The New York State Supreme Court, Appellate Division, affirmed a New York trial court decision denying a taxpayer’s motion to dismiss a False Claims Act suit brought against the taxpayer in relation to its sales of artwork to an alleged art collector under a resale exemption. According to the complaint, an employee of the taxpayer advised an individual purchaser of artwork to submit a resale certificate in order to avoid paying New York sales tax on his purchase of artwork, despite knowing that the purchaser’s occupation was as a shipping executive and that he had no plans to sell the artwork. The taxpayer’s employee allegedly provided the purchaser with the resale certificate and partially completed the certificate on his behalf. Over the course of five years, the purchaser bought artwork totaling $27 million from the taxpayer without paying New York sales tax, based on the resale certificates. The Appellate Division held that the alleged facts, if proven, would demonstrate that the taxpayer had actual knowledge that the purchaser’s purported exempt status was false and the taxpayer therefore violated its obligation to collect sales tax owed on the purchases. The Appellate Division further found that the facts alleged in the complaint permitted the inference that facilitation of knowingly false resale certificates by the taxpayer’s employees fell within the scope of their employment and was committed in furtherance of the taxpayer’s commission-based business. As a result, the Appellate Division, in a unanimous decision, upheld the trial court’s denial of the taxpayer’s motion to dismiss the complaint for failure to state a cause of action.

N.Y. v. Sotheby’s Inc., Case No. 2021-03657 (N.Y. App. Div. Apr. 14, 2022).

In this episode of the SALT Shaker Podcast, host and Eversheds Sutherland Associate Jeremy Gove welcomes Associates Dennis Jansen and Mary Kate Nicholson for a discussion about Texas’s R&D credit, and the impact of the state’s recently amended rules. In addition, they address an article they recently authored in Tax Notes State covering the topic.

During the conversation, Dennis offers background and analysis of the Texas R&D credit and the Comptroller’s recently promulgated (and retroactive) rules regarding internally developed software. As these rules rely on their federal counterpart, Mary Kate is called upon to dissect the federal research and experimentation (R&E) credit for internally developed software and its interesting history.

They conclude with Jeremy’s weekly question – overrated/underrated? This week, it’s simple. How do you feel about sleep?

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:

   

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 was the first state to pass legislation decreasing corporate and individual income tax rates this 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. Answers will be posted on Saturdays in our SALT Shaker Weekly Digest. Be sure to check back then!

 

 

On April 21, the Connecticut Department of Revenue Services released Ruling no. 2022-2, finding that online learning plans were not taxable digital goods. The company offers various learning plans which address educational needs through virtual learning and on-demand digital courses in academic subjects, professional topics, and vocational licensure preparation courses. The company’s platform is accessed from computers or via the company’s mobile device application. Because the company’s service consists of both taxable digital goods and enumerated taxable services, the Department applied the “true object test” to determine taxability of the service. In this case, the “true object” of the transaction is the is the education or training offered, including live tutors, practice quizzes, and credit toward academic, vocational or professional accreditation, rather than the sale of a digital good. The Department concluded that while the learning plans are generally not subject to sales tax as digital goods, under certain circumstances, the learning plans could be treated as taxable job-related training, computer training, or software training.

Meet Rosey, an Australian labradoodle and our April SALT Pet of the Month! Like a fine wine, Rosey keeps getting better with age. As cute as she is cuddly, she recently celebrated her first birthday with her parents – Michell Rodriguez, Director of Corporate Tax at Costco, and Wayne Monfries, Senior Vice President of Global Tax at Visa.

Rosey earned her name because of her coloring. It’s similar to Michell and Wayne’s favorite wine, rosé, and their favorite color of roses.

When she isn’t destroying a stuffed animal, she loves to chew on Bully Sticks and has recently developed a fondness for peanut butter. Beyond an affinity for good treats, she likes long walks on the beach, playing fetch in the house and hiding her favorite toys for her paw-rents to find.

They often locate her chew sticks in the couch, in chairs or hiding behind the pillows in bed. She also hides her green balls (which smell like bacon!) under beds, cabinets and other sneaky locations.

In addition to her playful mischief, she loves people and other dogs, and likes to sit on the stairs outside Wayne’s home office, waiting to bark at everyone in the neighborhood.

We’re happy to welcome Rosey to the SALT Pet of the Month club!

Between April 25 and 28, members of the Eversheds Sutherland SALT team will present during COST’s 2022 Income Tax Conference & Spring Audit Session in Denver, CO, which focuses on current income and franchise tax issues.

Presentations and topics include:

  • April 25 – State Tax Legislative Update – Nikki Dobay
  • April 26 – Combined Reporting – 80/20’s and Other Issues – Jeff Friedman
  • April 27 – Local Taxes and Constitutional Constraints – Maria Todorova

For more information and to register, click here.

On April 12, 2022, the Administrative Review and Hearings Division of the Washington Department of Revenue released decision number 41 WTD 118 (originally issued on June 4, 2020), concluding that a company providing online account access services to credit unions was providing taxable digital automated services (DAS) and not data processing services which is excluded from taxable DAS. The company’s online account access services included an online banking platform allowing member credit unions to provide various online banking services to their customers, and an automated phone system for customers to make inquiries, access account information, and activate credit cards. In concluding the services were taxable DAS, the decision explained that each of the services were a component part of a larger integrated service that constituted a taxable DAS. The decision also ruled that the tax was not discriminatory against e-commerce under the federal Internet Tax Freedom Act because there was not a non-digital equivalent to categorize as similar for purposes of establishing discrimination.

In this episode of the SALT Shaker Podcast policy series, host and Eversheds Sutherland Partner Nikki Dobay welcomes back SALT Partner Charlie Kearns for a lively conversation with Partner Ben Jones, head of the firm’s London Tax Group.

Ben provides an update on a recent UK proposal, in which the UK is seeking feedback regarding an online retail sales tax. From there, Charlie and Nikki react to the proposal and provide insights related to the US states, having been there!

To top it all off, they discuss Nikki’s latest surprise, nontax question: Have you ever been told that you look like someone famous, and if so, who was it?

The Eversheds Sutherland SALT 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.

 

 

 

 

 

 

 

 

 

 

Listen now: 

Subscribe for more:

   

Virginia’s Governor signed H.B. 1155, which expands the sales tax exemption for amplification, transmission and distribution equipment to now include “network equipment” that is used to provide Internet service. The expanded exemption defines a “network” to include modems, fiber optic cables, coaxial cables, radio equipment, routing equipment, switching equipment, a cable modem termination system, associated software, transmitters, power equipment, storage devices, servers, multiplexers, and antennas that are used to provide Internet service. This exemption is available to telephone common carriers whose networks are also used to provide services other than Internet. The amended exemption becomes effective July 1, 2022.