The Washington Court of Appeals recently issued a divided (2-1) decision in a case involving Washington’s “benefits received” test for apportioning service income. The Court ruled that the “benefit” of an airplane design firm’s services were received in Washington, where the taxpayer’s direct customer, Boeing, manufactured the airplanes incorporating the taxpayer’s airplane designs, rather than
California Franchise Tax Board to Hold Sixth Interested Parties Meeting on Proposed Market-Based Sourcing Regulations
On Friday, June 4, 2021 at 10:00 a.m. PST, the California Franchise Tax Board (“FTB”) will hold its sixth interested parties meeting (“IPM”) to discuss its latest proposed amendments to the market-based sourcing regulation, Cal. Code Regs., Title 18, Section 25136-2. At the IPM, FTB will discuss and solicit public input on the newly-proposed regulation
How Does California Source Sales of Services and Intangibles for Apportionment Purposes?
California uses market-based sourcing to apportion sales of other than tangible personal property to the state. Under the governing statute, sales of services are sourced to California to the extent the purchaser of the service receives the benefit in the state.1 Sales of intangible personal property are sourced to California to the extent the
Pennsylvania Attorney General Criticized For Not Representing Department of Revenue
Oral argument was held June 11 in the highly unusual case of Synthes USA HQ Inc. v. Commonwealth of Pennsylvania.
- The Attorney General faced skeptical questioning from the Commonwealth Court, with one judge suggesting that the Attorney General was “defeating,” rather than representing, the interests of the Department of Revenue.
- Synthes involves the question of
Look to Florida: Florida Department of Revenue Provides Guidance for Sourcing Income from Software User Fees
The Florida Department of Revenue determined that a platform software company should source its income from user fees and from its sale of services on a market basis, based on the location of the customer to which the services are provided. The platform software company provided a platform for developers to create and sell software
Marketplace Monday – Sourcing of Marketplace Sales
The shift in tax collection responsibility to marketplace facilitators raises questions on how to accurately source sales made through the marketplaces. Depending on the state sourcing rules, a marketplace facilitator may need to know whether sourcing is determined based on the presence/location of the marketplace seller in the state or the presence/location of the marketplace
Too Bad, So Sad – Virginia Supreme Court Upholds COP Apportionment Despite Subjecting the Taxpayer to Double Taxation
The Virginia Supreme Court held that the use of the cost-of-performance method to apportion nearly 100% of the taxpayer’s sales of services to Virginia did not violate the U.S. Constitution, even though over 95% of the taxpayer’s customers were located outside of the state – perhaps an expected result for a services company based in
Top New Jersey Tax Changes in the 2018 Budget Deal
In a last-minute deal to avert a government shutdown, New Jersey Governor Phil Murphy and the New Jersey Legislature cobbled together a budget with numerous amendments to New Jersey’s tax law.
View the full legal alert.
South Carolina Court of Appeals Sends Taxpayers Clear Signal; Rules DIRECTV Must Source Receipts Based on Satellite Signal Delivery
By Dmitrii Gabrielov and Tim Gustafson
The South Carolina Court of Appeals held that all of DIRECTV’s South Carolina customer subscription receipts were properly sourced to the state for purposes of determining DIRECTV’s corporate income tax apportionment factor due to the location of its satellite signal delivery. South Carolina’s apportionment statute requires a taxpayer to
MTC Adopts Allocation and Apportionment Regulations
In a rare special meeting on February 24, 2017, the Multistate Tax Commission (MTC) adopted amendments to the MTC’s Model General Allocation and Apportionment Regulations that it has worked on since 2014. Among other things, the 94-page Model Regulations:
- Provide a new section related to market-based sourcing of receipts from the sale of services and