In two reletter rulings, the Texas Comptroller’s office evaluated the sales and use taxability of certain unique web-based services. In Tex. Policy Letter Ruling 201207531L (July 31, 2012), the Comptroller’s office ruled that Internet marketplace listing fees were not subject to Texas sales and use tax; however, the provision of webstore development services were taxable data processing services.
Continue Reading The Lone Star State Swings the Lasso Around E-Commerce Services
While most states that have “click-through nexus” sales tax laws have issued little to no guidance addressing the scope of their provisions, the Pennsylvania Department of Revenue (Department) issued guidance explaining the types of payment mechanisms that will trigger nexus.
The Department’s ruling supplements a December 1, 2011 Tax Bulletin (Tax Bull. 2011-01) issued by the Department. For purposes of Pennsylvania’s “click-through nexus” provision, the Tax Bulletin interpreted “maintaining a place of business” to include a remote seller who contracts with an in-state entity or individual located in Pennsylvania whose website has a link that encourages purchasers to place orders with the remote sellers and where the in-state entity or individual receives consideration for the contractual arrangement.
In a letter ruling issued to the Performance Marketing Association on August 28, 2012, the Department stated that remote sellers do not have a “click-through” sales tax collection obligation if the remote seller pays an in-state entity or individual based on the effective placement of online advertising and not based on a percentage of sales. The Department’s conclusion in its August 28 ruling reflects an important consideration in evaluating state “click-through” provisions—the method of consideration in a “click-through” arrangement may determine whether the out-of-state seller falls within the state’s tax collection regime.
The Virginia Tax Commissioner concluded in two recent rulings that a reseller of mobile telephone services is not a “telephone company” for purposes of the Virginia Business, Professional and Occupational License (BPOL) tax and therefore is not subject to the higher BPOL tax rate levied against telephone companies. Va. Dept. of Taxation, Pub. Doc. Nos. 12-182 & 12-183 (Nov. 13, 2012). The taxpayer, a limited partnership, is not licensed by the FCC or the state regulatory agency, though its two partners are licensed by the FCC.
We hope you will join us for the Tax Executives Institute’s Advanced State and Local Tax Controversy Seminar, taking place December 6-7 in Orlando. The two-day seminar focuses solely on state tax controversy and will provide attendees with tools to navigate disputes with state revenue authorities.
We are pleased to have three members of our Sutherland SALT Team presenting at the Seminar. Marc Simonetti will present “After the Audit, During the Appeal,” including tips for drafting effective protest and choice of forum, and Pilar Mata and Tim Gustafson will discuss “Litigation Preparation,” including protecting privilege in state tax cases.
For more information and to register for the Seminar, please follow this link.
Meet Abby and Olive, the adorable Boston Terrier “children” of Sutherland SALT administrative assistant Stephanie Fulps and her husband, Jason. After years of swearing she would never get a dog, Stephanie finally gave in to Jason’s pleading and agreed to research dog breeds. Jason always wanted “one of those tall pugs” he saw in the local park, but the two decided to complete a survey to determine the best breed for their lifestyle. As it turned out, the survey recommended they get a Boston Terrier, and after seeing a photo, Jason exclaimed, “There it is! The tall pug!”
Enter Abby, whom Stephanie and Jason adopted when she was three (she will be nine in April). Abby was in need of a loving home where she could get the love and affection she deserved after battling for attention with a much larger Rottweiler.
At first Stephanie and Jason agreed to be strict disciplinarians, but their firm parenting lasted a quick minute before Abby took control. Dominant and feisty, Abby is now quick to remind her parents that they are guests in her house, and it is only because she loves them that they may sit on “her” furniture.
Several years later, after Abby recovered from an unfortunate bout with heartworm, Stephanie and Jason decided Abby needed a companion. After searching the internet, they found a woman selling Boston Terrier puppies and brought Olive home on election day in 2008. Sweet but timid, Olive is the perfect companion for her more assertive sister.
Abby and Olive are so happy to be part of the Sutherland family in Sacramento and are excited to be the November Pets of the Month!
The Missouri Department of Revenue (Department) issued guidance stating that gift certificates sold below face value by a radio station, which are redeemable for goods and services purchased at local retailers, are not subject to sales tax. Although the primary determination is not noteworthy, the private letter ruling further stated that the retailers receiving the gift certificates are required to impose sales tax on the full face value of the gift certificates. This guidance looks like it could be applicable to Groupon and Groupon-type transactions. The Department has not previously issued guidance directly addressing a Groupon-type transaction.
In 2007, Kentucky enacted a nonrefundable income tax credit of up to $1 per gallon of ethanol produced in the state. Under the statute, ethanol producers were required to file a credit claim “on forms prescribed by the department by January 15 following the close of the preceding calendar year.” The Department of Revenue (Department) appears to have made the reporting form available informally on its website well in advance of the filing deadline, but it did not formally submit the form to the Legislative Research Commission as a formal regulation until January 15, 2009, which was the statutory deadline for filing credit claims. The Legislative Research Commission published the regulation on February 1, 2009, thus making the reporting form official.
The taxpayer filed its credit application on February 4, 2009, and requested that the Department extend the filing deadline. The Department denied the request. After a second request to extend the deadline, which also was denied, the taxpayer appealed the Department’s ruling that the taxpayer’s credit application was untimely to the Board of Tax Appeals. The Board reversed the Department’s ruling, finding that the decision to publish the official reporting form on the day it was due was arbitrary and capricious. The Board directed the Department to consider the application as timely filed. The Franklin Circuit Court and the Court of Appeals affirmed. The Court of Appeals ruled that while the form was informally made available at an earlier date, “the official reporting form did not become legally effective until January 15, 2009, the day it was due.” Therefore, the Department’s failure to extend the filing deadline was arbitrary.
Georgia has seen a flurry of activity recently around the issue of whether a non-profit must actually put its property to exempt/charitable use to qualify for the “purely public charity” property tax exemption, or whether the property must merely be dedicated to exempt use. The issue frequently arises when a non-profit owns property that is under construction, or when it purchases and holds property while it collects donations to complete the construction or renovation. In a disappointing ruling, the Georgia Court of Appeals held that, at least in the context of the “purely public charity” exemption under O.C.G.A. § 48-5-41(a)(4), construction or renovation of the property is not enough to qualify for the exemption. H.O.P.E. Through Divine Interventions, Inc. v. Fulton County Bd. of Tax Assessors, No. A12A1100, 2012 WL 5859671 (Ga. Ct. App. Nov. 16, 2012). Even though the construction/renovation may be a necessary step in providing charitable services, the court concluded that the exemption only applies to property actually being used for the charitable purpose. On the facts of the case, a non-profit permanent supportive housing charity was denied an exemption for the tax years in which the property was being renovated.
The Kansas Attorney General issued an opinion in which it concluded that passing proposed legislation during the 2013 legislative session to amend legislation enacted in 2012 would not result in an unconstitutional retroactive tax increase. The proposed legislation, if signed into law, would define the tax basis for sales of business interests or shares, eliminate credits and deductions, or increase the income tax rates.
The attorney general’s opinion relies upon the U.S. Supreme Court’s holding in United States v. Carlton, 512 U.S. 26 (1994), that a retroactive tax statute does not violate due process if the retroactive application of the legislation is justified by a rational legislative purpose. The attorney general concluded that the proposed legislation would not violate due process because any potential changes made during the 2013 session would likely be curative in nature, thus serving a legitimate legislative purpose, and the period of retroactivity would be limited. The attorney general also stated that any potential claims of lack of notice and detrimental reliance would likely fail, as they did in Carlton.
We are pleased to share that Sutherland Asbill & Brennan LLP has been named the 2013 U.S. News-Best Lawyers “Law Firm of the Year” in “Litigation – Tax.”
“It is an honor to be recognized by our clients and peers,” said our Managing Partner Mark D. Wasserman, “for the tremendous federal, state and local tax litigation work that our tax group does year in and year out.”
The U.S. News-Best Lawyers® “Law Firm of the Year” award is based on client feedback, attorney peer reviews, and researcher analysis of the firm’s work during the past year.
“The ‘Law Firm of the Year’ recognition comes just months after our Tax Practice Group was also selected for the ‘Chambers USA Award for Excellence 2012’ in Tax,” noted Tax Practice Group Chair Jerome B. Libin. “I’m very proud of our team’s continuous efforts to provide the best in client service.”
Our tax practice is composed of more than 100 attorneys representing many of the world’s largest corporations – including more than 35 of the Fortune 100 – in every industry sector and in virtually every area of tax law, on the federal, international, state and local levels.
