On January 13, 2020, the Washington Court of Appeals upheld the Washington Department of Revenue’s retailing characterization of taxpayer’s provision of online access to information in a digital research library. Therefore the taxpayer’s service was subject to Washington sales tax and the higher business and occupation (B&O) tax rate. Gartner, Inc. v. Washington Department of
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California FTB Confirms Delivery by Private Vehicles Is Protected Under P.L. 86-272
In a Technical Advice Memorandum issued on December 4, 2018, the California Franchise Tax Board (FTB) concluded that delivery of tangible personal property via private truck is a protected activity under P.L. 86-272. However, any activity that goes beyond the scope of delivery, such as backhauling, is not protected. The FTB explained that Congress, when…
Physical Presence Standard Still Applies for Texas Franchise Tax After Wayfair
The Texas Comptroller of Public Accounts recently ruled that the physical presence nexus standard continues to apply for the Texas Franchise Tax, even after South Dakota v. Wayfair, Inc., 585 U.S. ___ (2018). As a result, a California company whose only contacts with Texas were sales of digital products, software and e-commerce transaction processing and…
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…
Marketplace Providers Are Statutorily Required to Collect Sales Tax in Minnesota and Washington
By Jeff Friedman and Stephanie Do
A new landmark sales tax statute has been adopted in Minnesota, which expands sales tax collection requirements to those retailers that sell their goods on certain “marketplaces.” Generally, only a retailer that is physically present in a state is required to collect and remit the state’s sales tax. The…
Pennsylvania Appeals Court Upholds Philadelphia Beverage Tax
By Jessica Eisenmenger and Open Weaver Banks
The Commonwealth Court of Pennsylvania upheld the Philadelphia Beverage Tax (PBT) against a challenge by the American Beverage Association and other challengers. The PBT imposes a 1.5¢ per fluid ounce tax on sugar-sweetened beverages and is generally payable by the distributor of the beverages. The court decided in…
Not So Fast: Tennessee Chancery Court Prohibits Department of Revenue from Enforcing Sales Tax Collection By Out-of-State Retailers
By Eric Tresh and Liz Cha
On April 10, 2017, a Tennessee Chancery Court ordered that the Tennessee Department of Revenue is temporarily prohibited from enforcing a regulation that requires out-of-state retailers making annual sales in excess of $500,000 to collect and remit sales tax. The Order arises out of a dispute between the Plaintiffs…
US Supreme Court’s Ruling Bolsters Taxpayers’ First Amendment Right To Pass Through Fees (and Taxes)
A recent US Supreme Court decision on surcharges strengthened taxpayers’ First Amendment rights when deciding how they present pass-through fees and taxes to their customers.
- The Supreme Court held that a New York statute prohibiting a seller from imposing a credit surcharge was a speech regulation, subject to heightened scrutiny, because it regulates how retailers
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It’s Always Better When We’re Together: Colorado DOR Determines Payment of Sales Tax by Marketplace Provider Relieves the Jointly Responsible Retailers of Sales Tax Obligations
The Colorado Department of Revenue (Department) released a non-binding general information letter, concluding that a marketplace provider’s payment of sales tax on transactions involving “jointly responsible” third-party retailers discharges the obligations of the third-party retailers to collect and remit sales tax. By statute, the Department has discretionary authority to…
Empty Miles, Empty Factor? Texas Comptroller Clarifies “Empty Miles” Treatment in Transportation Apportionment Factor
By Chelsea Marmor and Tim Gustafson
The Texas Comptroller of Public Accounts issued a franchise tax letter clarifying that “total mileage” for purposes of computing the Texas special apportionment formula for transportation receipts may either include or exclude “empty miles” provided symmetry is maintained between a taxpayer’s numerator and denominator. “Empty miles,” or deadhead miles…