In a much-anticipated decision concerning the situsing of receipts from intangibles for Ohio commercial activity tax (CAT) purposes, the Ohio Supreme Court rejected the Ohio Department of Taxation’s attempt to situs NASCAR Holdings, Inc.’s broadcast revenue, media revenue, licensing fees, and sponsorship fees to Ohio. The court’s opinion in NASCAR Holdings, Inc. v. McClain, Slip Op. No. 2022-Ohio-4131 (Nov. 22, 2022), confirms that under Ohio law receipts based on the right to use intellectual property may be sitused to Ohio only if the receipts, i.e., the underlying payments, are tied to a specific right to use the property in Ohio. Continue Reading ›
An administrative law judge (ALJ) in the New York State Division of Tax Appeals cancelled the New York State Division of Taxation’s notice of determination asserting sales tax on petitioner’s verification services. The October 6, 2022 determination in Matter of Employment Screening Services, LLC, confirms that petitioner’s services are properly characterized as nontaxable information services because this verification report is tailored and customized based upon the specific applicant.
An administrative law judge in the New York State Division of Tax Appeals rejected the state’s position that a taxpayer providing a web-based service which allowed clients to identify effective and ineffective messaging through information, analysis, and reports was selling taxable software. Following the rationale applied in a series of recent sales tax cases, including Matter of 1Life Healthcare, Inc., DTA No. 829434, and Matter of Breakdown Services, Ltd., DTA No. 829396, the judge concluded in her September 29, 2022 determination that the taxpayer’s service was nontaxable because its primary function was an information service that was personal or individual in nature.
In the Appeal of Sheward, 2022-OTA-228P (May 25, 2022), the California Office of Tax Appeals (OTA) held the California Franchise Tax Board (FTB) failed to follow its own market-based sourcing apportionment regulation by prematurely using reasonable approximation to source the income of a multistate unitary business. During the tax year 2017, the taxpayer operated a business providing in-person services as a horse racetrack judge in California and Minnesota but failed to file a California return. Related to such services, the taxpayer received Form 1099s from the State of California, the State of Minnesota, and Minnesota Harness Racing, Inc.