In this episode of the SALT Shaker Podcast, Eversheds Sutherland Associates Jeremy Gove and Cyavash Ahmadi tackle real property transfer taxes, in particular how they come into play in corporate transactions.

Jeremy and Cyavash highlight how the tax functions in certain jurisdictions and different nuances of their imposition, how state tax professionals can assist on the topic during tax planning, and takeaways when considering the state tax consequences of a transaction.

The episode wraps up with Jeremy’s usual overrated/underrated feature – how do you feel about leftovers?

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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The Indiana Department of Revenue modified Sales Tax Bulletin No. 89 to reflect the recent change (SB 382) clarifying that a marketplace facilitator is required to collect sales tax for each retail transaction it facilitates regardless as to whether the marketplace facilitator has a contractual relationship with the seller as long as the marketplace satisfies one of the following: (i) collects the price of the seller’s products, (ii) provides access to payment processing services, or (iii) charges, collects, or receives fees or other consideration from the purchaser for transactions made on the marketplace.

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: What state recently released a private letter ruling concluding that a taxpayer’s payment card management services are nontaxable?

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!

The Washington Department of Revenue upheld a retail sales tax assessment on a taxpayer who failed to collect retail sales tax on sales to a renewable energy company. The taxpayer stated that it did not collect tax on certain sales because it believed that the energy company qualified for the exemption provided by Wash. Rev. Code § 82.08.962 for sales of machinery and equipment used in generating electricity from renewable resources. However, the statute provides that the purchaser must claim the exemption by requesting a refund for retail sales tax collected and remitted to the Department.  On appeal, the Department held that the exemption did not relieve the taxpayer of its duty to collect and remit sales tax to the Department. Further, the Department determined that the taxpayer was not entitled to a reduction of its assessment by the amount of the tax that would have been refunded to the purchaser.

Washington Tax Determination No. 20-0253, 41 WTD 213 (Sept. 15, 2020, released May 16, 2022).

As the summer season kicks off, the Eversheds Sutherland SALT team couldn’t be prouder of our graduates!

Read on to learn more about our attorneys and their family members’ (even those who are furry!) accomplishments.

If you’d like to be added to our feature, email us information about your grad and a photo to SALTonline@eversheds-sutherland.com.

Partner Michele Borens’ daughter, Sydney, graduated from the University of Michigan.

Partner Jeff Friedman’s daughter, Sarah, graduated with a master’s degree in political science from The University of Chicago. Following in Jeff’s footsteps, her next journey is law school!

Partner Dan Schlueter’s daughter Rachel graduated from high school, and will attend Northwestern University in the fall. In addition, his son Nathan graduated from elementary school and is on to middle school!

Partner Maria Todorova’s daughter, Addison, graduated from elementary school and is ready for middle school!

Associate Annie Rothschild’s sister, Karen, graduated from Loyola Law School in Los Angeles.

Partner Nikki Dobay’s furchild, Rosie, recently graduated from tiny tykes to little tykes socialization class! She’s very excited for the opportunity to play with bigger pups.

The Wisconsin Tax Appeals Commission ruled that an out-of-state travel agent that used independent travel consultants in Wisconsin was doing business in Wisconsin and is responsible for the Wisconsin franchise tax. The company argued, among other things, that it was in the business of selling SaaS that did not produce income taxable in Wisconsin; however, the commission concluded that none of the evidence supported the company’s position that it was in the business of selling SaaS or software of any sort. Instead, the commission concluded that the company was engaged in the sale of travel services to Wisconsin residents through its independent travel consultants located in Wisconsin, which constituted doing business in the state, and thus the company was subject to the Wisconsin franchise tax.

In this episode of the SALT Shaker Podcast, Eversheds Sutherland Associates Jeremy Gove and Annie Rothschild delve into a recent decision out of the California Court of Appeal – Metropoulos Family Trust v. Franchise Tax Board. The court ruled for the Franchise Tax Board, affirming the trial court’s decision that non-resident S corporation shareholders are subject to California income tax on their pro rata shares of the income from the S corporation’s sale of shares in a subsidiary.

Jeremy and Annie discuss the case’s background and substance, as well as what this case’s holdings may mean for other California taxpayers.

Jeremy’s overrated/underrated question this week appeals to our fellow coffee drinkers. Is iced coffee overrated or underrated?

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

 

 

 

 

 

 

 

 

 

 

Listen now: 

Subscribe for more:

   

The Texas Comptroller recently released a private letter ruling (provided to the taxpayer on April 29, 2022) concluding that the taxpayer’s payment card management services are nontaxable in Texas. In the ruling, the taxpayer provides a payment card management program that allows services, such as food delivery services, the ability to apply customized spending limits and other controls on debit and prepaid cards used in their businesses. The taxpayer does not issue cards, but works with issuing banks and payment networks to authorize, process, and settle its customers’ transactions. The Comptroller concluded that the taxpayer’s service is a nontaxable electronic payment processing service rather than a taxable data processing service.

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 recently withdrew its proposed regulation seeking to expand the state’s sales tax to apply to cloud computing?

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!

The Supreme Court of Montana affirmed a lower court’s determination that a taxpayer was liable for accommodations sales tax on its resort service fees, but did not owe accommodations sales tax for forfeited guest deposits or lodging facilities use tax on its resort service fees. The taxpayer, Boyne USA, Inc. owns and operates Big Sky Resort in Montana. Boyne charges a resort services fee for amenities such as a children’s club, ski patrol dog demonstrations, tennis court access, summer boat rentals, ski lift rides, shuttle transportation, and movies. The taxpayer also requires payment of a non-refundable deposit 30 days before arrival. The Department audited Boyne for tax years 2011 through 2016, finding that the taxpayer owed sales and use tax for the resort service fees, as well as sales and use tax for forfeited deposit charges. The audit produced an assessment of $685,505.68 in additional tax, interest, and penalties.

Sales Tax on Resort Services Fees

Under Montana’s sales tax on accommodations, charges for services necessary to complete a sale that are separately stated are not subject to sales tax. Mont. Code Ann. §§ 15-68-101(14)(a)(iii), -(b). The taxpayer argued that, because certain resort services fees were necessary to complete the lodging transaction, they were exempt from tax. In response, the lower court concluded that the fee was taxable because it encompassed the entirety of the services sold by the taxpayer; the fee was not merely “necessary to complete the sale.” The Montana Supreme Court agreed, explaining that the resort services fee was – together with the room – the transaction itself. Thus, separately listing the fee and the lodging charges did not exempt the resort service fees from tax.

No Sales Tax on Forfeited Guest Deposits

The Montana Supreme Court also considered whether the forfeited guest deposits were subject to the sales tax on accommodations. The Department submitted evidence showing that, when calculating the deposit amount, Boyne considered applicable state taxes to calculate the total estimated cost upon which it imposed a 20% deposit charge. Because there was no activity engaged in by another person for a consideration – i.e., a “sale” of a “service” – the court concluded that a sale did not occur until a guest arrived at the facility and received the resort’s services. Mont. Code Ann. § 15-68-101(13), -(17) (defining “sale” and “service”). No sale occurred when a guest merely paid the deposit charge, even if subsequently forfeited.

No Lodging Facilities Use Tax on Resort Service Fees

Finally, Montana’s lodging facilities use tax is imposed upon “charges pertaining to accommodations for sleeping and resting at [a] resort.” See Mont. Code Ann. §§ 15-65-101, et seq. Rejecting the Department’s argument that resort services fee was a mandatory fee and an integral part of the accommodations charge, the Montana Supreme Court agreed with Boyne and concluded that the statutory definition of an “accommodation charge” exempts fees for meals, transportation, entertainment or other similar charges attributable to non-lodging purposes. Thus, the so-called bed tax would not apply to the resort services fee because, as the court explained, “while lodging is a ‘use of the resort,’ not all ‘uses of the resort’ are lodging.”

Boyne USA Inc. v. Dep’t of Revenue; DA 20-0319; 2021 MT 155; Cause No. DV-29-2019-48.