The Massachusetts Appellate Tax Board determined that three licensors of software properly sought refunds (or “abatements”) to apportion sales tax based upon proof of their purchasers’ intent to use the software in multiple locations, including outside of Massachusetts. In doing so, the Board rejected the Commissioner of Revenue’s argument that the taxpayers could apportion sales
Massachusetts
It’s In The Way That You Use It: Massachusetts Supreme Judicial Court Applies “Great Integral Machine” Doctrine
The Supreme Judicial Court of Massachusetts held that pipes and appurtenant equipment used by a taxpayer to produce, store and distribute steam for heating and power generation were exempt from local personal property tax as manufacturing property. Affirming the Appellate Tax Board, the court applied the “great integral machine” doctrine to find that the pipes…
Out of Time: Massachusetts Dismisses Taxpayer’s Attempt to Seek Refund as Untimely
Massachusetts Court of Appeals held that a taxpayer could not rely on timely applications for refund of deficiency assessments to also seek refund resulting from alleged overstatement of sales factor in corresponding years’ returns, where the initial application for abatement did not include the sales factor argument and statute of limitations had since lapsed.
The…
Massachusetts ATB Finds that Indiana Utility Receipts Tax Not a Deductible Transaction Tax for Massachusetts Corporate Excise Tax
The Massachusetts Appellate Tax Board disallowed a deduction for Indiana utility receipts tax (URT) paid by a natural gas distribution operator with operations in Indiana. The deduction for the URT was disallowed, for purposes of computing Massachusetts net income for corporate excise tax, because the URT is not a deductible “transaction tax.” The Board found…
Massachusetts Supreme Judicial Court Holds Taxation of Drop Shipments Is Constitutional
By Charles Capouet and Jonathan Feldman
The Massachusetts Supreme Judicial Court held that an in-state wholesaler was required to collect and remit sales tax on drop shipment sales made to Massachusetts customers. A drop shipment is a transaction in which an in-state customer purchases a product from an out-of-state retailer which then orders the product…
MA ATB Determines a Securities Corporation Subsidiary Must File Required Application to Receive Favorable Tax Status as a Securities Corporation
By Alla Raykin and Eric Coffill
The Massachusetts Appellate Tax Board (ATB) upheld the Commissioner’s assessment, resulting from a denial of a subsidiary’s securities corporation classification for corporate excise tax purposes. Companies classified as securities corporations receive favorable excise tax treatment under G.L. c. 63, § 38B(a), including not being subject to inclusion in the…
Money for Nothing: Massachusetts Appeals Court Finds Intercompany Financing Transactions Did Not Constitute Genuine Indebtedness
By Zachary Atkins and Charlie Kearns
The Massachusetts Appeals Court upheld an Appellate Tax Board decision disallowing interest expense on certain intercompany financing transactions because the underlying agreements did not establish an “unqualified obligation to repay.” The taxpayers, subsidiaries of a British utility, entered into a series of complex agreements—deferred subscription agreements—to sell and repurchase…
Keep On Truckin’ … Around Massachusetts: MA High Court Declares Unapportioned Use Tax on Motor Vehicles Constitutional
By Stephen Burroughs and Tim Gustafson
The Massachusetts Supreme Judicial Court denied a freight company’s Commerce Clause challenge to the application of an unapportioned use tax on its vehicles purchased out-of-state but used in Massachusetts. The company used its trucks to deliver freight in multiple states, but the court upheld taxation of the vehicles’ full…
Wynne’s First Casualty: First Marblehead Corp. v. Commissioner
Today, the U.S. Supreme Court vacated the decision of the Massachusetts Supreme Judicial Court in First Marblehead Corp. v. Commissioner of Revenue and remanded the case back to the court for reconsideration in light of the holding in Comptroller of the Treasury v. Wynne. In First Marblehead, a taxpayer was denied the ability…
A Reasonable Result in Massachusetts: Related Party Interest Deductions Allowed Under the Unreasonable Exception
By Stephen Burroughs, Jonathan Feldman and Open Weaver Banks
In a significant taxpayer win, the Massachusetts Appellate Tax Board (ATB) held that intercompany interest payments from a wholly owned subsidiary to Massachusetts Mutual Life Insurance Company (MassMutual) were bona fide loans and were deductible for excise tax purposes. The subsidiary (HoldCo) was a holding…