In this episode of the SALT Shaker Podcast policy series, host and Eversheds Sutherland Partner Nikki Dobay welcomes back guest Meredith Beeson, Director of State Government Affairs with the Global Business Alliance (GBA). Her colleague Alan Pasetsky, Tax Policy Consultant with GBA, also joins the conversation.

Together, they delve into the corporate provisions included in the Build Back Better Act as passed by the House on November 19. In particular, they focus on the various changes proposed to 163—specifically changes to subsection (j) and the inclusion of a new subsection, (n). Alan and Meredith then discuss GBA’s position on these changes and the implications of these changes at the state level. Finally, they wrap up their policy discussion with thoughts on the changes to GILTI.

This week, Nikki’s surprise nontax question is very timely – do you like the traditional Thanksgiving meal?

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. This series, which is focused on state and local tax policy issues, is hosted by Partner Nikki Dobay, who has an extensive background in tax policy.

Questions or comments? Email SALTonline@eversheds-sutherland.com.

 

 

 

 

 

 

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The New York State Department of Taxation and Finance recently released advisory opinion TSB-A-20(70)S, concluding that a taxpayer’s service of creating and hosting websites and applications (apps) for mobile devices is nontaxable. The taxpayer’s customers are retailers of consumer goods, and the customer’s users access the website or app to purchase items from the retailer. The taxpayer does not charge for website/app creation, and instead recovers its costs through the fixed monthly service fee it charges for website maintenance and hosting. The taxpayer embeds code in the websites/apps so that it can provide analytics services to each customer. The Department concluded that website development services, including consulting, designing, creation, and updating or hosting are not enumerated services subject to tax and do not involve the transfer of any prewritten computer software. The analytics the taxpayer provides are also not a taxable information service in New York, because the information is unique to each individual, and is not incorporated in reports provided to other clients.

An employee’s state of residency, and in some cases the city and/or county of residency, may significantly affect their employer’s withholding tax obligations. Given the expected increase in permanent remote work, residency complications may exacerbate an employer’s state withholding compliance burdens.

In this SALT@Work column for the November/December issue of Journal of Multistate Taxation and Incentives, Eversheds Sutherland Partner Charlie Kearns provides some common examples where employee residency can affect employer withholding, then addresses the extent of an employer’s obligations to document and/or verify an employee’s residency status for state withholding purposes.

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: Where did the Multistate Tax Commission (MTC) hold its Fall Executive Committee and Uniformity Committee Meetings?

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!

A New York Division of Tax Appeals administrative law judge determined that a California-based company’s sale of memberships to access its online medical technology platform was the provision of a nontaxable service rather than a taxable sale of prewritten software. The company offered membership-based “care navigation services” to patients of physician-owned medical practices through a web portal and a mobile device application, providing various services such as: medical provider selection; referral management; billing and insurance assistance; and access to medical records through a web portal and a mobile application, among others. While agreeing that the care navigation services were nontaxable, the Department of Taxation and Finance nevertheless asserted that the membership fees constituted receipts from sales of software because the memberships gave access to and the right to use the company’s software. The ALJ disagreed, concluding that the primary function of the membership was receiving care navigation services, which were not enumerated as subject to tax. The ALJ held that using software as one means of delivery was insufficient to characterize the overall service as the taxable sale of software. Finally, the ALJ noted that the Department’s assessment did not violate the Internet Tax Freedom Act because the Department was “taxing the prewritten software used in offering [the care navigation] services, as it would if the prewritten computer software was sold by other means.”

Matter of 1Life Healthcare, Inc., DTA No. 829434 (Div. Tax App., Nov. 10, 2021).

On December 1, Eversheds Sutherland Partner Nikki Dobay will present a multistate tax update for the Associated Taxpayers of Idaho during its 2021 ATI Taxpayers Conference.

In addition, Eversheds Sutherland Partner Jeff Friedman will present Hot Topics in Multistate Taxation for the North Carolina Bar Association on December 2.

Finally, Eversheds Sutherland is a sponsor of COST’s Pacific Northwest Regional State Tax Webinar on December 2. Speakers and topics include:

  • Partners Michele Borens and Jeff Friedman – Discussion of State Tax Cases, Issues & Policy Matters to Watch
  • Partner Jeff Friedman – What’s New at the Washington Department of Revenue

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

Currently, there is no California conformity to GILTI, and GILTI is not part of the tax law in California unless and until the California Legislature adopts it.

In this column for the November/December issue of Journal of Multistate Taxation and Incentives, Eversheds Sutherland attorneys Eric Coffill and Annie Rothschild discuss the California Legislature’s recent effort to conform to GILTI, which failed, and why future attempts should be rejected.

Cuter than any star in the sky, meet Luna, our November Pet of the Month!

Belonging to Eversheds Sutherland Partner Jonathan Feldman, Luna the mini Goldendoodle joined the Feldman tribe during Hanukkah last year. Jonathan’s daughter, Anna, chose Luna’s name from the Harry Potter series, naming her after the character Luna Lovegood.

Luna enjoys car rides to Starbucks, and snacking on cheese. She has also been known to steal socks from the dryer, but with a face that adorable, who could blame her?

Take a look below at throwback pictures of sweet Luna, showing off how cute she was at 12 weeks old.

Welcome to the SALT Pet of the Month family, Luna!

 

 

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’s Department of Revenue recently issued guidance to remote sellers providing that while a remote seller is not required to collect tax on its first $100,000 in sales for purposes of determining when economic nexus first begins, remote sellers should advise purchasers they have a use tax obligation if no tax is collected on the sale?

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!

In a recently published private letter ruling, the Kentucky Department of Revenue concluded that a taxpayer’s service via a Software as a Service (SaaS) model was not a transfer or sale of tangible personal property, and therefore not a taxable transaction. The taxpayer in the ruling charged for access and use of its web-based software, which also included a free downloadable application to enhance the SaaS product. The ruling stated even though the optional application is a pre-written software component, it is offered for free and is a de minimis portion of the offering, and therefore does not convert the SaaS product into a taxable bundled transaction.