Shaking things up in state and local tax
Shaking things up in state and local tax
By Mary Alexander and Andrew Appleby
The Tennessee Court of Appeals held a wide area network (WAN) service provided by IBM was not taxable because the true object of the service was not a “telecommunications service.” IBM’s WAN service was a technological infrastructure that enabled remote access to information by linking geographically separated computers. The…
In a 6-1 decision, the Illinois Supreme Court affirmed an Illinois Circuit Court holding that Illinois Public Act 96-1544 (The Click-Through Nexus Act), requiring out-of-state retailers to collect and remit use tax, violates the Internet Tax Freedom Act. Performance Marketing Ass’n v. Hamer, Docket No. 114496 (Oct. 18, 2013).
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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 Shane Lord and Timothy Gustafson
The Tennessee Court of Appeals held that a taxpayer’s wholesale service of converting end-user information into Internet protocol was an “enhanced” service for which the true object or primary purpose was to provide the non-taxable service of “Internet access” and not the taxable service of “telecommunications.” Adopting definitions set forth…
By Nicole Boutros and Pilar Mata
The U.S. Court of Appeals for the Second Circuit determined that dial-up internet services were taxable local telephone services when analyzing an Internal Revenue Service bankruptcy claim for federal excise taxes (FET). The taxpayer, WorldCom, Inc., purchased central-office-based remote access (COBRA) services from local telephone companies to provide internet…
By Kathryn Pittman and Andrew Appleby
The Arizona Department of Revenue determined that a taxpayer providing online backup and restoration services was subject to Arizona’s transaction privilege tax (TPT) after concluding that the receipts from such services were taxable as rentals of prewritten software. The taxpayer provided services that automatically backed up and restored files. As…
By Mary Alexander and Prentiss Willson
The Arizona Department of Revenue determined in a private letter ruling that gross receipts from “renting” prewritten software available online are subject to Arizona’s transaction privilege tax (TPT). The definition of tangible personal property for purposes of the TPT includes the electronic delivery of software. Thus, according to the…
By Suzanne Palms and Andrew Appleby
The Arizona Department of Revenue determined that shipping and handling fees were subject to Arizona’s transaction privilege tax (TPT). The company sold tangible personal property via the Internet. The company’s affiliates fulfilled the orders, which included activities such as labeling, packaging and shipping the items via common carrier. The…
By David Pope and Prentiss Willson
The New Jersey Division of Taxation concluded in a technical bulletin that sales of cloud computing services are not subject to sales and use tax in New Jersey. Although this is not a change to the Division’s position, the bulletin specifically identifies software as a service (SaaS), platform as…
By Sahang-Hee Hahn and Andrew Appleby
Effective September 1, 2013, Texas will refund state sales and use taxes paid by providers of cable television, Internet access or telecommunications services on tangible personal property used in their businesses. On June 14, 2013, Governor Rick Perry signed H.B. 1133 into law, authorizing such refunds. Under the new…
