In an article for Bloomberg Tax, Eversheds Sutherland attorneys Liz Cha and Chelsea Marmor summarize recent tax developments in New York, including proposed corporate tax reform regulations and two court opinions on income sourcing, Matter of Techar and Matter of Jefferies Group LLC & Subs.
Read the full article here.
This week, Eversheds Sutherland is proud to support Tax Executives Institute’s 2023 Annual Conference—75th Anniversary Celebration. SALT Partners Todd Betor, Ted Friedman and Tim Gustafson will contribute to the comprehensive program that will include nearly 40 sessions focused on US federal, international, and state and local tax, as well as Canadian tax, financial reporting, and corporate tax management issues.
Presenters and topics include:
In addition, Eversheds Sutherland is a proud sponsor of the 30th Annual Paul J. Hartman SALT Forum, held October 23 – 25 in Nashville, TN. The forum will discuss current developments as well as the practical solutions and planning opportunities in structuring and reporting state and local tax transactions.
Speakers and topics include:
Finally, on October 24, SALT Partner Dan Schlueter will cover current property tax developments and litigation during the 2023 Broadband Tax Institute (BTI) Annual Conference, held in Scottsdale, AZ.
View and learn more about past and upcoming events and presentations.
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: Which state’s commissioner recently determined that a data center operator was entitled to a sales and use tax refund on its equipment purchases?
E-mail your response to SALTonline@eversheds-sutherland.com.
The prize for the first response to today’s question is a $25 UBER Eats gift card. This week’s answer will be posted on Saturday in our SALT Shaker Weekly Digest. Be sure to check back then!
The Ohio Board of Tax Appeals denied an out-of-state healthcare organization’s apportionment of the Commercial Activity Tax related to healthcare services.
The taxpayer sought to apportion its gross receipts related to laboratory services and healthcare provider services based on where the taxpayer’s costs were incurred. The Board rejected the taxpayer’s position and found that the lab work and healthcare provider services are sourced based on where the benefit of these services is received. Citing to Defender Security Co. v. McClain, 162 Ohio St.3d 473 (2020), in which the Ohio Supreme Court held that under Ohio’s sourcing rule, the “paramount” consideration when determining what proportion of the benefit is attributed to Ohio is the physical location where the purchaser actually used and received the benefit of what was purchased. The Board found that while some of the services were conducted outside of Florida, the benefit of the services is received where the Ohio patients are located.
The Board also noted that even if the laboratory testing and administrative services could be sitused outside of Ohio, the taxpayer failed to support its apportionment method with sufficient documentation.
Total Renal Care Inc. v. Harris, No. 2019-848 (Ohio Bd. Tax App. July 24, 2023) (unpublished).
In the October 2023 edition of Spidell’s California Taxletter, Eversheds Sutherland Senior Counsel Eric Coffill shares six tips for settling tax matters with the FTB and the
CDTFA.
Read the full article here.
The taxpayer, a designer, marketer, and wholesaler of apparel, footwear, jeans, and other fashion accessories, shipped products to Ohio-based distribution centers of major retailers and paid the commercial activity tax for all items shipped to the distribution centers, even those that were ultimately received by customers outside of Ohio. The taxpayer applied for a refund for gross receipts realized from products that were sent to Ohio distribution centers but were ultimately shipped to locations outside of Ohio. The taxpayer provided labels for most of the retailers it shipped to that showed where the products would ultimately be delivered, and the Department of Taxation accepted those as sufficient evidence to situs those sales outside of Ohio. However, for two retailers (DSW and Dressbarn), the labels did not indicate where the products would ultimately be delivered, so the Department sitused those sales to Ohio.
The taxpayer appealed the refund denial to the Ohio Board of Tax Appeals. At the hearing the taxpayer provided evidence in the form of a report showing the distribution of each DSW product throughout all of its stores. This report was based on a data sample collected from DSW’s website over a 3-month period using custom software. The Department argued that the Board should only consider information the taxpayer had at the time it sold the products to DSW and Dressbarn and, that as far as the taxpayer knew at the time, the products were delivered to purchasers in Ohio.
While the Board rejected the Department’s argument that the taxpayer must have contemporaneous knowledge of the ultimate destination of the product at the time it is transported, the Board also determined that the taxpayer failed to meet its burden in proving that the Department’s findings (i.e., that the DSW and Dressbarn products should be sitused to Ohio) were not valid. The Board stated that the representative sample used was related to a time well after the tax period and “extremely short” in comparison (the sample looked at a period of 3 months and the tax period was 6 years). The Board also mentioned that while the taxpayer’s method may be sufficient in other circumstances, it was too far removed and reflected too narrow of a time frame to establish that the products sent to DSW and Dressbarn were ultimately received outside of Ohio. As a result, the Board affirmed the Department’s final determination.
Jones Apparel Group, et al. v. McClain, Case Nos. 2020-53, 2020-54 (Sept. 13, 2023).
Eversheds Sutherland is a proud sponsor of COST’s 54th Annual Meeting, covering all types of state and local taxes that business taxpayers are confronted with on a daily basis. Held in Las Vegas, NV between October 17 – 20, members of our SALT team will present on the following topics:
For more information and to register, click here.
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: California Governor Gavin Newsom recently signed legislation establishing a new 11% excise tax on what kind of products?
E-mail your response to SALTonline@eversheds-sutherland.com.
The prize for the first response to today’s question is a $25 UBER Eats gift card. This week’s answer will be posted on Saturday in our SALT Shaker Weekly Digest. Be sure to check back then!
Saddle up to meet our October Pet of the Month, Arson!
This striking Andalusian gelding is well traveled, having made his way from Madrid to New York to his final destination of Georgia where he was united with his owner, Jessica O’Quin, State and Local Tax Director at InterContinental Hotels Group.
Joining forces with Jessica after her previous horse had to reign in his more vigorous jaunts, Arson loves to be the mane attraction, especially by horsing around and performing tricks at random in hopes of earning a cookie. At five years of age, Arson enjoys galloping through the pasture with other horses where he lives in a stable state of mind. In future years, Jessica aims to compete in dressage and mounted archery with Arson.
Welcome to the SALT Pet of the Month family, Arson!
In a June 1, 2023 determination, the Virginia commissioner concluded that a Virginia data center operator was entitled to a sales and use tax refund on its equipment purchases, regardless of whether they were delivered to a storage facility prior to delivery to the data center.
Virginia allows a sales and use tax exemption for certain equipment purchased or leased for use in a data center. In reliance on this exemption, a Virginia data center operator pursued refund claims on its purchases of qualifying equipment. The Department denied the refund claims on the equipment that was delivered to the company’s Virginia storage facility prior to delivery to the data center itself.
On appeal, the commissioner concluded that the data center operator’s equipment purchases qualified for the exemption, despite first being delivered to a storage facility. The commissioner observed that the statutory exemption did not include a requirement that the data center use the purchased items immediately. Rather, the exemption applied to eligible equipment either “used or to be used” in the operation of the data center. The commissioner further noted that storing equipment in reserve is “an essential part of data center operations.” The incentive provided by the data center exemption would be impaired by “[p]rohibiting data centers from purchasing items for future use.”
Va. Public Document Ruling No. 23-67, Va. Dep’t of Tax. (Jun. 1, 2023).
