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Articles Posted in Sales and Use Tax

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Three Strikes, You’re Out! New York Has Another Miss in Sales Tax Case Against a Service Provider Under the “Primary Function” Test

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…

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“Primary Function” Test Propels Yet Another Service Provider to Victory in New York Sales Tax Case

  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…

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Contractual Delivery Terms Control Application of Alabama’s Wholesale Oil License Fee

The Alabama Tax Tribunal held the taxpayers’ wholesale sales of fuel that entered and exited the state via the Colonial Pipeline were subject to the state’s wholesale oil license fee. The sales in question were made to Alabama license holders and involved fuel imported from out-of-state. The fuel would either…

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California Governor Vetoes Sales Tax Bill Seeking to Require Large Online Retailers to File Informational Reports Detailing Sales by Destination

This week, Governor Newsom vetoed Senate Bill 792 (Glazer), which would have required large online retailers to include with their sales tax returns an additional schedule that reports gross receipts based on the “ship to” or destination location.  The bill targeted online retailers with over $50 million in annual sales…

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West Virginia: Streaming Services Subject to Sales and Use Tax

The West Virginia State Tax Department released new guidance, TSD-445, that clarified that streaming services are subject to sales and use tax in the state.  The Department’s guidance distinguishes streaming services from digital products, which are specifically exempted under the law.  The Department explains that streaming services are subject to…

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Only Simple Majority Required (Again!): California Court of Appeal Holds SF’s Proposition G Citizen Initiative Did Not Require Supermajority Voter Approval; Reconsideration Request Pending

California’s Court of Appeal again held that a special tax measure placed on the local ballot as a citizen initiative required only a simple majority, not a supermajority, vote to pass.  Proposition G is a school parcel tax initiative that passed on San Francisco’s June 2018 ballot with 60.76% of…

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California Court of Appeal Says Tax for “Public Safety Services” and “Other Essential Services” Not a Special Tax

California’s Court of Appeal held a local sales tax ordinance (Measure K) was a general tax, not a special tax, and therefore its adoption did not require a two-thirds vote (supermajority) under California’s Constitution. A tax is “special” and therefore would require a two-thirds vote, when the expenditure of its…

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Massachusetts High Court Approves of Apportionment of Sales Tax on Software Through General Abatement Process

The Massachusetts Supreme Judicial Court recently held that software vendors have a statutory right to apportion tax on the sale of prewritten computer software purchased for use in multiple states and that they may do so through the Commonwealth’s general tax abatement process.  The court’s decision in Oracle USA, Inc.…

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Maryland Court of Appeals Rejects First Amendment Challenge to Local Tax on Outdoor Advertising Services

On February 15, 2021, the Maryland Court of Appeals issued a decision in Clear Channel Outdoor, Inc. v. Director, Department of Finance of Baltimore City, Case No. 24-C-18-001778 (Md. 2021), upholding the constitutionality of a local ordinance that imposes an annual excise tax on businesses selling advertising space on off-site…

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Maryland Becomes First U.S. State to Enact Controversial Digital Advertising Tax to Immediate Challenge

On February 12, 2021, Maryland legislators voted to override Gov. Larry Hogan’s (R) veto of H.B. 732, making Maryland the first state in the nation to impose a digital advertising tax. While Maryland’s enactment of the bill is a first, other states have impending digital advertising tax bills, such as…