franchise tax

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The New York State Governor and Legislature recently enacted the 2014-2015 New York State Budget, Senate Bill 6359-D and Assembly Bill 8559-D (Budget), which results in the most significant overhaul of New York’s franchise tax on corporations in decades. In this edition of New York Tax Reform Made Easy, we will address the creation of the Prior Net Operating Loss deduction.
Continue Reading New York Tax Reform Made Easy: Net Operating Loss

The New York State Governor and Legislature recently enacted the 2014-2015 New York State Budget, Senate Bill 6359-D and Assembly Bill 8559-D (Budget), which results in the most significant overhaul of New York’s franchise tax on corporations in decades. In this edition of New York Tax Reform Made Easy, we will address the changes made to apportionment sourcing in computing a taxpayer’s apportionment factor.
Continue Reading New York Tax Reform Made Easy: Apportionment

The New York State Governor and Legislature recently enacted the 2014-2015 New York State Budget, Senate Bill 6359-D and Assembly Bill 8559-D (Budget), which results in the most significant overhaul of New York’s franchise tax on corporations in decades. In this edition of New York Tax Reform Made Easy, we will address how the Budget modifies the income tax base and changes various tax rates.
Continue Reading New York Tax Reform Made Easy: Business Income Base and Tax Rate

By David Pope and Pilar Mata

The New York Attorney General’s office posted a press release on March 14, 2014 announcing that Lantheus Medical Imaging (Lantheus) and Bristol-Myers Squibb (BMS), Lantheus’s former parent, agreed to a $6.2 million settlement for a claim filed pursuant to New York’s False Claims Act (FCA). Under New York’s FCA…

By Sahang-Hee Hahn and Timothy Gustafson

The New York Supreme Court, Appellate Division, held that interest income derived from Xerox Corporation’s equipment financing agreements with governmental customers failed to qualify as “investment income” for New York Corporation Franchise Tax purposes. Xerox’s financing agreements consisted of two types: fixed purchase option leases and installment sales. Xerox…

By Zachary Atkins and Prentiss Willson

A Texas administrative law judge ruled that a taxpayer was not entitled to make an alternative three-factor apportionment election under Article IV of the Multistate Tax Compact (Compact) for Texas franchise tax purposes. The Texas Tax Code requires taxpayers to use a single gross receipts factor to apportion taxable…

By Christopher Chang and Jack Trachtenberg

The New York State Division of Tax Appeals (DTA) ruled that the dividend income received by a taxpayer holding company from its minority ownership in a publicly traded corporation constituted “investment income” for purposes of New York’s Article 9-A franchise tax on business corporations. The holding company held stock…

By Mary Alexander and Andrew Appleby

The New York State Department of Taxation and Finance determined that a women’s apparel company’s “inspirational shopping” trips were not sufficient to be considered “doing business” in the state for corporate franchise tax purposes. Petitioner was a traditional remote seller headquartered outside of New York. Petitioner’s employees occasionally traveled…

By Sahang-Hee Hahn and Prentiss Willson

The New York State Department of Taxation and Finance ruled in an Advisory Opinion that a Virginia corporation was subject to New York corporation franchise tax because it hired independent contractors to store its consigned inventory and to solicit orders from and deliver products to New York customers. In…

The Texas Supreme Court upheld the imposition of the franchise tax (often referred to as the Texas Margins Tax) under both the Texas and United States Constitutions. In Re Nestle USA, Inc., No. 12-0518 (Tex. 2012) (opinion delivered Oct. 19, 2012).

Nestle argued that the imposition of the franchise tax was unconstitutional, both facially and as applied.  In Texas, the franchise tax rate is 1%, except for those taxpayers “primarily engaged in a wholesale or retail trade,” for whom the rate is 0.5%. Nestle was engaged only in wholesale and retailing activities in Texas, but because it was engaged in manufacturing outside of Texas, it was subject to the 1% franchise tax rate rather than the lower wholesale/retail rate. Specifically, Nestle argued that the differential rate based on the wholesale/retail classification was unconstitutional under the Equal and Uniform Clause of the Texas Constitution and the Equal Protection, Due Process, and Commerce Clauses of the United States Constitution because the tax lacked a reasonable relationship with actual business in Texas and because of the fact that the tax is higher for those with a manufacturing business outside of Texas.Continue Reading That’s the Way the Cookie Crumbles: Nestle Loses Its Battle on the Constitutionality of the Texas Franchise Tax