Sutherland SALT Shaker: January 2016 Digest

Posted on January 29, 2016

Read our January 2016 posts on stateandlocaltax.com or read each article by clicking on the title. For the latest coverage and commentary on state and local tax developments delivered directly to your phone, download the latest version of the Sutherland SALT Shaker mobile app.

California BOE Adopts Beneficial Amendments to Sales Tax Exemption for Manufacturing and R&D Equipment
The California Board of Equalization (BOE) voted to adopt an amendment to Ca. Code Regs. tit. 18, § 1525.4, to resolve a statutory ambiguity by clarifying that a taxpayer will qualify for the partial sales and use tax exemption available for certain manufacturing and research and development equipment purchases and leases if the purchase has a useful life of one or more years, even if the taxpayer expensed the purchase.

SALT Pets of the Month: Bolt and Teddy
Meet Bolt, aka “Boltie,” and Teddy, aka “Puppy,” belonging to Sutherland SALT Senior Counsel Eric Coffill and his wife Margaret.
No Ifs, Ands, or Buts: California Court Invalidates Regulation Limiting Consultant Contingent Fee Arrangements
The California Superior Court struck down a regulation that imposed a de facto ban on contingent fee arrangements between businesses and consultants applying for the California Competes tax credit. The Court ruled that the regulation improperly exceeded the scope of the related statute. Ryan U.S. Tax Services, LLC v. State of California, Superior Court, Sacramento County (California), No. 34-2014-00167988 (Jan. 7, 2016).

I Don’t Get No Respect: Kentucky Supreme Court Rejects Deference to Board of Tax Appeals Statutory Interpretation
The Kentucky Supreme Court held that the interpretation of inheritance tax statutes by the Kentucky Board of Tax Appeals was not entitled to Chevron deference.
Call an Ambulance: Illinois Nonprofit Hospital Exemption Ruled Unconstitutional
The Illinois Appellate Court held that a property tax exemption for nonprofit hospitals which provided certain services or subsidies equal in value to their estimated property tax liabilities was facially unconstitutional because it did not require exclusive charitable use of the property, as prescribed under the Illinois Constitution.

Heisman Would Be Proud: Taxpayer Stiff-Arms Indiana DOR with Transfer Pricing Studies
The Indiana Tax Court granted summary judgment to Columbia Sportswear USA Corp., (“Columbia”), determining that: (1) Indiana’s alternative apportionment statute did not permit the Department to equitably adjust Columbia’s tax base; and (2) Indiana’s standard sourcing rules clearly reflected Columbia’s Indiana source income because transfer pricing studies supported Columbia’s intercompany transactions as being consistent with Indiana’s conformity to I.R.C. § 482.
Dance, Dance Fever: Missouri Supreme Court Holds Dance Lessons Are Fun…and Taxable
The Missouri Supreme Court held that a dance school was subject to sales tax on its charges for dance lessons as fees paid to a place of amusement, entertainment or recreation. The court reasoned that even though the school had a primary purpose of teaching students how to dance, amusement or recreational activities comprised more than a de minimis portion of the business activities.

Tax Base Creep: Ohio Asserts Expanded Taxability of Electronic Information Services, Internet Access
The Ohio Department of Taxation issued a revised information release announcing its new positions regarding sales and use tax on electronic information services used in business.
A Win for Clean Energy: Court Holds Wind Turbine Exempt from Property Tax in Rhode Island
The Rhode Island Supreme Court held that a wind turbine owned by a non-utility private party was exempt from personal property tax under a manufacturing exemption because the turbine converted wind into electricity.

Taxation Is Not an Option: Utah Supreme Court Says Optional Liability Waiver Fees Not Subject to S&U Tax
The Utah Supreme Court held that optional liability waiver fees paid by customers along with lease-to-own rental payments were not subject to sales and use tax.
Utah Taxes Online Banking Service Provider
The Utah State Tax Commission ruled that sales to financial institutions in Utah of the right to use online banking software, finance and budget tool software, online bill payment software, mobile banking software, and a mobile banking application are sales of tangible personal property subject to Utah sales and use tax.

Electric Boogie: Wyoming BOE Denies Electric Utility Sales Tax Exemption
The Wyoming Board of Equalization (BOE) held that purchases of chemicals by an electric utility operating coal-fired electric generation plants were subject to sales tax because the utility was not a manufacturer or a processor.

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Sutherland SALT Shaker: January 2016 Digest

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