Meet Rose of Pinot Noir, a.k.a. Rosie! Rosie makes her home in the Pacific Northwest with Partner Nikki Dobay and her husband, Per. Rosie leapt into their lives and hearts in April, and gets her name as an homage to her older sister Grapes, who passed away earlier this year. Rosie was born two days after Grapes’ passing, so Nikki and Per are fairly certain she is Grapes’ reincarnation!

As an eight-month-old Rat Terrier, she’s wiggled her way into their hearts with her terrier attitude and little ear nibbles. Rosie loves to munch on any and all treats, but she is particularly fond of scones. Rosie’s fondness was acquired at a young age when Nikki and Per took her to a local coffee shop each day to socialize her. Now, she gets very upset after her morning run if the scone delivery has not been made!

When she isn’t munching on scones, Rosie loves to run on the trails in Forest Park in Portland. She also loves to play with other dogs – the bigger, the better! She’s developing a fondness for wine tasting, like Grapes before her. She gets a lot of attention at local wineries, and with a name like Rose of Pinot Noir, plus a cute face, how can they resist?

Waking up with Rosie is really something – after having her breakfast and a trip to the yard, she bounds back up to bed where she proceeds to become Lady Piranha – a high energy pup who wakes her owners up with kisses and nibbles!

Nikki and Per are thrilled to have the sweet and loving addition to their family. They miss Grapes every day, but are looking forward to many years with Rosie and the possibility of her having a sister in the future.

Welcome, sweet Rosie!

 

In this episode of the SALT Shaker Podcast policy series, Eversheds Sutherland attorneys Nikki Dobay and Cat Baron tackle part II of their discussion about the need for a multistate Power of Attorney (POA) form and the progress being made in the quest to create one. In case you missed it, you can catch up on part I of their discussion here.

For part II of the series, Nikki and Cat welcome Nicole Power, Research and Relationships Manager at Stripe Tax, as well as Scott Peterson, Vice President of U.S. Tax Policy and Government Relations at Avalara for a discussion of the significance of the project.  Nicole and Scott explain why streamlining the POA process is so critical. They also discuss what would be helpful from a states’ perspective in order to embrace the proposed changes and next steps.

Nikki wraps up the episode with their choice of a timely non-tax question – what are you going to dress up as for Halloween, or what’s your favorite Halloween wine?

The Eversheds Sutherland State and Local Tax team has been engaged in state tax policy work for years, tracking tax legislation, helping clients gauge the impact of various proposals, drafting talking points and rewriting legislation. Partner Nikki Dobay, who has an extensive background in tax policy, hosts this series, which is focused on state and local tax policy issues.

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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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: Eversheds Sutherland attorneys Nikki Dobay and Cat Baron have been working on a project to create a new, multistate form. Which form is it?

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

On October 6, 2022, the Supreme Court of Mississippi held that digital images are not subject to sales tax as tangible personal property or specified digital products. The taxpayer was a digital wedding photographer that sold wedding photography services to customers and then transferred the digital images to the customers via DVDs or flash drives. Following an audit and sales tax assessment, the Supreme Court of Mississippi held that the sales of wedding photography packages – including digital images – were not subject to sales tax. First, the court held that digital images were not “tangible personal property” by nature of being transferred by DVD or flash drive, as opposed to an electronic means of transfer. Rather, this approach “literally places form over substance” and is “an arbitrary distinction.” Instead, the court observed that the tangible drive or disk is “incidental to the nontaxable photography service being provided.”  Second, the digital images were not taxable as “specified digital products” because the term does not include “still digital images.” Finally, photography services are not enumerated as taxable.

Mississippi Dep’t of Revenue v. EKB, Inc., Dkt. No. 2021-SA-00441-SCT (Miss. Oct. 6, 2022).

The Iowa Department of Revenue proposed amendments to its sales and use tax regulations regarding digital-based services implementing 2018 legislation imposing sales tax on a variety of new, digital-based services. The Department essentially adopted its prior non-binding guidance regarding which services are taxable, including storage of tangible or electronic files, information services, video game services and tournaments, software as a service, storage of electronic files, webinars, and services relating to installing, maintaining, servicing, repairing, operating, upgrading, or enhancing certain digital products or software sold as tangible personal property. The public comment period is open through October 25, 2022.

Next week, Eversheds Sutherland is pleased to sponsor the Tax Executives Institute (TEI) 77th Annual Conference in Scottsdale, AZ from October 23-26, 2022. Registration and event information can be found here.

Members of the Eversheds Sutherland SALT team will present on the following topics:

  • October 24 − Around the States – Everything You Need to Know About the Top State and Local Tax Issues – Maria Todorova 
  • October 25 − NOLS: The Most Valuable State Tax Assets You Only Think You Have – Charlie Kearns
  • October 26 − A Tax Family Feud: An Interactive Discussion of Tax Department Challenges and Opportunities − Jeff Friedman 

In addition, Eversheds Sutherland is supporting the Council on State Taxation (COST) 53rd Annual Meeting from October 24-27, 2022 in Orlando, FL. Registration and event information can be found here.

Eversheds Sutherland SALT Partners are presenting on several topics, including:

  • October 26 − Locally Administered Sales and Accommodation Taxes: Compliance Burdens and Constitutional Concerns – Nikki Dobay
  • October 26 – The Next Chapter in Transfer Pricing – Michele Borens
  • October 27 – The Limits of Administrative Deference – Jonathan Feldman

View and learn more about past and upcoming events and presentations for the SALT team.

 

The Maryland Court of Special Appeals affirmed the tax court’s decision that a Macy’s captive insurance company is exempt from Maryland corporate income taxes on interest payments received from a Macy’s affiliate. Maryland imposes a premium receipts tax on unauthorized insurance companies, which includes the taxpayer captive insurer in this case. The taxpayer captive insurer paid no premium receipts tax to Maryland for the years at issue. However, the Maryland law says: “the premium receipts tax under this section is instead of all other State taxes.” The Court of Specials Appeals found this language to be unambiguous—a company subject to the premium receipts tax is exempt from all other taxes, without other conditions. The court noted that while exempting taxpayers who do not pay any premium receipts tax from other taxes may not have been the legislative intent, the court said it was bound by the plain language of the statute.

Comptroller of the Treasury v. Leadville Ins. Co., No. 563, 2022 Md. App. LEXIS 64 (unpublished Ct. of Special App. Aug. 29, 2022).

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: In what recent case did the Ohio Court of Common Pleas hold the City of Cleveland’s municipal income tax on remote workers unconstitutional on an “as applied” basis?

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

On September 29, 2022, the New York State Division of Tax Appeals determined that services involving the creation of customer engagement reports based on email tracking and email template usage data are nontaxable information services—particularly when use of software is only incidental to the performance of such services. The taxpayer sold “customer engagement services” to sales organizations or sales teams. A sales team could use software provided by the taxpayer to embed software in template emails that were then sent to the sales team’s prospective clients. The embedded software would transmit client engagement data back to the taxpayer to report how clients engaged with the template email. The taxpayer would analyze the data and issue a report to the sales team regarding the effectiveness of their template or sales campaign. The taxpayer sold different packages of these services, some that allowed for sharing of the template emails and reports across teams and others that permitted the integration of the information provided by the reports into customer engagement platforms.

The Division of Taxation of the New York Department of Taxation and Finance (Department) argued that the taxpayer’s services were subject to sales tax because they constituted the sale of a license to use software. The Department also argued that the taxpayer sold services that were bundled, and the prewritten software element of the bundle was not incidental, thereby subjecting the entire bundle to sales tax. The taxpayer contended that it was selling nontaxable information and data storage services, that any sale of prewritten software was incidental in the transaction, and that it did not receive payments for the license to use such software.

The Division of Tax Appeals determined that: (1) under New York Law, when a service is bundled, the primary function test should be used to determine whether the services are taxable; (2) the primary function of the taxpayer’s services lay in its provision of information reports; (3) although each level of service sold by the taxpayer increased the range of services provided to its customers, the primary purpose of the services remained the same and use of prewritten software by the taxpayer’s customers was incidental to this purpose; and (4) the services provided by the taxpayer to its customers were personal or individual in nature, since the taxpayer’s reports did not comingle data from various customers.  As a result, the Division of Tax Appeals found that the entire bundle of services was nontaxable.

In the Matter of the Petition of Yesware Inc., DTA No. 829638, (N.Y. Div. Tax. App. Sept. 29, 2022); In the Matter of the Petition of Matthew Bellows, DTA No. 829639 N.Y. Div. Tax. App. Sept. 29, 2022); In the Matter of the Petition of P. Cashman Andrus, DTA No. 829640 N.Y. Div. Tax. App. Sept. 29, 2022).