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 two bills did Washington Governor Inslee recently sign that delayed the start of the long-term care program known as the Washington Cares Fund?

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!

Courts returned to business in a big way in 2021, following the pandemic-related slowdown in 2020. Over the year, there were several noteworthy income tax and sales tax decisions, as well as two First Amendment cases from the highest courts in Maryland and Ohio that reached opposite results and could be headed to the U.S. Supreme Court.

In this installment of A Pinch of SALT for Tax Notes State, Eversheds Sutherland attorneys Jeff Friedman, Dan Schlueter and Fahad Mithavayani explore noteworthy tax decisions of 2021 and look at what the future might hold for taxpayers.

Read the full article here.

The Washington Administrative Review and Hearings Division (the Division) of the Department of Revenue held that payments between affiliated entities could not be deducted from “gross income” subject to the business and occupation tax (B&O Tax). Each of the taxpayers, three affiliated entities falling under the same parent company umbrella with each providing investment management services (the Taxpayers), sought to offset revenue received pursuant to customer contracts by deducting payments made to affiliated entities that performed some of the services provided under the contract. The Department audited the Taxpayers and issued an assessment, disallowing any gross income deduction attributable to payments made to affiliates in exchange for investment management services. In response, the Taxpayers filed a petition for review, asking the Division to determine whether monies transferred between affiliated—but separate—legal entities constitute gross income subject to the B&O Tax.

The Division, citing RCW 82.04.220 and RCW 82.04.290, stated that the B&O Tax is a gross receipts tax that includes gross proceeds from sales without any deduction for expenses. The Division found that there is no specific authority in Washington that allows a transfer pricing deduction.

The Division further determined that the Taxpayers provided no evidence to show that an agency relationship was in place, which could have qualified the payments as advances or reimbursements that are excludable from the gross income computation. Instead, the Division held that the provisions of services included two transactions: first, sales between a Taxpayer to its customer, and second, between such Taxpayer and its affiliate. Thus, the Division ultimately upheld the Department’s assessment.

Det. No. 19-0201, 40 WTD 242 (2021).

Meet Bingo! Better than any board game, Bingo is a one-year-old French bulldog belonging to Eversheds Sutherland Partner Charlie Kearns and his family. Bingo earned his moniker from Charlie’s daughter, Ella, and the origin of his name still remains a mystery.

Bingo’s favorite “approved” treats are Greenies, which are good for his teeth. But, he has several “unapproved” favorites, which shall remain undisclosed.

He also used to a have a dual bad habit, munching on both crayons and legos; but, after a late night visit to the emergency room, Bingo’s mom and dad had to nip his extracurricular activities in the bud.

He doesn’t limit his taste to off limits treats or activities. His favorite musician is David Bowie, especially the Berlin Trilogy, and his favorite athlete is former Washington Nationals ace Max Scherzer.

When he isn’t stirring up trouble or focused on sports, Bingo likes to nap, cuddle, snore, go to the dog park, make funny faces and chase Ella around the house. He’ll occasionally go for walks or play ball, but he has to be in the mood.

Welcome to the SALT Pet of the Month family, Bingo! We’re happy to have you.

On January 31, Eversheds Sutherland Partner Nikki Dobay will present during the American Bar Association’s Virtual 2022 Midyear Tax Meeting, which covers the latest federal, state and local tax policies and more.

As a panelist, Nikki will discuss various ways to challenge a local tax, many of which are unique to the limited jurisdiction possessed by localities.

For more information about the meeting and how to register, click here.

In a decision dated January 18, 2022, the Arkansas Office of Hearings and Appeals (OHA) held that a married couple remained domiciled in and residents of Arkansas for individual income tax purposes for the 2013 through 2018 tax years, rejecting the couple’s assertion that they had abandoned their Arkansas domicile by relocating to another state.

While the couple purchased a condo, registered to vote, and obtained drivers’ licenses in another state, and split their time between Arkansas and the other state during these years, credit card records indicated that they spent a significant amount of time in Arkansas over the same period. Further, the couple kept their house in Arkansas and stayed there while in the state. They also claimed the Arkansas homestead tax credit for their residence in Arkansas for each of the years at issue and did not claim a similar credit in another state, had bills from all of their properties mailed to their Arkansas address, and registered at least two companies in Arkansas between 2013 and 2018.

Based on these facts, and emphasizing the couple’s retention of their Arkansas house and the claiming of the homestead tax credit with respect to the property, the OHA concluded that the couple never abandoned their Arkansas domicile and thus remained residents of the state for income tax purposes.

Dkt. Nos. 22-046 through 22-051 (Ark. Office of Hearings and Appeals, Jan. 18, 2022).

On January 27, Washington Governor Inslee signed Washington HB 1732 and HB 1733 into law, which would delay the start of the long-term care program known as the Washington Cares Fund, just one day after the bills passed in the Washington legislature.

As signed, HB 1732 delays the implementation of the program by 18 months. The law allows for the refund of any amounts that taxpayers saw reduced from their paychecks after the tax to fund the program went into effect on January 1 and also modifies the conditions for becoming a qualified individual and eligible beneficiary by allowing for the extension of benefits to persons born before January 1, 1968. As signed, HB 1733 establishes voluntary exemptions to the program by providing exemptions for: (1) persons residing outside of Washington while working in the state, (2) veterans with a service-connected disability of 70 percent or higher, (3) spouses or domestic partners of active duty service members, and (4) persons working in the United States under a temporary, non-immigrant work visa.

Beginning in July 2023, Washington workers will be required to pay a $0.58 tax on every $100 and eligible residents will be able to receive long-term care services and support costing up to $36,500 over their lifetimes.

In this episode of the SALT Shaker Podcast focused on policy issues, host and Eversheds Sutherland Partner Nikki Dobay welcomes fellow SALT Partner Charlie Kearns. Together, they dive into the tax bills coming out of the states as the legislative sessions begin. Charlie and Nikki focus on the trends and proposals that have caught their attention, and opine on what they think might make it across the finish line later this year.

Nikki’s surprise non-tax question focuses on an Ohio superstar—Fiona the Hippo. Specifically, they discuss how they both feel about hippos!

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

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The Missouri Department of Revenue released a private letter ruling issued in December 2021 determining that a company’s private wireless network was not subject to Missouri sales tax. The company provides wireless services in Missouri, including voice, messaging, Internet access and private network services. The private network services provide machine-to-machine data transmission, which is segregated from the public internet and not connected to the public switched telephone network. The private network services allow for secure connections between a customer’s internal network and wireless-enabled devices located within the coverage area served by the company’s wireless network. The Department concluded that the private network services was not taxable as a telecommunications service as it was not an “interconnected” service connected to the public switched network and was not captured within the definition of any other enumerated taxable 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: How long does New York’s recently-released fiscal year 2023 Budget Bill propose the film production and post-production credits be extended?

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!