for the user fees is for access and for purchases, which occurs where the customer is located. Accordingly, the Department concluded that such sales should be sourced based on the user’s billing address. The determination of the “income producing activity” in Florida remains a hotly debated topic. Software service providers should take care to consider their individual facts and circumstances associated with Florida income tax sourcing.

Fla. Tech. Assistance Advisement No. 20C1-001, Fla. Dept of Rev., (Jan. 13, 2020)

The Washington Court of Appeals held that Seattle’s method of apportioning the City’s business and occupation tax (B&O tax) was unconstitutionally applied and unfairly apportioned when the City excluded compensation paid to independent representatives from the apportionment payroll factor. The taxpayer, a financial services firm headquartered in Seattle, generated most of its income through the sale of securities by registered representatives based outside the City. In calculating the payroll factor for its B&O tax liability, the taxpayer included the compensation paid to these registered representatives. The City disagreed with this method and argued that the taxpayer’s representatives were independent contractors, not employees, and therefore should be excluded from the payroll factor (which roughly tripled the taxpayer’s B&O tax liability). The court, however, concluded that the City’s method was not externally consistent as applied to the taxpayer because the City failed to consider where and how the taxpayer generated its income. It did not matter whether income was generated by independent contractors or employees working outside the city. The court reasoned that “either way they are not working in the city” and thus, “the city has no claim to a ‘fair share’ of the income they generate.”

City of Seattle v. KMS Financial Srvs. Inc., Dkt No. 78946-5-I (Wash. Ct. App. Feb. 24, 2020).