Shaking things up in state and local tax
Shaking things up in state and local tax
By Todd Betor and Pilar Mata
In a Letter of Findings, the Indiana Department of Revenue disallowed a corporate partner’s attempt to deduct flow-through income from a limited liability company as “foreign source dividends and other adjustments” on its Indiana corporate income tax return. Indiana requires corporate partners to report their share of partnership income,…
By Shane Lord and Andrew Appleby
The Indiana Department of State Revenue issued a Letter of Findings concluding that a taxpayer’s sales of tangible personal property from Indiana to foreign countries were attributable to Indiana for income tax purposes because the taxpayer did not show that its activities in the foreign countries exceeded the protections…
By Suzanne Palms and Andrew Appleby
The Michigan Court of Appeals held that a taxpayer was not liable for additional single business tax (SBT) and use tax because the taxpayer was making sales of tangible personal property at its Michigan facility rather than performing a service. The taxpayer’s business activities at issue consisted of…
By Kathryn Pittman and Andrew Appleby
The Utah Department of Revenue concluded that gift codes sold by an out-of-state seller (Gift Code Issuer) to Utah consumers were not subject to sales and use tax and that specified activities conducted by third parties in Utah relating to such sales of gift codes did not create nexus…
In a case pitting statutory language against a department of revenue’s historical practice, the Kentucky Court of Appeals held that the “franchise” of a public service corporation is a separate asset for ad valorem taxation purposes, and it is subject to state and local property taxation. Dayton Power & Light Co. v. Dep’t of Revenue…
The Michigan Court of Appeals held that a $2.2 billion transaction involving the sale of assets related to the Grey Goose vodka product line did not constitute a “sale” for purposes of apportioning the Michigan Single Business Tax (SBT). Sidney Frank Importing Co., Inc. v. Dep’t of Treasury, No. 306742 (Mich. Ct. App. 2012). The taxpayer, Sidney Frank, transferred all of its tangible and intangible assets in the top-shelf vodka, including inventory, to Bacardi, Ltd. The transaction produced a substantial gain, and Sidney Frank included the proceeds in the denominator of its sales factor for 2004 apportionment purposes.
For purposes of the SBT, which was repealed in 2006, “sale” was defined in relevant part as the amounts received from the rental, lease, license or use of property that constitutes business activity. The taxpayer argued that the transfer of the Grey Goose assets was a sale of intangible property (and thus the proceeds should be included in the sales factor denominator) because it was a “use” of intellectual property. The Department argued that the term “sale” includes only transactions where the taxpayer allows a person to use property and does not transfer title to the property.Continue Reading The (Grey) Goose that Got Cooked in Michigan
The Tennessee Department of Revenue released two taxpayer-favorable rulings related to the intangible expense addback statute and economic nexus on January 8, 2013. In Letter Ruling No. 12-32 (Dec. 19, 2012), the Department ruled that the discount incurred in the course of factoring trade receivables using an affiliated factoring company did not constitute an “intangible…
On January 8, 2013, the Sutherland State and Local Tax (SALT) Team appeared before the Oregon Supreme Court in an important case concerning the scope of Oregon’s central assessment method of property taxation. Comcast Corporation v. Department of Revenue, Case No. S059764. The issue in the case concerns whether cable television and Internet access services are within the scope of “data transmission services” for ad valorem tax purposes. This case is being followed closely by participants in the Digital Economy (e.g., sellers of Internet access, digital goods and services, and cloud computing providers) and taxing jurisdictions throughout the country.Continue Reading Sutherland SALT Argues Digital Economy Central Assessment Case
On December 18, 2012, the California Court of Appeal ruled that receipts from the right to replicate software are sourced as sales “other than tangible personal property.” In reversing the trial court, the Court of Appeal upheld the taxpayer’s use of costs of performance sourcing. Microsoft Corporation v. Franchise Tax Board, Case No. A131964…
On October 16, 2012, the Virginia Department of Taxation issued two identical determinations in which it found cable set-top boxes (a/k/a “converters”) exempt from the Business Tangible Personal Property (BTPP) tax (Ruling Nos. PD 12-162 and PD 12-163). Intangible personal property generally is exempt from the BTPP tax. Section 58.1-1101 of the Virginia Code classifies certain…
