Shaking things up in state and local tax
Shaking things up in state and local tax
By Zachary Atkins and Prentiss Willson
The Alaska Supreme Court held that a petroleum company and its subsidiaries were engaged in a unitary business and upheld the state’s use of an alternative apportionment formula for corporate income tax purposes. The taxpayer, Tesoro Corporation, was a petroleum refiner and marketer with its subsidiaries organized into five…
By Todd Betor and Andrew Appleby
The Illinois Department of Revenue granted a taxpayer’s request to use an alternative apportionment method, determining that application of the standard single sales factor formula did not fairly represent the market for the taxpayer’s goods, services or other sources of income. The taxpayer’s only sale during the year in…
By Madison Barnett and Prentiss Willson
The Indiana Department of Revenue determined in a Letter of Finding that an out-of-state information service provider must apportion its receipts from sales to Indiana customers to Indiana in a market-sourcing-like manner, even though the majority of its costs were incurred outside Indiana. The taxpayer provided information services electronically…
By Jessica Kerner and Andrew Appleby
The Virginia Tax Commissioner concluded that a taxpayer was not permitted to deduct a portion of the royalties it had paid to an affiliate by narrowly construing the “subject to tax” exception to the state’s addback statute. This exception provides that the deduction will be permitted if the “corresponding…
By Zachary Atkins and Andrew Appleby
An Arizona Department of Revenue hearing officer determined that the gross receipts from a taxpayer’s deemed asset sale pursuant to I.R.C. § 338(h)(10), including gross receipts attributable to goodwill, could not be included in the taxpayer’s sales factor for corporate income tax apportionment purposes. The taxpayer asserted that goodwill…
By Shane Lord and Prentiss Willson
The Missouri Administrative Hearing Commission held that a telephone company’s interest income received from its parent company was passive, non-Missouri source income and thus excludible from apportionable income as nonbusiness income. The interest income at issue was related to a note between the taxpayer and its parent company pursuant…
By Todd Betor and Pilar Mata
On July 3, 2013, the Michigan Supreme Court granted International Business Machines Corporation’s (IBM) motion for leave to appeal the Court of Appeals’ November 20, 2012, judgment in favor of Michigan in International Business Machines v. Department of Treasury, Michigan Supreme Ct., Case No. 146440. Consequently, the highest…
During the Multistate Tax Commission’s Annual Conference and Committee Meetings in San Diego on July 22, 2013, the Income and Franchise Tax Uniformity Subcommittee discussed its effort to redesign the financial institution apportionment rules. In addition, the Sales and Use Tax Uniformity Subcommittee will move forward in drafting a model nexus statute.
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By Stephen Burroughs and Timothy Gustafson
The Texas Comptroller determined that receipts received for the delivery of satellite programming to Texas subscribers should be sourced to the site of the subscriber’s set-top box for apportionment purposes. The taxpayer provides direct broadcast satellite television programming to subscribers in Texas and across the United States. For the…
By Stephen Burroughs and Andrew Appleby
The Mississippi Supreme Court held that the taxpayer bears the burden to prove that an alternative apportionment method imposed by the State is arbitrary and unreasonable. Rejecting the taxpayer’s original cost-of-performance filing position, the Department of Revenue applied an alternative apportionment method utilizing market-based sourcing. On appeal, the Chancery…
