A Massachusetts representative has introduced House Bill 4179, a proposed 6.25% excise tax on gross revenue from digital advertising provided within Massachusetts. Following its introduction, House Bill 4179 was referred to the Legislature’s Joint Committee on Revenue for review. The bill proposes to tax revenue sourced to Massachusetts arising from banner advertisements, search engine advertising, interactive full screen ads, and “other comparable advertising services” and sourced based on the IP address. Following the passage of the digital advertising tax in Maryland, this bill is the fourth different digital advertising tax proposal introduced in the Massachusetts legislature this year, in addition to a proposal attempting to establish a commission to study taxing digital advertising in the Commonwealth.

Residency/domicile is a critical issue in a state-tax analysis because, as a general principle, a state taxes its own residents on all their income from whatever sources it is derived (typically with a credit mechanism for some or all tax paid to another state on that same income). However, regardless of residency and regardless of whether the individual has any physical presence in the state, a state may also tax a nonresident upon income that has a “source” in that state. The devil is in the details, and the tax law of each state is filled with unique pitfalls and traps for the unwary regarding their definitions of residence, domicile, and source income.

In the October issue of the Journal of Financial Planning, Senior Counsel Eric Coffill discusses five recent decisions, from five different states, that illustrate some of the common issues and general principles encountered in analyzing and planning for residency/domicile and source income issues.

On October 12 and 13, Eversheds Sutherland Partner Nikki Dobay will present on two panels during the Western States Association of Tax Administrators (WSATA) 2021 annual meeting. Nikki will participate in a panel discussing recent court decisions at the state and federal level that are important to departments of revenue and taxpayers, as well as an industry panel addressing states’ questions. 
In addition, Eversheds Sutherland Partners Eric Tresh and Maria Todorova will participate in panel sessions during TeleStrategies’ 2021 Communications Taxation Conference. Eric will provide an update on key litigation and controversies involving the taxation of newer technologies, and Maria will cover policy considerations for and against gross receipts taxes.
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 is joined again by Rob Gutierrez, President and CEO of the California Taxpayers Association (CalTax) for round two of their discussion. Catch up on part one here.

Rob updates Nikki on the final days of California’s latest legislative session, including movement on specific legislation, and provides details on legislation that will carry over into the 2022 session. He also provides an update on the recent governor recall, and what impact it may have over the next year to 18 months. He also discusses the 2022 ballot initiatives you should have on your radar. They then wrap up with the surprise, nontax question – what’s your favorite musical?

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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On September 20th, the Los Angeles County Superior Court held that local video service provider fees do not apply to streaming video providers. This decision is consistent with a prior decision by the United States District Court for the District of Nevada, which held that streaming video providers were not subject to Nevada localities’ franchise fees, along with recent decisions by the United States District Courts for the Western District of Arkansas and the Eastern District of Texas. See City of Ashdown, Arkansas v. Netflix, Inc. & Hulu, LLC, Case No. 4:20-cv-4113 (W.D. Ark. 2021); City of New Boston, Texas v. Netflix, Inc. & Hulu, LLC, No. 5:20-CV-00135-RWS (E.D. Tex. 2021).

The city of Lancaster filed a class action complaint against two streaming video providers, claiming that they provide video services in California using broadband wireline facilities located at least in part in public rights-of-way, and thus must pay local video service provider fees imposed under California’s Digital Infrastructure and Video Competition Act (the Act). After holding that California localities such as Lancaster lacked the right to bring a case under the Act against streaming video providers, the court further concluded that the local video service provider fees imposed by the Act do not apply to the streaming video providers.

The court reached this decision for two primary reasons. First, the streaming video providers’ use of Internet service providers’ networks to distribute their content does not constitute the type of “use” of the public right-of-way rendering them liable for the local video service provider fees. Second, the court concluded that the streaming video providers do not meet the definition of a “video service provider” that provides “video programming” under the Act because the streaming video providers’ services were not comparable to the live, linear, channelized, scheduled, or programmed programming provided by a television broadcast station.

City of Lancaster, California v. Netflix, Inc., et al., Case No. 21STCV01881 (Los Angeles Cnty., Cal. Super. Ct. Sept. 20, 2021).

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: The Maine Board of Tax Appeals disallowed a resident individual taxpayer’s claim for a Maine income tax credit for taxes paid to which state?

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 September 30, California Governor Gavin Newsom signed AB 1402, which amends California’s sales and use tax law to require marketplace facilitators to register, collect, and remit certain fees on the retail sale of various items of tangible personal property sold in California. Under current law, a marketplace facilitator that facilitates the retail sale of tangible personal property is treated as the retailer for purposes of collecting and remitting sales tax. The new law expands marketplace facilitators’ collection responsibility beyond sales and use tax to specifically require collection of (i) the California tire fee, (ii) the covered electronic waste recycling fee, (iii) the lead-acid battery fee, and (iv) the lumber products assessment fee. The law takes effect on January 1, 2022.

On October 4, 2021, the United States Supreme Court denied certiorari in an appeal from a decision of the Second Circuit which held that New York’s opioid stewardship payment, required as part of the New York Opioid Stewardship Act constituted a tax and not a fee for purposes of the Tax Injunction Act, barring federal court jurisdiction over the case.

Read the full Legal Alert here.

On this episode of the Salt Shaker Podcast, host and Eversheds Sutherland Associate Jeremy Gove continues his discussion of local taxes with Partners Nikki Dobay and Breen Schiller. They expand on their prior discussion of municipal-level economic nexus provisions, the potential issues with their expansion and the potential legal issues regarding the attempt to enforce a local economic nexus standard. They then talk about the myriad of challenges taxpayers face regarding local tax audits and administration, including the hurdles created by localities’ use of third-party auditors.

They wrap their discussion with Jeremy’s favorite question – overrated or underrated? This time, regarding puppets and marionettes vis a vis boy bands.

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

 

 

 

 

 

 

 

 

 

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