Shaking things up in state and local tax
Shaking things up in state and local tax
By Elizabeth Cha and Scott Wright
The Texas Court of Appeals held that a seismic data gathering company was entitled to a cost of goods sold (COGS) deduction for costs of labor and materials incurred to acquire and process seismic data for its clients. Pursuant to Tex. Tax Code § 171.1012(i), a taxpayer may include…
On March 22nd, South Dakota Governor Daugaard signed into law Senate Bill 106, the passage of which may be the ultimate vehicle to challenge Quill at the U.S. Supreme Court. With landslide support in the South Dakota Senate and House of Representatives, S.B. 106 adopts an economic nexus standard for sales tax remittance and allows…
By Hanish Patel and Marc Simonetti
The Florida Department of Revenue (DOR) determined that the sale of certain online membership benefits—early, exclusive access to products and deals and unlimited cloud data storage—were not subject to Florida sales tax or the Communications Service Tax (CST). However, the DOR added that the taxpayer’s purchase of reorder button…
By Jessica Eisenmenger and Amy Nogid
The Florida Department of Revenue determined that software upgrades that are delivered electronically are not subject to sales tax because the upgrade was a stand-alone version of the software and did not rely on the earlier, physically-delivered software to operate. The Department also determined that sales tax does not…
By Todd Betor and Jonathan Feldman
On February 11, the Wisconsin Court of Appeals held that the receipts earned by Orbitz, an online travel company, from its services and markups for reserved rooms are not subject to sales tax. Specifically, the court determined that Orbitz is not “furnishing” rooms or lodging for purposes of Wisconsin…
Applying the “true object” test to the taxpayer’s web-based services, the Tennessee Department of Revenue ruled that charges for granting access to the taxpayer’s website for purposes of obtaining information would not be subject to sales tax. While the access to web-based services is tax-exempt as a sale of…
By Charles Capouet and Charlie Kearns
The Georgia Department of Revenue released a letter ruling stating that a taxpayer’s health-related information service was not subject to sales and use tax. The service includes a web portal to provide health information and track the user’s personal results and the in-person performance of an annual biometric health…
By Nicole Boutros and Jeff Friedman
The Director of the Arizona Department of Revenue affirmed an Administrative Law Judge determination that a taxpayer must pay the Transaction Privilege Tax on sales of access to the taxpayer’s subscription-based online research service. The Director reasoned that these sales were taxable as rentals of tangible personal property—and not…
On February 11, the United States Senate approved a permanent extension of the Internet Tax Freedom Act (ITFA), which previously passed the House of Representatives on December 15, 2015. Additionally, ITFA’s Grandfather Clause, which allows certain states to continue to tax Internet access, is phased out. President Obama is expected to sign the permanent extension …
By Chris Mehrmann and Charlie Kearns
The Tennessee Department of Revenue has issued guidance explaining that the retail sale of, use of, or subscription to a computer software maintenance contract is subject to sales and use tax when: (1) the maintenance contract is sold as part of a taxable sale of computer software; (2) the…
