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

We will award prizes for the smartest (and fastest) participants.

This Week’s Question: Besides “people” names, most of the 2020 “SALT pets of the month” have names more commonly used to describe what?

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

The prize for the first response to today’s question is a $20 UBER Eats gift card.

Answers will be posted on Saturdays in our SALT Weekly Digest. Be sure to check back then!

The Texas Court of Appeals held that the trial court did not have jurisdiction over a taxpayer’s sales and use tax refund claim because the taxpayer failed to properly state the grounds for the refund claim.  The Texas Tax Code requires that a refund claim: (1) be written, (2) “state fully and in detail each reason or ground on which the claim is founded,” and (3) to be timely filed. Tex. Tax Code § 111.104(c)(1)–(3).   In 2012, the taxpayer filed its refund claim, which over several years proceeded through the administrative process winding up at the Texas Court of Appeals.  At the Court of Appeals, the State argued that four years after the taxpayer filed its refund claim it raised for the first time an alternative argument, which was that the property was exempt from sales tax because of a manufacturing exemption.  The court held that the taxpayer was required to include the exemption argument in the initial grounds for the refund claim filed with the Comptroller back in 2012.  In the alternative, the taxpayer argued that the exemption claim was included in the original refund claim because the taxpayer included a schedule that identified the vendor, item, and cited to the tax code provision that supported the refund claim.  The court held that the schedule did not make it “reasonably clear” to the Comptroller that the taxpayer was claiming the manufacturing exemption for the equipment at issue nor did it put the Comptroller on notice for the legal basis for the refund claim.  Hegar v. El Paso Elec. Co., No. 03-18-00790-CV (Tex. Ct. App. Aug. 13, 2020).

Tank the dog and Pumpkin the cat, pets belonging to the family of Mark Fadden, Associate Director, Tax at Horizon Therapeutics, are living proof that even the unlikeliest of fellows can become best friends.

Tank and Pumpkin were not fated to cross paths. As a youth, Tank was institutionalized and awaiting a dire fate had he not been adopted by the Faddens. Pumpkin, on the other hand had an independent and fancy-free lifestyle and once she decided to become a house cat, selected a family by crossing 3 busy streets to follow them home. The family had a full house and asked the Faddens to take the tabby in when Tank was about 3 years old.

In addition to the age difference, the two have wildly divergent interests. The Anatolian Shepherd loves to eat popcorn and search for treats in the garbage , while Pumpkin is a hunter who likes bits of lunch meat. Despite this, they clicked immediately and you can see from these photos how much they enjoy one another. In one dramatic incident, Pumpkin chased off a coyote as Tank was obliviously hanging out in the yard. Pumpkin had been keeping an eye out for trouble daily since Tank had a hind leg in a cast. What a great buddy!

The two do have some things in common.  Both sit before receiving treats and both enjoy walking with the entire family around the neighborhood (though Tank is leashed and Pumpkin characteristically untethered.) We are sure delighted neighbors who witness this feel a spark of hope that even the most different among us can happily live together.

On September 29, 2020, Democratic Governor Gavin Newsom vetoed S.B. 972, the controversial taxpayer disclosure bill that would have required the California Franchise Tax Board (FTB) to provide the Legislature annually with the names, tax liabilities, and tax credits claimed by corporate taxpayers that meet a $5 billion gross receipts threshold.

S.B. 972 proposed a new provision of the California Revenue and Taxation Code requiring the FTB to annually compile a list with specific corporate taxpayer information and provide the list to the Assembly Committee on Revenue and Taxation and the Senate Committee on Governance and Finance (collectively, “Committees”) by May 1st of each year.

The list would have included information on all corporate taxpayers, including combined groups, subject to California’s Corporation Tax Law with $5 billion or more in gross receipts (less returns and allowances) reported on a return for the previous calendar year. For each of these corporate taxpayers, the FTB would have been required to provide the following information to the Committees:

  1. Taxpayer’s name,
  2. Tax liability,
  3. Taxable year for which the return is filed,
  4. Total gross receipts for that taxable year, and
  5. The amounts and types of corporate tax credits claimed for that taxable year.

Notably, the Senate significantly amended how the required corporate taxpayer information would have been disclosed under S.B. 972. The bill initially required the FTB to post the taxpayer information on its website. However, the Senate later amended the bill to remove website publication, and to instead require the FTB to provide this information annually to the Committees.

Echoing the sentiment of the Council On State Taxation, CalTax, and others opposing the bill, Governor Newsom noted in his veto message that the bill is “unnecessary, as current law already authorizes the FTB, upon request, to disclose taxpayer data to legislative committees.” He further stated that he was “not persuaded that enactment of the bill would provide additional value to future policy deliberations.”

Please see our previous post on S.B. 972 for additional information.

 ES Observation

While the Legislature has the ability to override Governor Newsom’s veto of S.B. 972, this seems very unlikely. The California Constitution, Article IV, Section 10(a) permits the Legislature to override the Governor’s veto by a two-thirds majority vote in both the Senate and the Assembly. However, the California Legislature has only rarely used its veto override power. We anticipate it is unlikely the Legislature will use its veto override power here based on its historic reluctance to do so.

In Opinion No. 20190925, the Arkansas Department of Finance and Administration explained how the state would tax a proposed online peer-to-peer vehicle sharing platform. The opinion noted that the peer-to-peer platform in question would be considered a marketplace facilitator and discussed how local taxes will be sourced. But the Department declined to opine on the tax consequences of the hosts who list their vehicles for rental because the ruling was requested by the platform. The opinion also explained when sales tax and short-term rental tax would apply to the related leasing costs.

In this episode we discuss two recent California decisions, including a Court of Appeal decision concerning property tax escape assessments (Prang v. Los Angeles Cnty. Assessment Appeals Bd., Case No. B301194 (Cal. Ct. App. Aug. 27, 2020) and an Office of Tax Appeals decision concerning nexus for the state’s LLC tax. (In the Matter of the Appeal of Aroya Inv. I, LLC, 2020-OTA-255P (Cal. Office of Tax Appeals Jul. 7, 2020). 

 

 

 

 

 

 

Listen Now: 

The Tennessee DOR issued three FAQs (123) explaining that the sale of a pre-recorded video of an online course is subject to sales tax as the sale of a specified digital product. The tax result is the same whether the video is on-demand or must be accessed at a scheduled time and whether or not there is a live instructor associated with the course.

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

We will award prizes for the smartest (and fastest) participants.

This Week’s Question: Justice Ruth Bader Ginsburg authored the opinion in this 1994 landmark state tax case, upholding California’s worldwide combined reporting against constitutional challenge.

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

The prize for the first response to today’s question is a $20 UBER Eats gift card.

Answers will be posted on Saturdays in our SALT Weekly Digest. Be sure to check back then!

Mississippi Notice 72-20-09 provides additional guidance on Mississippi’s marketplace facilitator law, which took effect on July 1, 2020. The Notice explains that a sale facilitated and delivered by a third-party food delivery service is not a “retail sale” by the facilitator. Rather, the restaurant will charge sales tax on the selling price it charged for the food. But if a third-party delivery company additionally makes direct sales of items from its own inventory, the delivery company must collect and remit sales tax on those sales.

A California Court of Appeal found that because the taxpayer did not file proper notice with the California Board of Equalization (BOE), the limitation on the number of years the county assessor can levy retroactive escape assessments did not apply. The taxpayer’s 2006 merger constituted a change in ownership triggering reporting requirements to the BOE.   Shortly after the merger, the taxpayer filed the Delaware certificate of merger with the county Recorder’s Office but did not file the change in ownership statement with the BOE until 2013.  Pursuant to Proposition 13, county assessors may reassess property when there is a triggering event such as a change in ownership, and when there is a delay between the event and its discovery by the assessor, the assessor may levy retroactive “escape assessments” to collect any underpayment for the years in between the triggering event and discovery. By statute, California limits the retroactive escape assessment to four years, however, this cap does not apply if the taxpayer fails to file a change in ownership statement with the BOE. The court rejected the taxpayer’s argument that the filing of a certificate of merger with the county recorder’s office satisfied the requirement to file a change in ownership statement with the BOE and held that without strict compliance with the statutory notice requirements, the four year limitation on escape assessment did not apply.

Prang v. Los Angeles Cnty. Assessment Appeals Bd., Case No. B301194 (Cal. Ct. App. Aug. 27, 2020)