Shaking things up in state and local tax
Shaking things up in state and local tax
By Stephanie Do and Andrew Appleby
The Texas Comptroller determined that an integrated circuit manufacturer’s purchases of software tools used to design and test the software code embedded in its semiconductor chips did not qualify for the manufacturing exemption for sales and use tax purposes. For Texas’s manufacturing exemption, software manufacturing begins with software design…
By Derek Takehara and Andrew Appleby
The Oklahoma Tax Commission issued three Letter Rulings addressing the digital economy. First, the Commission ruled that receipts from sales of digital photos, videos and designs delivered via the Internet are not subject to sales tax when no tangible item is conveyed. The Commission also ruled that charges for…
By Mary Alexander and Andrew Appleby
The Indiana Department of Revenue disallowed a taxpayer’s deduction for interest expenses accrued to a subsidiary because the Department considered the loan a sham. Unless eligible for an exemption under Ind. Code § 6-3-2-20(c), a taxpayer that is subject to Indiana’s adjusted gross income tax is required to add…
By Zachary Atkins and Prentiss Willson
The Colorado Supreme Court held that the Colorado Division of Property Taxation did not violate a public utility’s equal protection and uniformity rights by valuing and taxing its property differently than cable companies’ property. The public utility, Qwest Corporation, is a telecommunications service provider that competes with cable companies for…
By Maria Todorova and Jack Trachtenberg
The U.S. District Court for the Southern District of Ohio ruled that the Tax Injunction Act (TIA) served as a jurisdictional bar, depriving the court of subject matter jurisdiction in a case involving claims of a discriminatory real property foreclosure proceeding and unpaid property taxes. The taxpayers challenging the…
By Scott Booth and Prentiss Willson
The Vermont Supreme Court held that coupon books distributed monthly, within a free weekly newspaper and also separately distributed on news racks, were not “component parts” of the newspaper, and thus were not exempt from Vermont sales and use tax as newspapers. Vermont exempts newspapers and tangible personal property…
By Jessica Kerner and Pilar Mata
In an Advisory Opinion, the New York State Department of Taxation and Finance held that a taxpayer developing a data center for Internet services is eligible for the State’s sales and use tax exemption pertaining to Internet data centers. In order to qualify for the exemption, the tangible…
In a case that is interesting both substantively and procedurally, the Mississippi Supreme Court held that a consumer lending subsidiary of a national bank was subject to the Mississippi Finance Company Privilege Tax. Miss. Dep’t of Revenue v. Pikco Finance, Inc., 2012 WL 3031281 (Miss. July 26, 2012). In ruling for the state, the…
Georgia Governor Nathan Deal signed three bills that will enact a wide range of changes to Georgia’s tax structure and procedure (HB 386, HB 100, and HB 846). These changes include a new sales tax exemption for energy used in manufacturing, an affiliate nexus provision, creation of a new Georgia Tax Tribunal, publication of letter rulings, and changes to the taxation of motor vehicles, among others. The bills are the culmination of the comprehensive tax reform effort started in 2010 by the Tax Reform Council. While the bills fall short of the dramatic changes originally proposed by the Council (which included taxation of services and groceries, and communications tax reform), they nevertheless include a number of taxpayer-friendly changes.Continue Reading Georgia Tax Reform 2.0: Three Bills Signed by Governor
Taxpayers frequently challenge tax laws based on equal protection grounds, but states generally prevail on the rather easily met rational basis test. In a noteworthy Iowa decision, Qwest, an incumbent local exchange telecommunications company (ILEC), successfully argued that the application of two property tax exemptions resulted in unconstitutional discrimination against it in favor of competitive long distance companies (CLDCs) and wireless companies. Qwest Corp. v. Iowa State Bd. of Taxation and Revenue, Docket No. CV008413 (Iowa Dist. Ct. Aug. 17, 2011).
The first subject of Qwest’s challenge was an exemption for personal property acquired by CLDCs after 1995 that was available to “long distance telephone companies,” the definition of which specifically excluded ILECs like Qwest. The second aspect of Qwest’s challenge involved the state’s central assessment property tax scheme. Iowa law exempts all personal property from tax, but for centrally assessed telephone companies like Qwest, the state treats all property as “real property.” All “telephone companies” operating a telecommunications line in the state are subject to central assessment. The state did not classify wireless companies as telephone companies, because the wireless companies use radio wave technology and not a network of cable and wires. Therefore, Qwest paid tax on the value of all of its property, while wireless companies did not pay tax on personal property.Continue Reading Iowa Court Upholds Equal Protection Challenge
