Shaking things up in state and local tax
Shaking things up in state and local tax
When a company undertakes a financing transaction, federal and state income tax considerations most frequently take priority in the tax department. In certain financing transactions, however, one would be remiss to ignore potential sales tax issues that can be traps for the unwary.
Reprinted from the Journal of Multistate Taxation and Incentives (Thomson Reuters/Tax &…
By Samantha Trencs and Andrew Appleby
A South Carolina administrative law judge (ALJ) determined that cell phone insurance is not subject to South Carolina sales tax even though the wireless provider sells it with taxable communication services.
Alltel provided its wireless customers with an option to purchase insurance for the loss, theft or damage to…
By Liz Cha and Timothy Gustafson
In its first decision on combined unitary reporting since Vermont adopted combined reporting in 2006, the Vermont Supreme Court held that the AIG insurance group was not unitary with its wholly owned ski resort subsidiary, Stowe Mountain Resort. Applying the U.S. Supreme Court’s test for unity articulated in Mobil…
By Zachary Atkins & Prentiss Willson
The Massachusetts Supreme Judicial Court (SJC) refused to allow a taxpayer, a financial institution, to assign its loan portfolios based on the location of third-party loan servicing activities for purposes of calculating its financial institution excise tax property factor. The taxpayer earned flow-through interest income through its residual beneficial…
By Todd Betor and Andrew Appleby
The Chief Administrative Law Judge (ALJ) of the New York City Tax Appeals Tribunal ruled that The McGraw-Hill Companies, Inc., may source its receipts from Standard & Poor’s (S&P) public credit rating business using an audience-based method. The ALJ first determined that S&P’s ratings receipts are “other business receipts&rdquo…
By Nicole Boutros and Timothy Gustafson
The New York State Department of Taxation and Finance issued an advisory opinion determining that a securities broker may source receipts from “matched principal transactions” based on the “production credit method” provided in New York tax law. The taxpayer was a U.S. entity operating in six states, including New…
By Scott Booth and Andrew Appleby
The Massachusetts Governor released his proposed fiscal year 2015 budget, which includes a tax provision that is targeted directly at the insurance industry. Currently, income earned by pass-through entities, such as partnerships, owned by licensed life or property and casualty insurers is excluded from Massachusetts income tax because…
By Scott Booth and Andrew Appleby
Although states continue to challenge the validity of captive insurance companies, Wendy’s has notched several taxpayer victories. In a win involving Scioto Insurance Company (Scioto), Wendy’s captive insurance company, the Illinois Appellate Court held that Scioto constituted a bona fide insurance company that was properly excluded from Wendy’s combined…
By Madison Barnett and Timothy Gustafson
In a case involving the exclusion of captive insurance companies from combined reporting groups, the Indiana Tax Court held that a captive must be physically present in Indiana to be “subject to” the insurance premiums tax and therefore exempt from the corporate income tax. The Tax Court initially…
By David Pope and Jack Trachtenberg
The New York State Department of Taxation and Finance has determined that a financial services firm is not subject to the New York State sales and use tax because the product being sold by the taxpayer constitutes a single, integrated, nontaxable service. The taxpayer provides its clients with investment…
