The Washington Department of Revenue recently released informal guidance regarding the taxability of online instructional classes. The guidance states that live classes where participants can interact in real-time with the presenter are not subject to sales tax; however, pre-recorded videos and classes are subject to sales tax. This distinction focuses on the live ability to interact with the presenter—a chat room or help desk would not be sufficient to classify a class as not taxable. As examples, the guidance states that a fitness studio’s classes with two-way video and audio connectivity is not subject to sales tax, regardless of whether the charges are a monthly subscription fee or pay-per-class. However, a service that charges customers a monthly fee for live-streamed online cooking classes are subject to sales tax because there is no real time interaction between the presenter and the students.

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: When will New Jersey restore pre-pandemic nexus standards, ending its temporary waiver of certain corporation business tax (CBT) and sales tax nexus standards necessitated by the COVID-19 pandemic?

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 1, Eversheds Sutherland Partner Breen Schiller will participate in an industry panel during the 2021 Midwestern States Association of Tax Administrators (MSATA) annual conference, responding to states’ questions of interest. For more information or to register, click here.

In addition, Eversheds Sutherland Partners Breen Schiller and Eric Tresh will participate in the American Petroleum Institute’s State, Local and Franchise Tax (SLIFT) virtual event on September 2.

The Eversheds Sutherland SALT team has continued to be active in presenting on dynamic, hot topics in state and local tax around the country. We have an ongoing involvement with various tax, state tax and industry-specific organizations and interest groups.

View and learn more about past and upcoming events and presentations.

On August 31, 2021, the Maryland Comptroller filed proposed regulations on the controversial digital advertising gross revenues tax (the DAT) with the Joint Committee on Administrative, Executive, and Legislative Review. Of primary interest to potential DAT taxpayers, and described in this Legal Alert, the regulations adopt a device-based apportionment fraction. The comment period for the proposed regulations runs through November 8, 2021; a public hearing will be scheduled at a later date.

Read the full Legal Alert here.

On August 25, 2021, the New York State Department of Taxation and Finance released guidance (Technical Memorandum, TSB-M-21(1)C, (1)I) addressing the recently enacted optional pass-through entity tax (PTET) that partnerships and New York S corporations may elect to pay for tax years beginning on or after January 1, 2021.

Read the full Legal Alert here.

In an article for Bloomberg Tax, Eversheds Sutherland attorneys Dan Schlueter and Fahad Mithavayani highlight how Hawaii and Texas are the latest states to join the trend to restrict the discoverability of attorney communications with expert witnesses and what it means for state tax litigation.

On August 17, 2021, the Ohio Department of Taxation finalized amendments to its rule governing the determination of resident status for personal income tax purposes. See our prior coverage of the draft (now finalized) rule here. The amendments are intended to modernize the factors to be considered – and to be disregarded – in determining an Ohio taxpayer’s residency status.

Ohio Admin. Code 5703-7-16 (available here).

In this episode of the SALT Shaker Podcast policy series, host and Eversheds Sutherland Partner Nikki Dobay welcomes Dale Craymer, President of the Texas Taxpayers and Research Association (TTARA), as well as Eversheds Sutherland Associate Dennis Jansen for a discussion about all things Texas.

Dale provides an overview of TTARA’s work, as well as how Texas’s legislative session was impacted by COVID-19 and the winter storm. Dale, Nikki and Dennis then discuss accomplishments in the most recent legislative session, including important changes to tax protest procedures, marketplace facilitator legislation, and whether any tax policy will be discussed during the special session. All of these topics are covered before turning to the surprise non-tax question – everyone’s favorite movie!

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.

 

 

 

 

 

Listen now: 

Subscribe for more:

   

Apple recently appealed an Ohio Commercial Activity Tax (CAT) assessment, alleging that the Department of Taxation improperly treated receipts from sales made through its app store as Apple’s receipts for purposes of determining its tax base under the CAT.  Ohio law allows agents to exclude gross receipts (other than commission) from the agent’s CAT base. Apple argues that under this law, Apple acted as an agent in collecting receipts on behalf of the app’s publisher. Thus, Apple’s gross receipts for CAT purposes are only the commission, not the full app price paid that Apple collects on the publisher’s behalf. Apple also asserted that the Department improperly included receipts in its CAT base for sales made to Ohio retail distribution centers or warehouses, which are excluded from the CAT when the item is shipped from the distribution center to a destination outside Ohio.

Effective August 6, 2021, Illinois amended its unclaimed property law to include cryptocurrency. SB 338, Public Act 102-0288, was approved by the Governor and became law the same day. Under the unclaimed property law, “virtual currency” is presumed unclaimed after 5 years of no indication of interest by the apparent property owner. The new law amends the definition of “virtual currency” to specifically include “cryptocurrency” or “a form of digitally stored value, which does not have legal tender status recognized by the United States.” Once virtual currency is abandoned, the holder must liquidate the virtual currency and turn it over to the administrator. However, the virtual currency owner has no recourse to recover any gain in value against the holder who liquidated the virtual currency.