On Wednesday, February 15, Eversheds Sutherland Partners Michele Borens and Jeff Friedman will present a SALT Controversy Update to TEI’s Seattle Chapter as part of its SALT program.
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: The Supreme Court of Virginia recently upheld a decision invalidating which county’s plan to claw back tax refunds?
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!
To kick off the SALT Shaker Podcast for 2023, Eversheds Sutherland Associate and host Jeremy Gove welcomes Maria Koklanaris, Senior Tax Correspondent for Law360, to the show. Together, they tackle state tax legislation and litigation that should be on your radar this year.
Jeremy and Maria begin with an overview of state tax legislation season, including: two diverging trends, some states increasing taxes on people deemed “high earners” versus other states moving to cut taxes or simplifying their tax codes; and states’ continued attempts to tax the digital economy.
Beyond legislation, they also discuss cases to watch this year, which includes two U.S. Supreme Court cases dealing with unclaimed property, and a non-tax California ballot initiative case which has the potential to inform the application of “Pike Balancing” under the Commerce Clause. They also address the pending case before the Ohio Supreme Court confronting the tax impacts of remote work.
You can read Maria’s articles they referenced here:
To conclude, Jeremy picks his first overrated/underrated question of the year – how do you feel about hot chocolate?
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 February 7, Eversheds Sutherland Partner Todd Betor will present during Tax Executive Institute’s 2023 Mergers and Acquisitions Seminar in Nashville, TN, which covers the critical tax and operational issues relevant to M&A transactions. Todd’s panel will discuss unique state tax issues.
For more information and to register, click here.
In addition, Eversheds Sutherland Partners Michele Borens and Jonathan Feldman will present during the 2023 National Multistate Tax Symposium, held in Orlando, FL. Jonathan will present Cultivating a Thriving Multistate Tax Environment: Fostering Today for Tomorrow on February 9, and Michele will present Sales and Use Tax Hot Topics in Our Digital World: What’s New and Next on February 10.
For more information and to register, click here.
On January 19, 2023, the Michigan Court of Appeals held that a taxpayer, transitioning from the Michigan Business Tax (MBT) to the Corporate Income Tax (CIT), cannot claim prior MBT business losses on its first CIT return. For tax years 2008 through 2011, the taxpayer filed MBT tax returns and claimed employment tax credits. In 2012, Michigan replaced the MBT with the CIT, but allowed businesses to continue filing MBT returns until they had exhausted their credits. However, any such taxpayer must pay the MBT as the greater of the typical MBT amount or as if it had instead filed a CIT return. The taxpayer took this approach until it exhausted its credits in 2018. In tax year 2019, the taxpayer filed its first CIT return and claimed an MBT business loss carryforward as a deduction. The Department of Treasury denied the deduction.
The court first held that the taxpayer had not paid CIT from 2012 to 2018, even though it paid the “greater” CIT-based amount on the MBT return. The court concluded that the CIT-based amount is “[a]n amount equal” to the CIT liability, not a CIT liability itself. The court then concluded that the CIT does not allow a deduction for MBT business losses. The CIT defines “business loss” specifically with respect to the “corporate income tax base.” In contrast, the MBT “contemplates and uses a business income tax base which contains some different additions and deductions than those in the corresponding CIT statute.” Because the taxpayer did not previously file CIT returns and pay the CIT, it had no CIT base. It therefore had no CIT losses capable of being carried forward to tax year 2019.
Int’l Auto. Components Grp. N. Am., Inc. v. Dep’t of Treas., No. 360602 (Mich. Ct. App. Jan. 19, 2023) (unpublished).
The US Court of Appeals for the Sixth Circuit reversed a lower court decision that had denied an Illinois’ coal producer’s motion for a preliminary injunction. The coal producer sought to stop the enforcement of a Kentucky law that directed the agency that regulates Kentucky utilities – the Kentucky Public Utility Commission (PUC) – to evaluate the reasonableness of coal prices only after subtracting severance taxes paid on the coal.
The PUC is tasked with ensuring that energy rates remain “reasonable” for Kentucky consumers, and conducts reviews of each Kentucky utility. One of the factors examined during the PUC’s review is the price the utility paid for raw materials, including coal. As such, Kentucky utilities are encouraged to buy the most competitive coal. Kentucky also imposes a severance tax on coal extracted within its borders and, when compared to coal-producing states with no severance tax, Kentucky coal is relatively expensive.
In 2021, recognizing that this combination of measures resulted in Kentucky utilities being less likely to buy Kentucky coal, the Kentucky legislature enacted a law that required the PUC to “evaluate the reasonableness” of coal costs after subtracting coal severance taxes imposed by any jurisdiction. The Illinois coal producer challenged the law on the grounds that it violated the Commerce Clause. The Sixth Circuit agreed with the coal producer, and determined that the law impermissibly discriminates against interstate commerce because it requires the PUC to treat coal on which severance taxes have been paid (to Kentucky or other states that impose them) better than it treats coal on which severance taxes have not been paid – and that coal from severance tax states is artificially discounted by the amount of the tax, while other coal is not discounted at all.
Ultimately, the Court remanded the case to determine whether the coal producer met the remaining requirements for a preliminary injunction.
Foresight Coal Sales LLC v. Kent Chandler et al., case number 21-6069.
The Texas Comptroller of Public Accounts (the Comptroller) published proposed amendments to Texas’ franchise tax apportionment rule in the January 20 issue of the Texas Register, discarding the now-repudiated “receipt-producing, end-product act” test. The Comptroller proposed these amendments in response to the Texas Supreme Court’s unanimous decision in Sirius XM Radio, Inc. v. Hegar. Eversheds Sutherland’s SALT Team represented Sirius XM in this litigation.
Read the full Legal Alert here.
On February 1, 2023, New York Governor Kathy Hochul released her Fiscal Year 2024 Executive Budget and accompanying legislation (the Budget Bill). The Budget Bill includes several tax rate adjustments and technical fixes to the Tax Law, among other provisions.
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 recently introduced bill would impose a tax on revenue from digital advertising services, specifically on persons with revenue from digital advertising services in excess of $25 million per year?
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 this article originally published by CalCPA in the January/February issue of California CPA, Eversheds Sutherland Senior Counsel Eric Coffill provides helpful tips for having a Power of Attorney (POA) submission to California’s Franchise Tax Board accepted the first time and for anticipating problems in using the POA.
Read the full article here.
