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

Tags: , , , , , , , , , , , , , ,

 by Jennifer Weidler


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 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 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 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 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 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.


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 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 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

Tags: , , , , , , , , , , , , , , , , , , ,

 by Jennifer Weidler


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 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 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 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 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 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 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 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 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 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 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

Tags: , , , , , , , , ,

 by Jennifer Weidler


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.


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 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 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.


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 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 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 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 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.


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 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


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 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 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 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 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 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


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 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 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 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.



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 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 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 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 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 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 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 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 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.

Weekly Blog Update for Week of 2/10/2012 – Virginia Senate Committee and Arizona Senate Approve Amazon Legislation; Pennsylvania Upholds Drink Tax; Pennsylvania House Passes Marcellus Shale Legislation…and more.

Posted February 13, 2012 by SALT Blawg
Categories: SALT

 by Jennifer Weidler


Arizona Senate Approves Bill Aimed at Amazon.com

The Arizona Senate Commerce and Energy Committee approved a bill, SB 1338,which is designed to affect Amazon.com by expanding the definition of “retailer” to include companies that have warehouses or distribution centers in the state. Amazon.com currently maintains four (4) warehouses within Arizona.  As we noted in last week’s update, the Arizona Department of Revenue has issued a bill to Amazon.com alleging that it owes $53 million in uncollected taxes in the state.



California Issues Summary of Property Tax Legislation Enacted in 2011

The California State Board of Equalization issued a Legislative Bulletin, which discusses property tax legislation which was enacted during 2011.  The legislation addresses various topics, such as exclusions, exemptions, and real property transfers.


Colorado DOR Issues Guidance on Statues of Limitations

The Colorado Department of Revenue has issued guidance regarding various statutes of limitations for different tax types.  Colorado’s income tax and wage withholding statute of limitations are based on the federal statute of limitations, while other taxes are defined purely by state law.



Idaho Tax Commission Issues Release Explaining Grocery Tax for Non-Filers

The Idaho Tax Commission issued a publication explaining that taxpayers who do not normally file because they do not make enough money to file an income tax return are still able to file for an $80 grocery tax credit for 2011.  The credit is an attempt to offset the state sales tax on groceries.



Kansas DOR Issues Guidance for Hotels, Motels and Restaurants

The Kansas Department of Revenue has issued guidance for hotels, motels, and restaurants under Publication KS-1540.  The Publication is meant to address the various business taxes that hotels, motels and restaurants are required to collect, including the retailers’ sales tax, transient guest tax and the liquor drink tax.  The Publication also discusses exemptions.



Amazon.com Reportedly Seeks Sales Tax Exemption in New Jersey

According to NJBIZ.com, Amazon.com is reportedly seeking a sales tax collection exemption from the state of New Jersey in exchange for approximately 1,700 new jobs and a new distribution center in the state.  Any such proposal should expect to be met with similar opposition that other states presented with like deals have experienced from in-state brick-and-mortar businesses.



Oklahoma Rejects Legislation Aimed at Removing Sales Tax Exemption for Newspapers

The Oklahoma Senate Finance Committee rejected legislation, SB 1098, which would have removed the sales tax exemption for newspapers and periodicals.



Court Upholds Allegheny Drink Tax

During 2007, Allegheny County passed a Drink Tax, which imposed a tax on the sale at retail of liquor and malt and brewed beverages within the county.  Barrel of Monkey’s LLC challenged the legislation on its own behalf, as well as on behalf of all other liquor-licensed restaurants in Allegheny County subject to the Drink Tax.  However, the Pennsylvania Commonwealth Court has held that Allegheny County’s Drink Tax did not violate the “single subject” rule or the uniformity rule of the Pennsylvania Constitution, nor did it violate the equal protection clause of the U.S. Constitution.


Pennsylvania Governor Presents 2012-2013 Budget

Pennsylvania’s Governor announced his 2012-2012 budget, proposing continued phase-out of the Capital Stock and Franchise Tax, along with maintaining numerous tax credit programs and emphasizing job creation.


Pennsylvania House Passes Marcellus Shale Legislation

The Pennsylvania House passed legislation, HB 1950, that would impose a fee on natural gas drilling in the Marcellus Shale formation.  The Marcellus Shale formation is the largest domestic source of natural gas.


Virginia Senate Committee Approves “Amazon” Legislation

A Virginia Senate Committee unanimously approved legislation, SB 597, which would require Amazon.com to collect sales taxes if it builds fulfillment centers in the state.



Wisconsin Publishes Guide Addressing Withholding Tax Requirements

The Wisconsin Department of Revenue issued a publication, W-166, to address withholding tax requirements and changes in the state, effective for periods after October 1, 2009.

Weekly Blog Update for Week of 2/3/2012 – Arizona Hits Amazon.com with Bill; Florida, Tennessee and Vermont Consider New “Amazon” Legislation; Expedia Not Subject to Philadelphia Hotel Tax; Scholastic Subject to Tennessee Sales and use tax; Connecticut and Oklahoma to Issue Refunds as Debit Cards …and more

Posted February 6, 2012 by SALT Blawg
Categories: SALT Update

 by Jennifer Weidler


Arizona Hits Amazon.com with $53 Million Bill for Allegedly Uncollected Taxes

The Arizona Department of Revenue issued a bill to Amazon.com alleging that it owes $53 million in uncollected taxes in the state.  Amazon.com has announced its belief that the assessment is without merit and its intent to defend against the assessment.



Arkansas Expands Definition of Developmental Disability

Arkansas has expanded the definition of “developmental disability” for the 2011 Individual Income Tax Forms and Instruction Booklet to include two (2) new disabilities: (1) spina bifida; and (2) Down syndrome.  These two disabilities will now qualify for developmental disability services.  This conforms the forms and booklets to changes made by Act 68, which formally added the two disabilities to those conditions that qualify for developmental disability services.



Colorado DOR Issues Publication Explaining Withholding Obligations

The Colorado Department of Revenue has issued a publication, which seeks to explain requirements and procedures for employers required to withhold taxes.  Primarily, if Colorado tax is withheld, taxpayers are required to have a Colorado 1099 or W-2G withholding account.  Taxpayers must then remit the tax.  For further information on Colorado’s withholding requirements, see the publication.



Connecticut to Issue Tax Refunds in Form of Debit Cards

Following the lead of states like Oklahoma, Louisiana and South Carolina, the Connecticut Department of Revenue has announced its intention to issue personal income tax refunds in the form of debit cards to taxpayers who do not use direct deposit.  JP Morgan Chase will administer the debit card program and taxpayers will need to call Chase in order to activate their cards.  Taxpayers may use the debit card at ATMs, banks and credit unions displaying the VISA logo, and gas stations and retail locations that accept VISA.  Notably, if the taxpayer does not activate the debit card within 365 days, the debit card account will be closed and the available balance will be returned to the Connecticut Department of Revenue.  Moreover, if the debit card is activated and a balance remains on the card after the twelfth consecutive month of inactivity, Chase will charge an inactivity fee of $1 per month.



The District of Columbia Announces Changes for Tax Filing Season

The District of Columbia has announced changes for this tax filing season.  Among the changes, the estimated tax payment that a businessmust make has changed from 100% to 110% of the prior year’s taxes.  Additionally, the District of Columbia will no longer mail individual income tax packages.  Instead, taxpayers can obtain the forms and instructions online or in paper form at various District agencies or public libraries.



Florida Legislature Considering Revenue-Neutral Legislation Aimed at Amazon.com and Online Retailers

The Florida Senate is currently considering legislation, SB 7206, which would provide for click-through nexus provisions aimed at requiring Amazon.com and like online out-of-state retailers to collect sales taxes.  Pursuant to the legislation, remote sellers would be required to collect state sales taxes if they engage in at least $10,000 in annual sales through in-state affiliates that receive a commission.  As we previously reported, Amazon.com has offered to bring thousands of jobs to the state in exchange for a two (2) year state tax break.



New York Issues Information for Tax Return Preparers

The New York Department of Taxation and Finance issued a publication, which provides important information for tax return preparers for tax year 2011.  The publication addressed numerous issues, such as: electronic filing mandate; return due dates; signature requirements; penalties; and consumer rights regarding tax preparers.



City of Akron, Ohio Offering Tax Amnesty Program to Businesses

The city of Akron, Ohio has announced that it will offer a tax amnesty program for businesses that have failed to report and pay net profit and wage taxes for tax years through 2010.  The program is slated to run from March 5 through May 4, 2012.



Oklahoma to Issue Tax Refunds in Form of Debit Cards

Following the lead of states like Connecticut, Louisiana and South Carolina, the Oklahoma Tax Commission announced its intention to issue personal income tax refunds in the form of debit cards to taxpayers who do not use direct deposit.  The Commission has published a list of frequently asked questions for taxpayers.



Commonwealth Court Holds Expedia Not Subject to Philadelphia Hotel Tax

The Pennsylvania Commonwealth Court (“Commonwealth Court”) affirmed the decisions of the Philadelphia County Common Pleas Court and the City of Philadelphia Tax Review Board (“TRB”), finding Expedia, Inc. (“Expedia”) was not an operator of a hotel and was not subject to the City of Philadelphia’s (“City”) Hotel Room Rental Tax (“Hotel Tax”).  For more detailed information, see our prior coverage of this case.


Pennsylvania Tax Update Reminds Taxpayers Estimated Coupon Packets and Fiduciary Return Booklets Will No Longer Be Mailed

Pennsylvania Tax Update 159 advises taxpayers that the Department of Revenue will no longer mail Estimated Payment Coupon Packets (REV-857-I) or the Pennsylvania Fiduciary Income Tax Return Booklet (PA-41).  Instead, forms and instructions will be available on the Department’s website.  The change is expected to result in a significant cost savings for the Commonwealth.


Pennsylvania Extends Nexus Compliance Deadline to September 1, 2012

On January 27, 2012, the Pennsylvania Department of Revenue announced its decision to issue a one-time extension of the nexus compliance deadline.  Remote sellers with a physical presence in the Commonwealth must be licensed and begin collecting sales tax as of September 1, 2012.  The original compliance deadline had been February 1st, but it became apparent that the original date was impractical.  Those businesses that do not register by the new September 1st deadline will face a variety of enforcement strategies, including: audits, assessments, liens, and/or referral to a collection agency or the Office of the Attorney General.


Pennsylvania Adds Use Tax Line to State Personal Income Tax Return

In an attempt to encourage compliance with the use tax reporting requirements, the Pennsylvania Department of Revenue added a use tax line (Line 25) to the 2011 PA-40 (Pennsylvania Personal Income Tax Return), thereby simplifying the use tax reporting process.  The Pennsylvania Tax Update explained that when sales tax is not collected by a seller on a taxable item or service, it is the responsibility of the purchaser to report and remit use tax to the state.



Tennessee Court Holds Naval Captain Responsible for Tennessee Use Tax on Personal Aircraft

A Tennessee trail court held that a naval captain, who purchased an airplane in Texas during 2007, was required to pay Tennessee use tax on the aircraft when he was reassigned to a naval base in the state. (See, McIntyre v. Farr, Dkt. No. 09-2145-III).  Tennessee laws provide no exemption from use tax for military personnel who, on military orders, are relocated to the state.


Governor Urges Tennessee Legislature to Adopt “Amazon” Law, Exempting the Online Retailor from Sales Tax Collection

During his State of the State address, the Tennessee Governor urged lawmakers to approve legislation under HB 2370 that would exempt Amazon.com from collecting state sales taxes.  In exchange for the exemption, Amazon.com would agree to set up two (2) distribution centers in the state.  Pursuant to the legislation, the online retailor would be exempt from collecting Tennessee state taxes until January 1, 2014.


Tennessee Court of Appeals Holds Out-of-State Book Distributor Subject to Sales and Use Taxes Because of Substantial Nexus Through Local Schools and Teachers

The Tennessee Court of Appeals held that an out-of-state book distributor, Scholastic Book Clubs, Inc., was subject to Tennessee sales and use taxes because the distributor had substantial nexus with the state.  The court found the substantial nexus to be present through the local schools and teachers who participated in Scholastic’s program, holding that those teachers acted as agents for the company.  It found that Scholastic’s utilized teachers to effectuate its sales, creating a de factor marketing and distribution mechanism, and therefore Scholastic had nexus with the state. For more detailed information, see our prior coverage of this case.



Vermont Bill Would Create August Sales Tax Holiday

Vermont is considering a Bill, S250, which would create a sales tax holiday.  The proposal is an attempt to help the state recover from the devastation caused by last year’s Tropical Storm Irene.  Among other things, the tax holiday would waive the state’s 6% sales and use tax for general purchases of up to $2,000 apiece.  The tax holiday would take place on August 28, 2012, the one-year anniversary of Irene.


Vermont Introduces New “Amazon” Law

On January 31,Bill H.639, a replica of the California-style “Amazon” law, was introduced to the legislature.  The Bill would require remote sellers, such as Amazon.com, to collect and remit state sales tax on Vermont purchases.  Currently, Vermont maintains an “Amazon” law similar to New York, but with a twist.  The current Vermont “Amazon” law requires out-of-state sellers with in-state affiliates to collect sales taxes from Vermont purchasers only after fifteen (15) or more states have adopted requirements that are the same or substantially similar to its own “Amazon” law.  The new Bill seeks to repeal the current “Amazon” law’s language relating to the 15-state requirement and instead implement language similar to California’s AB 155.  However, pursuant to the Bill, if Federal sales tax streamlining legislation requiring tax collection on remote sales is not implemented before July 31, 2012, Vermont would require collection of the state sales tax from remote sellers beginning September 1, 2013.



Washington Releases 2012 Tax Exemption Study

The Washington Department of revenue has issued its2012 Tax Exemption Study, presenting a detailed list of tax exemptions for state and local taxes, including exemptions relating to: property tax; excise tax; business and occupation tax; public utility tax; and sales and use tax.



Wisconsin Warns Taxpayers about Tax Services Providing “Quick Money” and “Instant Tax Refunds”

The Wisconsin Department of Revenue has issued a warning to taxpayers thinking of availing themselves of tax services that advertise “instant tax refunds” or “quick money.”  The Department has urged taxpayers to reconsider doing so, since these quick refunds are essentially just loans that will ultimately cost the taxpayer in fees and interest.