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: Subject to budget approval, the MTC agreed to reduce the member assessment of which state to $60,000 for the upcoming fiscal year due to the state’s budget deficit?

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

The prize for the first correct 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 two noteworthy Texas franchise tax decisions that provide important guidance on sourcing and federal preemption.

The hosts first discuss NuStar Energy LP v. Hancock, a Texas Supreme Court decision addressing how receipts from the sale of tangible personal property are sourced for franchise tax purposes. The court held that receipts are sourced to Texas based on where the property is delivered to the buyer, rejecting an “ultimate use” or consumption-based approach, even where the property (bunker fuel) could not legally be used in Texas.

They then turn to Hancock v. American Airlines, where a Texas appellate court concluded that the federal Anti‑Head Tax Act preempts application of the Texas franchise tax to certain airline revenue streams. The court determined that, despite being styled as a margin tax, the franchise tax functions as a tax on gross receipts from air transportation, bringing it within the scope of federal preemption.

The episode wraps up with an overrated/underrated debate on standing desks.

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

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The taxpayer, a designer, marketer, and wholesaler of apparel and other fashion accessories, shipped products to its customer’s Ohio distribution center. The taxpayer argued that most of its products were subsequently shipped by its customer outside of Ohio after being received at the Ohio distribution center. And, because of this subsequent shipment, the taxpayer should be entitled to reduce its Ohio Commercial Activity Tax sales factor numerator. The Supreme Court of Ohio rejected the taxpayer’s position because it failed to document the amount of products that were shipped outside of Ohio.

The taxpayer presented testimony evidence of one of its employees who stated that he was certain that at least eighty percent of the products were shipped outside of Ohio. Additional evidence was provided by an employee of the taxpayer’s legal representative who provided a calculation using data from a subsequent period. The Court found that the evidence presented was not the type of supporting documentation sufficient to justify the taxpayer’s refund claim. 

Jones Apparel Group/Nine W. Holdings v. Harris, 2026-Ohio-74 (2026).

The U.S. District Court for the Northern District of Illinois ruled that the National Bank Act (NBA) does not preempt Illinois’ Interchange Fee Prohibition Act (IFPA), which prohibits credit card and debit card transaction processors from charging interchange fees on the portion of any card transaction that includes state and local taxes and gratuities.

In 2024, Illinois enacted the IFPA which has two components: (i) the prohibition on interchange fees on state and local taxes and gratuities, and (ii) a data usage limitation prohibiting all entities in a transaction other than merchants from distributing, exchanging, transferring, disseminating, or using transaction data except to facilitate or process the payment. Following the court granting a preliminary injunction, the Illinois Bankers’ Association requested a permanent injunction against the IFPA, arguing that the NBA preempts IFPA. The court rejected that preemption request, concluding that payment card networks, rather than banks, set the interchange rates the IFPA is regulating. Because the IFPA’s limitation on interchange rates “does not directly regulate banks”, the NBA does not preempt the IFPA’s regulation of interchange rates. The court similarly concluded that the IFPA’s interchange fee limitation was not preempted for out-of-state banks or federal credit unions.

The court reached a different conclusion as to the IFPA’s. data usage limitation, granting a permanent injunction regarding the IFPA’s data usage limitation as to national banks, out-of-state banks, federal credit unions, payment card networks and “others involved in the payment process” because the data limitation “directly constrains” the power of national banks to process data “to monitor credit card fraud, address payment disputes, and facilitate cardholder loyalty programs.” The court went on to agree that the data usage limitation is “so tied up” between the parties, that preemption must run to the others involved in the payment process as well, not just national banks.

The case is now on appeal at the U.S. Court of Appeals for the Seventh Circuit, with oral arguments anticipated to take place in May, in advance of the IFPA taking effect on July 1, 2026.

Ill. Bankers Ass’n v. Raoul, Case No. 24 07307 (N.D. Ill. Feb. 10, 2026).

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: An appellate court of which state recently held that COVID-19 did not qualify as a “natural disaster” for purposes of property tax relief?

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

The prize for the first correct 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 Indiana Tax Court addressed whether cell phones qualify for Indiana’s telecommunications equipment exemption from sales and use tax. New Cingular purchased certain cell phones that were later used to fulfill contractual obligations by either providing them free to customers who entered service agreements, or by issuing replacements under insurance programs. New Cingular sought a refund of use tax paid on those phones, asserting that the phones were exempt as “radio or microwave transmitting or receiving equipment.” The Department denied the refund, arguing that the exemption applied only to central network infrastructure under the provider’s custody and control, and not customer-used devices.

The court rejected the Department’s position, finding no textual support for limiting the exemption to infrastructure equipment. Furthermore, the court concluded the relevant “acquisition” for use‑tax purposes was New Cingular’s purchase of the phones from suppliers, not the customers’ subsequent receipt of the phones.

New Cingular Wireless PCS, LLC v. Ind. Dep’t of State Revenue, No. 24T‑TA‑00004 (Ind. Tax Ct. Mar. 31, 2026).

Bundled and mixed transactions continue to play an ever‑increasing role in New York sales tax determinations, particularly where nontaxable services are sold with software or other taxable property for one nonitemized price.

In this installment of “A Pinch of SALT,” published by Tax Notes State, Eversheds Sutherland attorneys Jeremy Gove and Periklis Fokaidis examine how New York’s recent decisions evaluating bundled transactions have led to confusion – and how the Appellate Division’s decision in Matter of Beeline may finally be providing clarity.

Read the full article here.

On April 2, 2026, the Supreme Judicial Court of Maine ruled that a liquor supplier was subject to Maine income tax and owed nearly $750,000 in state income tax, penalties, and interest for the 2011-2017 tax years.

The liquor supplier argued that it was not subject to income tax because it did not have nexus with the state and because PL 86-272 protections applied in any event. The Court rejected both arguments. It found that the taxpayer had nexus because Maine’s law applicable to liquor sales required the supplier to ship liquor to a bailment warehouse in Maine under contracts that provided the supplier retained title to the liquor until removed from the warehouse. The Court thus concluded that the taxpayer owned property at the bailment warehouse in Maine and made sales from that warehouse, sufficient to give it nexus under Maine’s income tax statute. The Court rejected the taxpayer’s PL 86-272 argument for the same reason, finding that the compelled bailment and compelled delay in transfer of title exceeded the protected activities of PL 86-272, and thus the Company was subject to income tax.

State Tax Assessor v. Fifth Generation, Inc., No. Ken‑24‑490 (Me. Apr. 2, 2026).

In Det. No. 23-0004, 45 WTD 013 (2026), the Washington Department of Revenue (DOR) concluded that professional implementation services and associated travel reimbursements are subject to retail sales tax when provided exclusively in connection with a Digital Automated Service (DAS).

The taxpayer was a software provider that offered cloud-based solutions to state and local governments. Its primary product was a platform used for public interactions, such as permitting and licensing, supplemented by a payment processing application. Because these applications are transferred electronically and utilize software applications to perform tasks, the Department classified them as Digital Automated Services.

The dispute centered on the taxability of “Time and Materials” (T&M) charges for implementing the product, and “Time and Expense” (T&E) charges for reimbursed costs (e.g., airfare). Under Washington law, services that are provided “exclusively in connection with” the sale of a DAS are considered a retail sale, even if such service would otherwise be non-taxable. RCW 82.04.050(8)(b). 

With respect to the time and material charges, the taxpayer argued that its T&M work constituted the “customization of prewritten computer software,” which is specifically excluded from the definition of a retail sale under RCW 82.04.050(6)(b). With respect to the taxability of reimbursed costs, the taxpayer contended that it should not be required to collect sales tax on reimbursements for airfare, lodging, and meals, because it had already paid sales tax to the original vendors when these expenses were incurred.

The Department maintained that because the products was a digital automated service, any services provided “exclusively in connection with” those products are inherently part of the retail sale under RCW 82.04.050(8)(b). The Department further argued that the statutory “sales price” includes the total consideration received by the seller, including cost reimbursements, with no deductions allowed for the seller’s own business expenses.

The Administrative Review and Hearings Division (ARHD) denied the taxpayer’s petition, affirming that both implementation fees and travel reimbursements are taxable. The ARHD found that while the taxpayer’s work involved customization, these services were performed specifically to implement the digital automated services. Since the taxpayer did not demonstrate that these services were sold on a standalone basis independent of the sale of the digital automated service, they were deemed to be provided “exclusively in connection with” a digital automated service. Accordingly, the general exclusion for software customization did not apply.

With respect to the reimbursed costs, the ARHD relied on RCW 82.08.010, which defines the “sales price” as the total amount of consideration for which a product is sold. Because the underlying implementation was a taxable retail service, any reimbursements for business costs incurred during that service – such as travel – are included in the taxable gross income.

This week, members of our SALT team are on the speaking circuit, addressing foundational and emerging SALT issues at TEI programs and COST’s 2026 Spring Meeting.

Partner Jeff Friedman will present “Unitary Business Principle & Combined Reporting” as part of TEI’s virtual SALT Essentials Course on April 20. The session will address core concepts underlying unitary business determinations and combined reporting regimes, with a focus on practical considerations for navigating complex state tax compliance and planning issues.

In addition, Partners Jeff Friedman, Charlie Kearns, and Jonathan Feldman are pleased to join the speaker lineup at the Council On State Taxation (COST) 2026 Spring Meeting. Conference sessions will provide income and sales tax developments, legislative and judicial updates, and practical considerations for multistate businesses.

Topics will include:

  • When One Size Doesn’t Fit All: The Limitations of the Single Sales Factor: How the growing use of single sales factor apportionment raises concerns around fairness, distortion, and constitutional risk—particularly when foreign source income is in play.
  • Federal Moves, State Ripples: Tariffs and the End of the Penny: The ripple effects of recent federal actions, including tariffs and the potential elimination of the penny, on state tax revenue, sourcing, compliance, and audit practices.
  • Conformity Chaos? Corporate Income Tax Issues Resulting from H.R. 1: The challenges taxpayers face as states consider whether to conform to or decouple from federal changes under H.R. 1, with a focus on practical compliance, planning, and risk management.

Finally, Partners Jeremy Gove and Chelsea Marmor will join the TEI Dallas and Fort Worth Chapters’ annual Tax School Conference, which will feature timely discussions on tax reform developments, artificial intelligence in tax, state tax legislative updates, federal litigation, international tax, and other cutting‑edge topics. Chelsea and Jeremy’s State Tax Family Feud session will deliver an interactive look at key multistate tax updates.