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: The California Court of Appeal, Fourth Appellate District, recently held that a citizens’ initiative need only receive what percentage vote to pass?

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 Michigan Department of Treasury issued a Revenue Administrative Bulletin (RAB) describing the taxation of computer software and digital products to reflect updated case law and legislation enacted in 2004, which, among other things, defined “tangible personal property” to include “prewritten computer software.” The RAB provides that the “key feature” in determining whether prewritten software is taxable is whether a party exercises a right or power over it, which turns on how it was delivered. For example, if a user merely accesses the software through a third-party server outside of the state, the software is not taxable. Additionally, the RAB provides that the Department will use the “incidental to service” test to determine whether a transaction that includes prewritten software and professional services is taxable. The RAB specifies that digital goods that are not prewritten computer software, like e-books, movies streamed over the internet, or podcasts are not taxable, but noted that applications or video games downloaded or otherwise installed onto electronic devices could constitute prewritten computer software. Finally, the RAB provide how to source sales of prewritten computer software following the repeal a statute that allowed consumers to apportion tax for software through a multiple-points-of-use exemption certificate.

The South Carolina Administrative Law Court (ALC) held that the South Carolina Department of Revenue could require Tractor Supply and its affiliates to file a combined return notwithstanding that South Carolina law requires corporate taxpayers to file tax returns on a separate-entity basis. In a factually intensive ruling, the ALC found that the Department met its burden of proving that the taxpayer’s separate-entity return filings resulted in distortion and that combined reporting was a reasonable alternative method that fairly reflected the combined group’s business activity in the state. In rendering its decision, the ALC noted that the taxpayer’s expert admitted that the taxpayer’s original transfer pricing methodology was “flawed and unreliable” and its proposed alternative transfer pricing approach was not based on sufficient evidence. As a result, the ALC found that the Department was justified, in this circumstance, to exercise its discretion to require the taxpayer’s unitary group to file a combined tax return.  

Tractor Supply Co. v. S.C. Dep’t of Revenue, No. 19-ALJ-17-0416-CC (S.C. Admin. Law Ct., Aug. 8, 2023).    

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 issued an emergency rule-making order regarding administrative rules surrounding sales and use tax and B&O tax for remote sellers?

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!

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: New Mexico recently updated guidance for online marketplace providers and sellers reflecting that out-of-state taxpayers pay gross receipts tax at what new reduced rate?

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!

On August 16, during the National Conference of State Legislatures’ (NCSL) 2023 Indianapolis Legislative Summit, Eversheds Sutherland Partner Charlie Kearns will cover the remote work revolution. He will discuss how the shift away from the office has caused issues for state and local economies, and cover remote work’s impact on commercial property values, public transit and the growing question of how to tax work that crosses state borders.

In addition, also on August 16, Eversheds Sutherland Partner Todd Betor will participate in an industry panel during the Midwestern States Association of Tax Administrators (MSATA) Annual Conference 2023, providing his perspective on hot topics presented by attendees.

Finally, Eversheds Sutherland is a proud sponsor of the Council On State Taxation (COST) 2023 SALT Workshop for Technology Companies, which covers the key SALT issues that technology companies are facing. Held in Foster City, CA from August 16-17, presenters and topics include:

  • Jeff Friedman – Update on States’ Digital Services Tax Initiatives
  • Michele Borens – Conundrums with the States’ Marketplace Facilitator Laws

View and learn more about past and upcoming events and presentations.

In this episode of the SALT Shaker Podcast, Eversheds Sutherland Partner Tim Gustafson joins Associate Jeremy Gove for a deep dive into California’s market-based sourcing regulation.

Together they discuss various interpretations of and proposed amendments to the regulation offered over the past six years, and how the interpretations and amendments might affect taxpayers.

They wrap with a series of underrated/overrated questions related to scents.

You can read Tim’s article on the topic for Tax Notes State here.

Questions or comments? Email SALTonline@eversheds-sutherland.com. You can also subscribe to receive our regular updates hosted on the SALT Shaker blog.

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On August 9, 2023, the New York State Department of Taxation and Finance (Department) submitted its draft corporate franchise tax regulations for publication in the State Register – a significant and necessary step in the State Administrative Procedure Act (SAPA) process to formally adopt regulations related to the sweeping reform of the state’s Corporation Franchise Tax that was enacted nearly a decade ago. 

Read the full Legal Alert 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: Which state’s Court of Appeals recently held that a qualifying taxpayer could elect the alternative apportionment method for manufacturers for the first time on an amended tax return?

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!

In the pending-precedential decision Appeal of Southern Minnesota Beet Sugar Co-op., the California Office of Tax Appeals (OTA) ruled that payroll, property and sales that generated deductible agricultural cooperative income under Cal. Rev. & Tax. Code Section 24404 must be included in the taxpayer’s corresponding payroll, property and sales factors. 

The California Franchise Tax Board (FTB) argued that such payroll, property and sales should be excluded from both the numerator and denominator of the apportionment factors because the activities produced deductible income. The FTB relied on Legal Ruling 2006-01, which reflects the agency’s long-standing position that activities not resulting in net business income should not be reflected in the apportionment formula.  Despite the FTB’s request for deference to its interpretation, the OTA disagreed with the FTB’s position.  Looking to the plain language of the governing apportionment statutes, the OTA concluded that there were no grounds to exclude activities that give rise to apportionable business income whether or not deductible. Specifically, the OTA drew a distinction between income that is deducted, and income that is “exempted,” “excluded,” or “not recognized” under the terms of the Revenue and Taxation Code, the latter of which “generally do not enter into gross income (or gross receipts) to begin with.” 

In the Matter of the Appeal of Southern Minnesota Beet Sugar Co-op., 2023-OTA-342P (Cal. OTA March 17, 2023), petition for rehearing denied, 2023-OTA-343 (Cal. OTA June 6, 2023).