In a private letter ruling, the Illinois Department of Revenue ruled that an out-of-state taxpayer that provided software subscriptions and related hardware for one bundled price was subject to the Service Occupation Tax, not the Retailers’ Occupation Tax, Use Tax, or Service Use Tax. The customer owns the hardware, but the taxpayer retains ownership of the embedded firmware. The Department concluded that the taxpayer is acting as a “serviceman” offering cloud-based services. The taxpayer’s charges for software and firmware are transferred to the customer incident to the cloud-based service and are taxable. As a serviceman, the taxpayer may choose one of four ways to calculate tax—in this case, the taxpayer did not wish to separately state tangible personal property, and therefore was required to collect the service occupation tax based on 50% of the entire bill.

On November 8, Eversheds Sutherland Partner Nikki Dobay will present a SALT update for the Texas Society of CPAs during their 2021 Summit, which highlights topics in estate planning, state taxation and general tax. Registration and event information can be found here.

In addition, Eversheds Sutherland Partner Jeff Friedman will present Ongoing Teleworking and Multiple Workplace Issues Like Nexus for Employers, Convenience of the Employer Rule, Etc. at the Advanced Tax Institute 2021, co-sponsored by the Maryland State Bar Association Section of Taxation Law and the Maryland Association of CPAs.

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

In this episode of the SALT Shaker Podcast policy series, host and Eversheds Sutherland Partner Nikki Dobay welcomes back Jeff Newgard, Principal and Owner of Peak Policy, as well as Stephanie Do, Senior Tax Counsel for the Council On State Taxation (COST).

They team up with Nikki to discuss the intricacies of corporate tax disclosures, including recently-introduced ballot initiative 21-23 in Massachusetts. They cover the initiative’s status, concerns associated with it and how it may fare in the future. In addition, Jeff reviews the history of public tax disclosure legislation in Oregon and opines on whether there should be concerns that such legislation might be back in 2022. Collectively, they express concern with disclosure bills generally and how it affects tax policy discussions.

Then, they wrap up with Nikki’s surprise non-tax question – what is your favorite Halloween costume?

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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Iowa recently issued updated guidance regarding the taxation of specified digital products, software and related services. The guidance provides that web hosting is not a taxable service, explaining that, as opposed to web-based storage, web hosting “is focused on the publication of the data and not its mere storage.” Therefore, the guidance concludes that web hosting is a web-based service that is not specifically enumerated as taxable in Iowa.

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 proposed a rule expanding the state’s sales tax to cloud computing, defining “cloud computing” as “the delivery of computing resources, including software applications, development tools, storage, and servers over the Internet?”

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!

Trick or treat? This All Hallows’ Eve, the Eversheds Sutherland SALT team wasted no time getting in the spirit.

Take a look at some of the fun and creative costumes from our team members and their families – including pets!

Please share your SALT family costumes with us at SALTonline@eversheds-sutherland.com!

 

 

1: Tori Caracci and her husband Matthew dressed as Shaggy and Velma from Scooby Doo, with their dog as Scooby.

2: Candice Alba’s son Marcos braved a Halloween graveyard.

3: Partner Breen Schiller’s daughters Avery and Quinn dressed up as Captain Marvel and Evil Audrey from Descendants 3, while Breen’s son Sullivan represented the White Sox as Tim Anderson.

4: Partner Maria Todorova and her family opted to be a skeletal crew, while her daughter Addison dressed up as Runa Yomozuki, an anime character.

5: Partner Charlie Kearns donned his best Hawaiian attire as Armond from HBO’s The White Lotus, while his daughter Ella looks on skeptically as a bat.

6: Associate Laurin McDonald’s daughter Lola took on crime as Batgirl.

7, 8: Paralegal specialist Jaime Lane’s daughter Cassidy and son Cooper opted to be a cowgirl (who unfortunately got kicked off her horse!) and Michael Myers.

9: Melissa Bragg and her husband Mike posed with their daughters Madelyn and Emma, who dressed up as Carmen Sandiego and the Mad Hatter.

10, 11: Partner Tim Gustafson’s daughter Cate and son Luke challenged other trick or treaters as Princess Leia and a ninja, while Tim also got in on the fun as a grown-up Prince Adam.

12: Business development coordinator Pamela Wimmer’s son Nathan snatched up plenty of candy as Spiderman.

 

13: Partner Jonathan Feldman and his wife opted to go as David S. Pumpkins and Darcy S. Pumpkins, while his kids chose a pig and pepperoni pizza costumes.

14: Partner Nikki Dobay’s furchild Grapes enjoyed the neighborhood visits as a lion.

On November 2, Eversheds Sutherland Partners Nikki Dobay and Breen Schiller will support a webinar series for the Tax Executives Institute (TEI) Chicago Chapter. Their presentation will review recent Illinois cases and provide a legislative overview/outlook.

Partners Nikki Dobay and Breen Schiller will also join Partner Charlie Kearns in presenting webinars for the Michigan Tax Conference from the Michigan Association of CPAs. Topics include:

  • November 3 – Nikki Dobay – Where Do Michigan Companies and Their Owners Pay Tax?
  • November 4 – Charlie Kearns – Digital Advertising & Services: There’s a Tax for That?
  • November 4 – Breen Schiller – Ethical Dilemmas in a Technological World

Eversheds Sutherland is also sponsoring the California Tax Policy Conference, which will be held this week in San Diego, CA. Virtual attendance is offered, and registration and event information can be found here. Associate Annie Rothschild will co-present Office of Tax Appeals: Looking Back and Looking Ahead on November 4.

Finally, members of the Eversheds Sutherland SALT team will present at the Bank & Capital Markets Tax Institute in Orlando, FL. Virtual attendance is offered, and registration and event information can be found here. Eversheds Sutherland attorneys Ted Friedman, Michael Hilkin and Laurin McDonald will co-present a SALT workshop, providing an overview of the latest in state tax policy and controversy impacting the financial services industry.  The session will include a review of leading state tax cases, audit issues and other current developments.

In this episode of the SALT Shaker Podcast, host and Eversheds Sutherland Associate Jeremy Gove is joined by Partner Jeff Friedman to discuss how Congress’s preemption of state tax laws is not commandeering. Jeremy and Jeff discuss Jeff’s recent article on the topic published in Tax Notes State, co-authored by Associate Alla Raykin, and how the federal laws governing state taxation are constitutional, despite arguments to the contrary. 

Jeff and Jeremy also cover the history of the anti-commandeering doctrine, and how it is inapplicable to noteworthy federal laws in state tax, such as the Internet Tax Freedom Act and Public Law 86-272. They wrap up their discussion with Jeremy asking Jeff – is apple cider overrated or underrated?

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

 

 

 

 

 

 

 

 

 

 

 

 

 

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The Louisiana Department of Revenue (the Department) issued Revenue Information Bulletin No. 21-029 (the Bulletin), inviting corporate income taxpayers to resolve intercompany transfer pricing issues via the Louisiana Transfer Pricing Managed Audit Program (the Program) beginning on November 1, 2021. The purpose of the Program is to “create an efficient and expedited resolution for corporate tax audits” involving transfer pricing issues and provide “certainty and uniformity to taxpayers on the resolution of transfer pricing issues for open audit periods and a defined period of future tax years.” Requests for approval to participate in the Program must be received by the Department on or before April 30, 2022.

Read the full Legal Alert here.