On September 20th, the Los Angeles County Superior Court held that local video service provider fees do not apply to streaming video providers. This decision is consistent with a prior decision by the United States District Court for the District of Nevada, which held that streaming video providers were not subject to Nevada localities’ franchise
taxability
Nevada Federal Court concludes streaming video providers not subject to local franchise fees
On September 3, 2021, the United States District Court for the District of Nevada held that streaming video providers were not subject to Nevada localities’ franchise fees. The city of Reno filed a class action lawsuit against two streaming video providers, claiming that they were required to register as video service providers (i.e., obtain a…
Washington issues guidance on taxability of online classes
The Washington Department of Revenue recently released informal guidance regarding the taxability of online instructional classes. The guidance states that live classes where participants can interact in real-time with the presenter are not subject to sales tax; however, pre-recorded videos and classes are subject to sales tax. This distinction focuses on the live ability to…
Beyond use tax – Michigan court holds retailer not subject to use tax on advertising materials mailed to in-state residents
On July 8, 2021, the Michigan Court of Appeals issued a decision holding that a retailer was not subject to use tax on advertising materials mailed to Michigan residents. The retailer designed the materials in-house and had them printed by a third-party printer, outside of Michigan. After printing, the retailer sent the materials to a…
Chicago Weighs In on Wayfair Nexus, Permits Limited Safe Harbor
In response to numerous inquiries, the Chicago Departments of Finance and Law issued an Information Bulletin on their application of nexus to Chicago taxes in light of Wayfair v. South Dakota, 585 U.S. __, 138 S. Ct. 2080 (2018). Illinois has adopted an economic nexus standard by which out-of-state retailers making sales of tangible…
Sensing a Trend? Maine Tax Assessor Argues Sales Tax “Sale Price” of iPhones More Than What They Sold For
After losing at trial, the Maine State Tax Assessor is now arguing to the state’s Supreme Judicial Court that sales tax applies to carrier subsidies received by Apple on its sales of iPhones bundled with service contracts. During the years in issue, Apple sold iPhones to its customers at a reduced price when the customers…
California OTA Tells CDTFA Its Audit Manual Has No Authority In Appeal
In a pending precedential decision, the California Office of Tax Appeals (OTA) held that the California Department of Tax and Fee Administration (CDTFA) is bound to follow its own regulation and could not rely on its audit manual to disregard that regulatory authority. Regulation 1595 provides that the agency will use “book value” as the…
Texas Court of Appeals Upholds Insurance Premium Tax on Cotton Bale Insurance Policies
On September 24, 2020, the Texas Court of Appeals upheld the Texas insurance premium tax on insurance policies for bales of cotton temporarily stored at Texas warehouses. The court rejected the taxpayer’s arguments that: (1) the tax violated the Commerce Clause and the Import-Export Clause of the United States Constitution; and (2) the insurance at…
Colorado Backs Up Backup: DOR Concludes Backup Service Non-Taxable Sale of Computer Software
The Colorado Department of Revenue has determined that an information technology provider’s sale of its backup service, which allowed its customers to back up business applications, files, and systems, and also included the delivery of computer servers to customers’ locations, constituted a nontaxable service. Although the Department “considered whether the placement of [the] servers constitut[ed]…
Something to Keep an Eye On: Texas Comptroller Says Web-Based Services for Eye Doctors Is Taxable Data Processing
The Texas Comptroller of Public Accounts issued a private letter ruling concluding that several services provided to optometrists and ophthalmologists were subject to sales tax as data processing. Specifically, the Comptroller determined that the taxpayer’s web-based software system, which doctors use to manage patient relationships, schedule appointments, refill prescriptions, and communicate about treatment, is a…