Alabama Supreme Court Rules in Favor of Orbitz and Other Online Travel Companies; Online Travel Companies Not Subject to Lodgings Tax

Posted April 23, 2012 by SALT Blawg
Categories: Alabama, Hotel Occupancy Tax, Hotel Tax

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 by Jennifer Weidler

The Alabama Supreme Court recently addressed the issue of whether online travel companies are liable for the payment of municipalities’ lodgings tax.SeeCity of Birmingham, et al. v. Orbitz, LLC, et al., Dkt. No. 1100874 (Ala. S. Ct. 2012).The appellants in the case were nine (9) Alabama municipalities and the appellees were sixteen (16) online travel service companies and related entities.

In their complaint, the municipalities alleged that municipal ordinances were enacted which imposed a lodgings tax on hotels located within their city limits; that the municipal lodgings tax is in addition to a State lodgings tax; and that the tax is calculated as a percentage of the amount charged by such hotels for the use of a room.

The online travel companies’ business model involves a customer making a room reservation through the online service, the customer is charged an amount for (1) the occupancy of the hotel room, (2) a lodgings tax recovery charge, and (3) an additional amount retained as compensation for the services.  Thereafter, the online travel company is billed by the hotel based upon a contract between the on line travel company and the hotel for the right to offer reservation services to guests who would like to make a reservation at the hotel.  The hotel bills the online travel company for the price of the room and the state and local tax thereon.  The hotel then pays the lodgings taxes to the State and the appropriate municipality.

The municipalities alleged that the lodgings tax should be imposed not only upon the hotels for the amount they charge as rent for the occupancy of their hotel rooms, but additionally upon the amount that online travel companies charge the customer for their online services.

The Alabama Supreme Court disagreed with the municipalities and found forthe online travel companies.  In so doing, it reasoned that the statute and ordinances were not ambiguous, and clearly imposed the lodgings tax upon every person, “engaging in the business of renting or furnishing any rooms, in any hotel.”  The tax is fixed as a percentage of “the charge for such room…including the charge of use or rent of personal property and services furnished in such room.”  Additionally, the court found that the DOR specifically promulgated a rule affirming that only persons who operate a hotel are persons who rent or furnish rooms.  As such, the court found that the online travel companies do not operate a hotel in any of the municipalities and cannot be said to have engaged in the business of renting or furnishing rooms for purposes of the lodging tax.

Numerous cases have been brought in various states and jurisdictions throughout the country touching on the same or similar issues with varying results.  For review of a similar holding by a different court, see our detailed posting regarding the Pennsylvania Commonwealth Court’s holding relating to Expedia and the Philadelphia Hotel Tax.

Weekly Blog Update for Week of 3/23: Connecticut Supreme Court Reverses Scholastic Decision; Georgia and Marlyand Lawmakers Address Amazon Bills; Kansas Legislature Approves Single-Sales-Factor Apportionment Bill…and More

Posted March 26, 2012 by SALT Blawg
Categories: Connecticut, Georgia, Indiana, Kansas, Maryland, Minnesota, South Carolina, Tennessee

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 by Jennifer Weidler

 

CONNECTICUT

Connecticut Finds Scholastic Used Teachers to Sell Books Creating Nexus to Subject it to Sales Tax

The Connecticut Supreme Court reversed a lower court’s decision and held that Scholastic Book Clubs, Inc. was subject to state sales tax because in-state school teachers acted as its representatives, thereby creating the requisite nexus to justify imposing the tax.  For prior coverage of this issue, click here.

 

GEORGIA

Georgia Lawmakers Approve “Amazon” Bill

The Georgia Senate approved legislation, HB 386, which would create click-through nexus and establish a phase-out of the sales tax on energy used in manufacturing.

 

INDIANA

Indiana Supreme Court Holds Out-of-State Service Provider’s Promotional Materials Subject to Tax

The Indiana Supreme Court held that an out-of-state online service provider, AOL, Inc., was subject to Indiana use tax on promotional materials that it distributed to in-state individuals.  The court found that the transactions through which AOL obtained the promotional materials it sent to in-state residents from its assembly houses and letter shops constituted retail transactions and were therefore subject to state tax once AOL used the property in-state.

 

KANSAS

Kansas Senate Approves Single-Sales-Factor Legislation

The Kansas Senate approved legislation, HB 2157, which would enact a single-sales-factor apportionment method for certain corporations relocating to the state.  The apportionment method would be available beginning in tax year 2013 for those businesses with no employees in the state and with no real or tangible personal property in the state prior to January 1, 2013.

 

MARYLAND

Maryland Legislature Strips Bill of “Amazon” Language

The Maryland House amended legislation, SB 523, by pulling language pertaining to an “Amazon” law.  The amendment deleted language that would have required remote sellers to collect sales taxes on purchases by in-state buyers.  The House also revised the proposed individual income tax increase.

 

MINNESOTA

Minnesota Legislature Passes Bill to Phase-Out State’s Business Property Tax

The Minnesota House of Representatives passed legislation, HF 2337, which would phase-out the state’s business property tax.  The legislation would gradually reduce the tax, until an ultimate elimination of the tax during tax year 2025.  The legislation would also offer a tax credit in lieu of the current foreign operating corporation deduction.

 

SOUTH CAROLINA

South Carolina Publishes Revenue Ruling on Software

The South Carolina Department of Revenue issued a Revenue Ruling dealing with sellers who sell and deliver software via a laptop to the buyer’s location.  Where the seller downloads the software via the internet or other wireless connection and then terminates the connection, taking the laptop when the download is complete and leaving no tangible software behind, the transaction is not subject to South Carolina sales tax.

 

South Carolina Supreme Court Rules for Taxpayer in Bi-furcated Apportionment Case; Places Burden on DOR

In a victory for the taxpayer, the South Carolina Supreme Court held that where the South Carolina Department of Revenue (“DOR”) attempts to deviate from the standard method of apportionment, the DOR must bear the burden of proving both that the standard method should not be used and that the alternative method is reasonable and more appropriate than any of the opposing methods.

 

TENNESSEE

Tennessee Legislature Considers Phase-Out of Stat’s Inheritance Tax

The Tennessee General Assembly passed legislation, SB 3762/HB 3760, which would phase-out the state’s inheritance tax.  Pursuant to the legislation, the tax would be repealed by 2016.

Weekly Update for 3/16

Posted March 19, 2012 by SALT Blawg
Categories: Arizona, Income Tax, Indiana, Kansas, Maryland, Michigan, New Jersey, Pennsylvania, Sales and Use Tax, Tennessee, Texas

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 by Jennifer Weidler

ARIZONA

Arizona Court Holds that Cooperative Direct Mail Advertising is Not Subject to Use Tax

The Arizona Appeals Court held that cooperative direct mail advertising was not subject to the state’s use tax, since the dominant purpose of the taxpayer’s business was to obtain nontaxable design, mailing and printing services, and not tangible personal property.

INDIANA

Indiana Legislature Passes Bill to Phase Out Inheritance Tax

The Indiana General Assembly has passed legislation, SB 293, which will phase out the state’s inheritance tax, gradually reducing the rate until it hits zero during 2022.   The phase out would be retroactive to January 1st.

KANSAS

Kansas House Approves Bill to Alter State Income Tax Structure

The Kansas House approved legislation, SB 177, which would make several modifications to the state’s income tax structure.  The legislation includes changes to the state’s sales tax exemption and business income exemption provisions, formulaic individual income tax rate reductions, Rural Opportunity Zone expansions, tax credits and more.

MARYLAND

Maryland Senate Approves “Amazon” Law

The Maryland Senate has approved legislation, SB 523, which includes an “Amazon” law and an income tax increase.  The bill would add three additional tax brackets and rates and would impose a flat tax on those filers making more than $500,000.  The bill also contains affiliate nexus/”Amazon” language.

MICHIGAN

Michigan Court of Appeals Finds Taxpayer Could Not Collaterally Attack Underlying Assessment

The Michigan Court of Appeals held that a taxpayer could not appeal a use tax assessment, as the sole shareholder and responsible corporate officer of a retailer, where the taxpayer’s appeal was untimely and where he was statutorily precluded from collaterally attacking the underlying assessment.

NEW JERSEY

New Jersey Legislature Passes “Amazon” Law

The New Jersey Assembly has passed legislation, A 2608, which would give Amazon.com a temporary sales tax collection exemption in exchange for job creation.  Pursuant to the bill, those retailers that make capital investments of at least $130 million and create at least 1,500 full-time jobs in the state would not have nexus until July 1, 2013.

New Jersey Legislature Passes Bill Expanding State’s Nexus Rules

The New Jersey Assembly passed legislation, A 2608, which would expand the state’s nexus rules by creating nexus for sellers that use in-state affiliates to perform activities to aid in business development or to maintain a New Jersey business market.  Moreover, the bill would create nexus for out-of-state businesses with distribution centers or subsidiaries in the state.

PENNSYLVANIA

Philadelphia DOR Releases 2012 KOZ Booklet

The Philadelphia Department of Revenue has released its 2012 Philadelphia Keystone Opportunity Zone Programs Booklet, which provides guidance on calculations, credits, two-factor apportionment formula, and more.

TENNESSEE

Tennessee General Assembly Approves Bill to Exempt Amazon from Tax

The Tennessee General Assembly passed legislation, HB 2370, which would temporarily exempt Amazon.com from collecting state sales tax.  Pursuant to the legislation, Amazon.com will build new facilities in the state and create thousands of jobs, in exchange for sales tax exemption through January 1, 2014.  The bill is now awaiting the Governor’s signature.

TEXAS

Texas Announces Amnesty Program Slated for June 2012

Texas has announced that it will offer a tax amnesty program for businesses, during which it will waive all interest and penalties for taxpayers that file or amend delinquent tax reports and pay all taxes due.  Reports originally due prior to April 1, 2012 are eligible, and the amnesty program will run from June 12 through August 17, 2012.

Weekly Update for 3/9: Arizona Rejects Amazon Legislation, While New Jersey Considers Implementing Amazon Law; Missouri Considers Amnesty Legislation; Pennsylvania Considers Closing the “Delaware Loophole”…and more.

Posted March 12, 2012 by SALT Blawg
Categories: Arizona, California, Corporate Tax, Georgia, Illinois, Iowa, Missouri, New Jersey, New Mexico, Pennsylvania, Property Tax, Sales and Use Tax, Virginia, Wisconsin

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 by Jennifer Weidler

ARIZONA

Arizona Senate Rejects Proposed Amazon Legislation

The Arizona Senate rejected proposed Amazon legislation, SB 1338, which would have broadened Arizona’s definition of retailer to include any company with a warehouse in the state.

CALIFORNIA

California Revises Publication on Internet Sales, Incorporating eBooks and Apps

The California State Board of Equalization revised Publication 109 regarding Internet Sales, in order to provide guidance on the tax treatment of eBooks and apps.  According to the Publication, the transfer of a downloadable file such as an eBook or app is not a taxable transaction, without purchasing any physical storage medium.

GEORGIA

Georgia House Approves Legislation to Establish Tax Tribunal

The Georgia House of Representatives approved legislation, HB 100, which would establish a state Tax Tribunal in the state’s judicial branch.

ILLINOIS

Illinois Releases Information Letter of “Deal-of-the-Day” Transactions

The Illinois Department of Revenue issued an Information Letter providing guidance on the treatment of “Deal-of-the-Day” transactions.  For more detailed information, see the Information Letter.

IOWA

Iowa Court Grants Refund Relief for Illegal Taxation

The Iowa District Court ordered a refund of franchise fees that were collected in excess of the amount determined to be allowable for which the City of Des Moines could impose.  The court found that the refund was a constitutional remedy for the illegal taxation of the city’s residents.  The fact that the funds gathered from the illegal taxation were used wisely, legally and with the best intentions was not a defense.

MISSOURI

Missouri House Approves Amnesty Legislation

The Missouri House has approved legislation, HB 1030, which would offer a tax amnesty period, slated to run from August 1 to October 31, 2012.  The amnesty program would cover all taxes administered by the Department of Revenue and would waive penalties.  The amnesty program is projected to raise $75 million for the state.

NEW JERSEY

New Jersey Finds Nexus Based on Telecommuting Employee

The New Jersey Superior Court upheld a Tax Court ruling, which found that a foreign corporation was subject to the New Jersey Corporate Income Tax because it regularly and consistently permitted one of its employees to telecommute from her New Jersey residence.  Her full-time telecommuting was viewed as doing business in the state, thereby requiring the payment of the tax as well as the filing of corporate income tax returns in New Jersey.

New Jersey Introduces Amazon Legislation

Legislation, S 1762, has been introduced in New Jersey that would grant Amazon.com a temporary state sales tax collection exemption if it builds warehouses within the state.   Pursuant to the bill, distribution facilities built in the state after January 1, 2012 would not create nexus with the state until July 1, 2013, provided that Amazon.com creates at least 1,500 full-time jobs in the state and makes a capital investment exceeding $130 million.

New Jersey Court Affirms Value of Residential Property Where Owner’s Evidence was Insufficient

The New Jersey Tax Court affirmed the value of a residential property established by the assessment after finding that the owner’s evidence regarding comparable sales was insufficient to establish the true market value of the property.  Although the owner overcame the presumption of validity attached to the assessment of his property, he was unable meet his burden of proof with regard to establishing the true market value of the property.

NEW MEXICO

New Mexico Governor Vetoes Combined Reporting Legislation

New Mexico’s Governor vetoed legislation, SB 9, which would have established combined reporting in the state.  The bill would have required combined reporting for multistate retailers with a 30,000 square feet or large facility in New Mexico.  Additionally, it would have lowered the top corporate income tax rate from 7.6 percent to 7.5 percent.

PENNSYLVANIA

Pennsylvania Considers Legislation to Allow Counties to Institute Local Taxes to Reduce or Eliminate Property Tax

The Pennsylvania legislature is considering legislation, HB 2230, which would allow counties in the state to institute a local sales or income tax in order to reduce or eliminate the property tax.  Pursuant to the bill, county governments could ask voters to approve a sales or income tax, which would ultimately provide property tax relief.

Pennsylvania Considers Competing Legislation to Close “Delaware Loophole”

During January, legislation, HB 2150, was introduced that suggested a close to the “Delaware loophole.” For previous coverage of that bill, please click here.  Competing legislation is currently being drafted that will seek to create a broader add-back provision than that contained in HB 2150.

VIRGINIA

Virginia Governor Approves Legislation Phasing in Single-Sales-Factor

Virginia’s Governor has approved legislation, HB 154, which creates a phase-in of single-sales-factor apportionment for retailers.  The bill requires retailers to begin utilizing a triple-weighted sales factor beginning July 1, 2012 and a quadruple-weighted sales factor beginning July 1, 2012.  Finally, a single-sales-factor would be implemented beginning July 1, 2015.

WISCONSIN

Wisconsin Rules that Individual is Responsible for Portion of Company’s Tax Liabilities

The Wisconsin Tax Appeals Commission held that an individual was responsible for a portion of a company’s sales tax and withholding tax liabilities.  The Commission reasoned that the evidence established that the individual maintained the title of president of the company, retained check-writing authority and participated on the board of directors.  As such the Commission found the individual to be a “responsible” person.

Weekly Update for 3/2: Georgia Considers “Amazon” Law; Verizon Challenges Statute of Limitations in Florida Assessment; Maryland Rules on Statute of Limitations for Refund…and more.

Posted March 5, 2012 by SALT Blawg
Categories: Colorado, Florida, Georgia, Hawaii, Indiana, Maryland, Minnesota, Nevada, New York, Oklahoma, Washington

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 by Jennifer Weidler

COLORADO

Colorado DOR Issues Letter Ruling Discussing Tax Exempt Status of Photovoltaic Energy Systems

The Colorado Department of Revenue issued a letter ruling explaining the sales exempt status of photovoltaic energy systems.  The letter ruling clarified that a company or customer who purchases photovoltaic energy systems is exempt from sales tax because all sales and uses of qualifying renewable energy components are entitled to the renewable component exemption.

FLORIDA

Verizon Business Purchasing, LLC Challenges Florida Sales and Use Tax Assessment

Verizon Business Purchasing, LLC has filed a complaint challenging a $3 million Florida sales and use tax assessment, claiming that the statute of limitations expired prior to the proposed assessment becoming final.  The complaint alleges that the final assessment was invalid because although the parties agreed to extend that statute of limitations until March 31, 2011, the notice of proposed assessment was issued with less than sixty days left in the statute of limitations period. Therefore, the complaint contends, it did not become a final assessment until the expiration of the sixty days, on April 11, 2011, which was after the statute of limitations had lapsed.

GEORGIA

Georgia House Considers “Amazon” Law

The Georgia House of Representatives is considering legislation, HB 993, which would implement click-through nexus and similar provisions, aimed at requiring out-of-state online retailers to collect state sales tax.  The legislation contains a threshold that must be met: an out-of-state online retailer must have at least $10,000 in annual sales through in-state affiliates receiving a commission in order to be subject to collecting the tax.


HAWAII

Hawaii Senate Committee Passes Streamlined Sales and Use Tax Legislation

The Hawaii Senate Ways and Means Committee passed legislation, SB 2226, which would bring the state into conformity with the Streamlined Sales and Use Tax Agreement.

INDIANA

U.S. Supreme Court Hears Oral Arguments in Armour v. Indianapolis

The United States Supreme Court heard oral arguments in Armour v. Indianapolis, which tackles an equal protection challenge.  During 2001, Indianapolis gave taxpayers the option of paying upfront or in monthly installments for special assessments related to the connection of their properties to city sewers.  The case challenges the city’s decision not to provide refunds to taxpayers who paid a sewer special assessment in lump sum, while forgiving outstanding balances for those taxpayers who entered into installment plans.  The Indiana Supreme Court held that the Board had a rational basis for its decision to deny refunds while eliminating outstanding balances.

Indiana House Approves Legislation to Phase-Out Inheritance Tax

The Indiana House approved legislation, SB 293, which would phase-out Indiana’s inheritance tax by increasing the exemption for children and grandchildren from $100,000 to $250,000.  The increase would apply to decedents dying after July 1, 2012.


MARYLAND

Maryland Rules on Statute of Limitations for Refund

The Maryland Court of Appeals ruled that the one-year statute of limitations for the filing of a limited partner’s state income tax refund claim pursuant to a federal adjustment of the partnership return began to run on the date that the Internal Revenue Service issued its final adjustment report to the limited partner.  Since the taxpayer filed its claim for refund more than one year after the date that the Internal Revenue Service issued its final adjustment report, the taxpayer’s refund was denied.

MINNESOTA

Minnesota Considers Legislation to Classify Jurisdictions as Tax Havens

Two separate bills, HF 2480 and SF 2029, currently under consideration by the Minnesota legislature would classify 34 foreign jurisdictions as tax havens, thereby terminating the ability of corporations to shelter their earnings in those areas. The legislation would also repeal the state’s foreign royalty exclusion, eliminate the state’s preferences for foreign-source income, and eliminate the state’s transition to single-sales-factor, instead re-implementing the three-factor formula.

NEVADA

Nevada Supreme Court Reverses Dismissal of Property Tax Petition for Board’s Failure to Conduct Public Hearings

The Nevada Supreme Court reversed the dismissal of property taxpayers’ petition for writ of mandamus directing the State Board of Equalization to equalize property valuations throughout the state, because the Board failed to conduct public hearings thereby denying the taxpayers an adequate remedy at law.

NEW YORK

New York Issues Guidance on Application of Sales Tax to Gratuities and Service Charges

The New York Department of Taxation and Finance issued guidance explaining how sales tax applies to gratuities and service charges.  The guidance clarifies that mandatory gratuities and service charges are exempt if: (1) the charges are shown separately on a bill; (2) identified as gratuities; and (3) the entire gratuity amount is given to the employees.

OKLAHOMA

Federal Court Rules Against Oklahoma Indian Tribe’s Tobacco Tax Claims

A Federal Court held that an Indian tribe located in Oklahoma had failed to state a claim upon which relief could be granted in its complaint.  The complaint alleged that Oklahoma’s tobacco tax laws violated various constitutional rights and federal laws.  However, the court found that the claims were not valid either on grounds of preemption or on infringement of the tribe’s right to self-government.

WASHINGTON

Washington Legislation Would Abolish Sales and Use Tax Exemption for Some Out-of-State Shoppers

Legislation, HB 2791, currently under review by Washington’s House would abolish the sales and use tax exemption for certain out-of-state shoppers.  The exemption would no longer be available for residents of the U.S. and Canada whose province or state assesses consumption taxes of less than three percent.

Weekly Update for 2/24: Oregon Legislature Approves Tax Break for Facebook; Tennessee and Virginia Legislation on “Amazon” Laws; Washington Privatization of Liquor Sales; Summary Judgment for Online Travel Companies in Tennessee…and more.

Posted February 27, 2012 by SALT Blawg
Categories: Uncategorized

 by Jennifer Weidler

KENTUCKY

U.S. Supreme Court Denies Petitions for Writ of Certiorari in Kentucky Tax Lien Case

The United States Supreme Court denied a petition for writ of certiorari in a Kentucky case dealing with general tax liens.  The Kentucky Supreme Courtpreviouslyheld that professional lenders with actual or constructive knowledge of an earlier recorded general tax lien are precluded from benefiting from an equitable reordering of the liens.  Since the U.S. Supreme Court denied certiorari, the Kentucky Supreme Court’s decision will stand.

 

NEW JERSEY

New Jersey Tax Court Dismisses Property Tax Assessment for Failure to Respond to Tax Assessor’s Financial Information Request

The New Jersey Tax Court has dismissed a property tax appeal, holding that the owner did not show good cause for its failure to respond to the tax assessor’s financial information requests.  The owner did not dispute actual receipt of the request for the financial information and there was no evidence that it found the request to be confusing or ambiguous.

 

OREGON

Oregon Legislature Approves Bill Aimed at Tax Break for Facebook

The Oregon Legislative Assembly approved a bill, SB 1532, which would ensure that data centers, such as those owned by Facebook, would not be taxed on their intangible assets.  The legislation comes after a dispute between Facebook and the Department of Revenue, in which the Department of Revenue determined that Facebook met the definition of a “communications company,” thereby allowing for it to be centrally assessed by the Department.   The legislation would clarify that a company operating a data center, such as Facebook’s, would not be centrally assessed if: (1) the property is part of an enterprise zone agreement, and (2) the data center represents more than 95 percent of its total property owned within the state.

 

TENNESSEE

Tennessee House Approves Legislation to Implement “Amazon” Law

The Tennessee House approved legislation, HB 2370, which would implement an agreement between the Tennessee Governor and Amazon.com regarding the collection of sales taxes in the state.  The legislation would grant Amazon.com an exemption from the collection of state sales tax through the sooner of January 1, 2014, or upon the passage of a federal law addressing the issue of remote sales.  For prior coverage of the legislation, click here.

 

U.S. District Court Issues Summary Judgment on Behalf of Online Travel Companies in Tennessee

The Nashville Division of the U.S. District Court for the Middle District of Tennessee issued summary judgment on behalf of online travel companies, who challenged a class action lawsuit, which was filed against them by the City of Goodlettesville.  The complaint alleged a failure to remit hotel occupancy taxes to the city.  The court found that the online travel companies did not purchase or take title to the hotel rooms and therefore did not fall within the statutory definitions applicable to the hotel tax.  Goodlettesville v. Priceline et al.,Dkt. No. 3:08-CV-00561 (U.S. Dist. Ct., Middle Dist. of Tennessee 2012).  A Pennsylvania court recently reached a similar holding with regard to the online travel company Expedia.  For more details, click here.

 

VIRGINIA

Virginia Approves Legislation to Phase-In Single-Sales-Factor Apportionment for Retailers

The Virginia General Assembly approved legislation, HB 154, which would phase-in mandatory single-sales-factor apportionment for retailers.  The legislation is slated to take effect on July 1, 2012.

 

Virginia Governor Reaches Agreement with Legislators on Amazon Legislation

Virginia’s Governor announced that he had reached an agreement with legislators regarding the Tax Fairness, SB 597, which would have required Amazon.com to collect sales taxes if it builds fulfillment centers in the state.  An amendment was added to the bill, and approved by the House of Delegates’ Finance Committee, authorizing the state to require an out-of-state seller with distribution centers in the state to collect state sales tax on in-state purchases on the earlier or September 1, 2013 or the effective date of federal legislation addressing the issue of remote sales.  For past coverage of the legislation, click here.

 

WASHINGTON

Washington DOR Issues Updates on Privatization of Spirits Sales

The Washington Department of Revenue has dedicated a portion of its website to guidance relating to the privatization of spirits sales in the state.  The links include updated Frequently Asked Questions as well as specific guidance on Initiative 1183, which requires the state to close state liquor stores on May 31, 2012, thereby allowing for the privatization of spirits sales.

Weekly Update for Week of 2/20 – Iowa Discusses Taxability of Groupons; Iowa and Illinois Issue Rulings on Computer Software; Pennsylvania Governor Signs Marcellus Shall Bill and Legislation Expanding Keystone Opportunity Zone…and more.

Posted February 20, 2012 by SALT Blawg
Categories: Uncategorized

 by Jennifer Weidler

ARIZONA

Two New Bills to Repeal State’s Use Tax Introduced to Arizona Legislature

Two new bills, HB 2623 and HB 2629, have been introduced to the state legislature.  Both bills attempt to repeal the state’s use tax for individuals.

 

HAWAII

Hawaii DOR Issues Letter Ruling on Qualification of Photovoltaic Energy Systems for Renewable Energy Credit

The Hawaii Department of Taxation issued a Letter Ruling, finding that taxpayers were entitled to the renewable energy technology income tax credit on photovoltaic energy systems, subject to a $500,000 per system statutory cap.

 

ILLINOIS

Illinois DOR Updates Publication on Withholding of State Income Tax

The Illinois Department of Revenue issued an updated publication, which explains the requirements for withholding of Illinois income tax.  For further details, please refer to the publication.

Illinois DOR Issues Explanation of Tax Treatment of Computer Software Transactions

The Illinois Department of Revenue issued a Letter explaining the tax treatment of computer software transactions.  The Letter details when hosted marketing services using a proprietary software platform would or would not be taxable.

 

IOWA

Iowa DOR Issues Guidance on Sales Tax Treatment of “Groupons”

The Iowa Department of Revenue issued guidance on the sales tax treatment of “Groupons” or other similar certificates, which are purchased via the Internet for a discount price.  Generally, sales tax is collected on the full price of the item purchased.  However, if the certificate on its face shows the price paid by the online purchaser, the tax is collected on that amount instead of the full price of the item.

Iowa DOR Issues Policy Letter Regarding Taxability of Hosted Software and Training Services

The Iowa Department of Revenue issued a Policy Letter explaining that a software provider’s gross receipts for hosted software and training services are not subject to sales tax.  The Department reasoned that the software is only accessible online and training is not an enumerated taxable service in the state.

Iowa Department of Revenue Issues Policy Letter Regarding Taxability of Replacement Fees

The Iowa Department of Revenue issued a Policy Letter explaining that where a customer loses a book and is charged a “replacement fee”, whereby no replacement book is provided to the customer, no sales tax is owed. The Department reasoned that since the replacement fee is a type of penalty fee, it is not subject to the state’s sales tax.

 

MARYLAND

Independent Audit Reveals Maryland Business and Economic Development Officials did not Require Documentation before Awarding Millions in Tax Credits

An independent audit report issued by the Office of Legislative Audits has revealed that Maryland Business and Economic Development officials did not require documentation prior to awarding millions of dollars in tax credits to various businesses.  The Business and Economic Development’s response to the findings indicated that, effective immediately, applications would require an accountings.

 

MASSACHUSETTS

Massachusetts DOR Finds Prepackaged Individual Salads Subject to State Sales Tax

The Massachusetts Department of Revenue issued a Letter Ruling, holding that prepackaged individual salads are subject to the state’s sales tax, regardless of where in the supermarket the salads are sold and irrespective of whether the salads are sold on an eat-in or to-go basis.  The Department found that due to the nature of the packaging and quantity, the supermarket in part functioned as a restaurant with regard to these items and was subject to the state tax on the prepackaged salads.

 

MICHIGAN

Michigan Court of Appeals Grants Refund Request Over Disputed Royalty Income

The Michigan Court of Appeals granted a pharmaceutical company’s tax refund request after finding that the company had presented sufficient evidence at trial to show that the disputed royalty income was in fact derived from a subsidiary’s use of patents.  The company provided affidavits from individuals involved in the preparation of the company’s tax returns, who averred that the relevant income it deducted did in fact derive from its subsidiary’s use of the company’s patents.  The court found this evidence to be sufficient and found that since the defendant had failed to produce any evidence to counter the company’s evidence, the company was entitled to summary disposition.

 

NEW JERSEY

New Jersey Issues Notice of Cosmetic Medical Procedures Phase-Out

The New Jersey Division of Taxation issued a Notice discussing the cosmetic medical procedures gross receipts tax phase-out, which will occur over the next two (2) years.  Commencing July 1, 2012, the phase-out will reduce the current 6% tax rate by 2% annually, thereby eliminating it completely by July 1, 2014.

New Jersey Issues Guidance on Changes to Urban Enterprise Zones Refund Procedures

The New Jersey Division of Taxation issued guidance, explaining changes to the urban enterprise zones refund procedures.  Those changes relate topoint-of-purchase sales tax exemption eligibility, statute of limitations, use tax self-assessed or audit assessments, improperly paid tax, and non-small qualified business transactions.

 

NEW YORK

New York Issues Guidance on Delivery Companies for Timely Filing of Returns

The New York State Department of Taxation and Finance issued guidance, which provides the names of those private delivery companies that taxpayer may use in order to timely file their tax returns.  Those delivery companies meeting the requisite federal and state criteria are DHL Express, Federal Express and the United Parcel Service.

 

PENNSYLVANIA

Pennsylvania Passes Legislation Establishing how Municipalities will Determine Condominium and Single-Family Home Assessments

The Pennsylvania Legislature passed H1582,effective April 16, 2012.  The bill establishes how municipalities are to determine assessments for both condominiums and single-family homes.  Additionally, the bill provides for incentives for residential properties in Business Improvement District and outlines a process for objections.

Pennsylvania Governor Signs Marcellus Shale Bill

The Pennsylvania Governor has signed HB 1950, which will impose a fee on natural gas drilling in the Marcellus Shale formation.  The Marcellus Shale formation is the largest domestic source of natural gas.

Pennsylvania Governor Signs Legislation Expanding Keystone Opportunity Zone

The Pennsylvania Governor has signed SB 1237, which expands the Keystone Opportunity Zone, Keystone Opportunity Expansion Zone, and Keystone Opportunity Improvement Zone Act.  The Keystone Opportunity Zones provide tax exemptions, deductions, credits and abatements to qualified businesses.

SOUTH CAROLINA

South Carolina DOR Reminds Taxpayers of be Aware of Fraud During Tax Season

The South Carolina Department of Revenue issued a News Release reminding taxpayers to be aware of potential fraud during tax season.  The News Release warned of communications in the form of phone calls, text messages, emails or other forms of communication, which ask for any personal identifying information.  Typically, the DOR will contact taxpayers via standard mail, with a possible follow-up phone call.

 

TENNESSEE

Tennessee DOR Rules that Manufacturer’s Drop Shipments are not Exempt from Tax

The Tennessee Department of Revenue issued a Letter Ruling, finding that a manufacturer’s drop shipments to a contractor were not exempt from sales and use tax, even where the customer presents a resale certificate.  The Department reasoned that the tax is imposed on all materials for specific jobs performed by contractors, and thus the drop shipments were found to be subject to the tax.

Tennessee DOR Rules Out-of-State Company Subject to Franchise and Excise Tax

The Tennessee Department of Revenue issued a Letter Ruling, holding that an out-of-state company who used local sales representatives to solicit its products was doing business in the state for franchise and excise tax purposes.  Moreover, the Department ruled that the company was not exempt under P.L. 86-272, since it used a direct shipment process to its local vendors.

 

TEXAS

Texas Supreme Court Dismisses Complaint Challenging Constitutionality of State Franchise Tax

The Texas Supreme Court dismissed a complaint that sought to challenge the constitutionality of the state’s franchise tax scheme.  The court found that the taxpayers failed to pay their taxes under protest or to request a refund from the comptroller prior to bringing suit.  As such, the court found that the statutory conditions required dismissal for lack of jurisdiction.