Shaking things up in state and local tax
Shaking things up in state and local tax
By Mike Kerman and Madison Barnett
The Indiana Tax Court granted summary judgment to Rent-A-Center East, Inc. (RAC), finding that the Department of Revenue’s determination that RAC and two affiliates should have filed a combined return was improper. This case was on remand from a prior Indiana Supreme Court ruling (please see our prior coverage…
By Charles C. Capouet and Madison J. Barnett
The Indiana Department of Revenue determined that a taxpayer’s sales of merchandise return-related services to retailers are not subject to Indiana sales and use tax. The Department addressed the taxability of three services: (1) the Merchandise Authorization Service (MAS), which utilizes the taxpayer’s proprietary database and risk-scoring…
By Charles C. Capouet and Andrew D. Appleby
The Indiana Department of Revenue found that software training is not subject to sales and use tax because it does not constitute tangible personal property. The Department audited the taxpayer and assessed additional use tax on its purchase of a software license agreement. Nearly half of the…
By Jonathan Maddison and Timothy Gustafson
The Indiana Department of Revenue determined that forced combination of an Indiana taxpayer, its wholly owned disregarded entity and its out-of-state parent company was appropriate where the disregarded entity generated 92% of the federal consolidated group’s sales but only 0.14% of the consolidated taxable income for the taxpayer. The…
By Zachary Atkins and Andrew Appleby
The Indiana Department of State Revenue upheld an audit determination that an intellectual property arrangement between a parent company and its wholly owned subsidiary distorted the parent company’s income. The parent company, a separate-return filer for Indiana, adjusted gross income for tax purposes, and transferred to the subsidiary, in…
By Mary Alexander and Timothy Gustafson
The Indiana Department of Revenue applied the State’s throwback rule to an Indiana company’s sales to California customers based on a determination that the taxpayer was not subject to tax in California due to P.L. 86-272. Under Indiana law, a sale is attributed to Indiana for sales factor apportionment…
By Stephanie Do and Open Weaver Banks
The Indiana Department of Revenue determined that an out-of-state taxpayer improperly sourced tuition received from its Indiana students taking online learning courses on a cost of performance basis. The taxpayer provided educational services through local campus courses and online learning programs. In computing its Indiana sales factor, the…
By Open Weaver Banks and Pilar Mata
The Indiana Department of Revenue ruled that a limited liability corporation (LLC) that elected to be taxed as a corporation was entitled to use net operating loss (NOL) deductions generated by its former members. The NOLs in question were generated in tax years 2003, 2005, and 2007 by…
By Ted Friedman and Andrew Appleby
The Indiana Department of Revenue determined that an Indiana taxpayer owed use tax on its rental of equipment from a related entity. After concluding the taxpayer was involved in a retail transaction when it rented equipment from a related entity, the Department imposed use tax on the taxpayer’s storage…
By Stephen Burroughs and Prentiss Willson
Indiana’s Department Revenue determined that the sale of prepaid phone cards and prepaid cell phones are “telecommunication services” subject to Indiana’s Utility Receipts Tax (URT). The URT is an income tax imposed upon the receipts a taxpayer receives from the sale of utility services. Included within utility services are…
