Shaking things up in state and local tax
Shaking things up in state and local tax
By Zack Atkins and Eric Coffill
The Illinois Supreme Court invalidated a Chicago ruling obligating suburban car rental companies to collect Chicago’s personal property lease transaction tax on rental transactions occurring outside the city on the grounds that it violated the Illinois Constitution. The ruling, which the City of Chicago Department of Revenue issued in…
By Eric Coffill
FTB announced that it will pay 1% interest on corporation tax overpayments for the period July 1, 2017 through December 31, 2017. Previously, the last time FTB paid interest on corporation tax overpayments (i.e., refunds) was for the period ending June 30, 2009 (for which the interest rate on overpayments was 2%).
On December 29, 2016, a New York City administrative law judge (ALJ) determined that Sprint’s long distance telecommunications service fees were exempt from the City’s Utility Tax. In the Matter of the Petitions of U.S. Sprint Communications Co., LP, TAT (H) 14-12 (UT) et al. Sutherland represented Sprint in the matter.
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By Robert Merten and Madison Barnett
The San Diego County Superior Court determined that California’s combined filing regime—which requires interstate taxpayers to use combined reporting but permits intrastate taxpayers to choose between combined or separate reporting—does not violate the US Constitution’s Commerce Clause. The court acknowledged that (1) the interstate and intrastate unitary businesses were…
On January 12, 2017, the California Court of Appeal held in a published opinion that a taxpayer passively holding a 0.2 percent interest in a California-based limited liability company (CA LLC) was not “doing business” in the state for purposes of being subject to California’s franchise tax. The court reasoned as follows:
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On January 5, 2017, a New York State Division of Tax Appeals administrative law judge (ALJ) determined that a taxpayer’s electronic bill payment and presentation receipts constitute “service” receipts and not “other business receipts,” and are properly sourced where the service is performed. In the Matter of the Petitions of Checkfree Services Corp.
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By Zack Atkins and Tim Gustafson
The Washington State Department of Revenue ruled that an out-of-state baker whose only in-state “presence” was its use of in-state independent commissioned sales representatives to solicit orders had substantial nexus with Washington and therefore was subject to the state’s business and occupation (B&O) tax. The taxpayer contracted with the…
By Zack Atkins and Marc Simonetti
A federal district court denied a taxpayer’s motion to dismiss a lawsuit brought under the New York False Claims Act (FCA) for lack of subject matter jurisdiction and remanded the action to state court. The relator, an Indiana University professor, alleges that Citigroup violated the FCA by deducting net…
Tinkering with a state’s interest provisions can be a hidden way to increase revenue without expanding the base or increasing the tax rate—an important work-around for legislators who have pledged not to increase taxes. However, fundamental fairness requires states to follow specific tenets related to interest provisions. View this State Tax Notes article, which outlines…
By Jessica Allen and Jeff Friedman
The Tennessee Department of Revenue (Department) released a letter ruling stating that a taxpayer’s charges for use of its web-based interface are subject to sales and use tax as the sale of ancillary services. The taxpayer’s proprietary software allows users to communicate through text and other messages on a…
