georgia4.jpgMeet Georgia, the five-and-a-half-year-old German Shepherd belonging to Damien Packard, Sutherland’s Senior User Support Coordinator, and his girlfriend Chelsy. The two adopted Georgia last August when a friend moved and couldn’t take Georgia with him.

While with her previous owner, Georgia spent all of her time in the backyard, so she is still working on her social skills. She is a sweet girl, but can be very protective of her family and their personal space.georiga2.jpg

She loves to snuggle and goes wild for bully sticks. When she hears the ice machine in the refrigerator, her face lights up and she runs to the kitchen.

Georgia is so very grateful to be October’s Pet of the Month!

georgia1.jpg

By Alla Raykin and Tim Gustafson

The Colorado Department of Revenue determined that energy purchased by a television broadcaster is exempt from sales tax when used to transmit broadcasts, but taxable when used for other office purposes. Colorado imposes sales tax on electricity and natural gas for commercial consumption. The Department analyzed possible exemptions applicable to the broadcaster’s use of energy and concluded that the 1937 statute exempting “radio communication” extends to television broadcasting today. However, the exemption, read narrowly, does not extend to energy used for office lighting, computers, printers, cameras, stage lighting and heating of office space. CO GIL-16-014. 

The Louisiana Department of Revenue has proposed a new regulation expansively interpreting Louisiana’s recently enacted related party expense addback statute.  

  • Earlier this year, Louisiana enacted a new statute requiring taxpayers to add back interest expenses, intangible expenses and management fees paid to related members, subject to certain exceptions.
  • The Proposed Regulation seeks to adopt definitions, impose compliance and documentation requirements, and place additional limitations on intercompany expense deductions.
  • Comments on the Proposed Regulation should be due by November 29, with a public hearing scheduled for November 30.

View the full Legal Alert.

By Ted Friedman and Madison Barnett

The Maryland Tax Court held that the Comptroller’s policy of not allowing carryforwards of unsubtracted exempt federal obligation interest violates the Supremacy Clause of the U.S. Constitution. Under the Comptroller’s policy, interest earned on Maryland obligations is subtracted in its entirety when computing Maryland taxable income. As a result, Maryland obligation interest is included in the taxpayer’s Maryland NOL and can be carried forward and deducted in later years. The same is not true for interest earned on federal obligations. The Comptroller allows the federal obligation interest to be deducted until there is no Maryland taxable income, but any excess may not be used to increase the taxpayer’s Maryland NOL carryforward. The Court determined that the Comptroller’s policy violates the Supremacy Clause by discriminating against those who hold federal obligations in favor of those who hold state obligations. As a result, the taxpayer was permitted to carryforward its excess federal obligation interest deductions. Branch Banking & Trust Co. v. Comptroller of the Treasury, No. 13-IN-OO-0076 (Md. Tax Ct. Aug. 12, 2016).

Sutherland SALT releases the third edition of its SALT Scoreboard, a quarterly publication that tracks significant state tax litigation and controversy developments and tallies the results of taxpayer wins and losses across the country. Our quarterly publication features Sutherland’s observations regarding important state tax decisions and identifies trends by issue, state and forum as they emerge during the year. This issue of the Sutherland SALT Scoreboard includes our observations on False Claims Act and class action cases, the Tax Injunction Act, and states’ treatment of fees vs. taxes.

View our Sutherland SALT Scoreboard results from the third quarter of 2016!

SALT-Scoreboard-Graphic_Q3.png

 

Sutherland SALT releases the third edition of the “SALT Scoreboard,” a quarterly publication that tracks significant state tax litigation and controversy developments and tallies the results of taxpayer wins and losses across the country. Our quarterly publication features Sutherland’s observations regarding important state tax decisions and will identify trends by issue, state and forum as they emerge during the year. This issue of the SALT Scoreboard includes Sutherland’s observations on the Tax Injunction Act, states’ treatment of fees vs. taxes, and states’ sourcing of receipts for corporate income taxes. In our Third Quarter Spotlight (see page two), we review the significant False Claims Act and class action cases decided this year.

Sutherland is a proud sponsor and host of the TEI New York State and Local Chapter Meeting on Wednesday, November 9, at Sutherland’s New York Office. The Sutherland SALT Team will be discussing the changing state and local tax landscape from counsel’s perspective. Topics will include:

  • State Income Tax Litigation You Need to Know About
  • Speakers: Michele Borens and Amy F. Nogid
  • SALT Legislative and Regulatory Trends
  • Speakers: Todd A. Lard and Andrew D. Appleby
  • Top 10 Sales and Use Tax Cases
  • Speakers: Marc A. Simonetti and Open Weaver Banks
  • Hot Topics in State and Local Tax
  • Speaker: Jeffrey A. Friedman
  • New York Tax Reform – Controversial Issues in Implementing the New Regime
  • Speaker: Leah Robinson and Nicole D. Boutros

View registration and event details.

 

 

By Mike Kerman and Jonathan Feldman

The Florida Department of Revenue advised that certain materials and labor a taxpayer plans to use to construct a combined heating and power plant will be exempt from Florida sales and use tax. The plant will produce electricity for sale. Florida exempts purchases of machinery and equipment necessary to produce electrical or steam energy from burning fuels when such energy is primarily used to produce tangible personal property for sale. In this scenario, the electricity itself would constitute the tangible personal property produced for sale. Under the “integrated plant theory,” Florida courts have interpreted this exemption to apply to all machinery, equipment, and integral components used in the generation, but not the distribution of electricity and steam. The Department therefore advised that all of the taxpayer’s machinery and equipment will be exempt (including, among others, machinery foundations and platforms, generators, a cooling tower, electrical building and control room, and the first step-up transformers) with the exception of subsequent transformers and a pipeline that will distribute steam energy from the plant to a purchaser, because they are related to distribution. Additionally, the Department explained that labor to construct the plant is exempt to the extent it is for buildings or subsurfaces directly related to exempt machinery and equipment.  Fla. Dep’t of Revenue, Tech. Assistance Advisement No. 16A-010 (July 21, 2016) (released Sept. 20, 2016).  

By Chelsea Marmor and Tim Gustafson

The Texas Comptroller of Public Accounts issued a franchise tax letter clarifying that “total mileage” for purposes of computing the Texas special apportionment formula for transportation receipts may either include or exclude “empty miles” provided symmetry is maintained between a taxpayer’s numerator and denominator. “Empty miles,” or deadhead miles, are miles traveled without goods or passengers. The policy allows taxable entities to either include empty miles in both the numerator and denominator of the apportionment formula, or exclude empty miles from both. The Comptroller indicated the governing rule will be amended to clarify the treatment of empty miles.  Letter No. 201609008L, Texas Comptroller of Public Accounts, September 8, 2016.

By Chelsea Marmor and Andrew Appleby

The Kentucky Court of Appeals held that a Kentucky statute, which retroactively reduced vendors’ 1% deduction of the sales tax collected and remitted to Kentucky to $1,500 in any monthly reporting period, did not violate the Kentucky Constitution. Wal-Mart argued that the statute violated the Kentucky Constitution because the funds collected by the statute were added to the state’s general fund and were not diverted to a fund of the same purpose as the statute to compensate vendors. The Department argued, and the court agreed, the act was not a tax purpose statute because it merely allowed for a deduction. Further, when vendors collect sales tax, they are acting as trustees for the state and do not have a property interest in the collected funds because the money is being collected for Kentucky’s general fund.  Wal-Mart Stores East, L.P. et al. v. Dep’t of Revenue, No. 015-CA-001054-MR (Sept. 9, 2016).

Read our September 2016 posts on stateandlocaltax.com or read each article by clicking on the title. For the latest coverage and commentary on state and local tax developments delivered directly to your phone, download the latest version of the Sutherland SALT Shaker app.

  • Michigan Supreme Court Denies Tax Compact Appeal
    The Michigan Supreme Court denied an application for leave to appeal a Michigan Court of Appeals decision that sanctioned the Michigan’s Legislature’s retroactive withdrawal from the Multistate Tax Compact.