There were two competing bills regarding tax sharing agreements (TSAs) this legislative session: SB 531 and SB 485. The former would have barred all TSAs at the local level as of January 1, 2020. The latter would not bar TSAs but instead would require the locality to report certain information pertaining to the agreement that would be made publicly available. On October 12, 2019, Gov. Gavin Newsom vetoed the bill that would have barred TSAs altogether and instead signed the other bill that requires publicly reporting certain information pertaining to the TSAs.
Pillsbury is proud to partner with TEI’s NY Chapter to host their State & Local Chapter Meeting. Join Pillsbury SALT and TEI NY Chapter members for “Sales Tax: Transformation in Action.”
In a presentation designed for sales tax compliance professionals at all levels, Sheila Rao, Senior Vice President, TEI NY Chapter, will present a step-by-step study of her company’s sales tax software implementation.
Nebraska’s tax department has issued guidance confirming its position that IRC 965 deemed repatriation income: 1) must be included in a taxpayer’s corporate income tax base (less the IRC 965(c) deduction); and 2) does not qualify for the state’s dividends received deduction. Nebraska Dep’t of Revenue, Gen. Info. Letter 24-19-1 (Sept. 13, 2019).
On Sept. 30-Oct. 2, members of Pillsbury SALT will lead discussions at COST’s property tax workshop in Las Vegas. This event aims to bring multistate property tax professionals together and discuss timely legislative and litigation updates, trends and opportunities to make sure your business’s property is not over taxed.
Topics will include:
- “Central or Local Assessment? Why It Matters and How to Take Advantage of Either Process,” (Breann Robowski)
- “California – A Property Tax Nation unto Itself” (Craig Becker)
- “Best Practices for Getting Fair High-Tech Property Valuations.” (Breann Robowski)
- “Ask the Experts – Practitioners Addressing Issues for Free” (Craig Becker)
For more information and to register, please visit the event page.
The California Office of Tax Appeals (OTA)—in a 3-0 pending precedential opinion granting the Appeal of Jali, LLC—has rejected the Franchise Tax Board’s (FTB) 0.2 percent ownership threshold as the new bright-line standard for determining whether an out-of-state LLC member is actively “doing business” (and thereby required to file and pay tax) in California. The FTB relied upon Swart Enterprises, Inc. v. Franchise Tax Bd. (2017) 7 Cal.App.5th 497 (Swart) to deem Jali as actively doing business in California because its membership interest in an in-state LLC ranged between 1.12 to 4.75 percent, which “was well beyond the 0.2% Swart limit.” However, the OTA determined the FTB misconstrued Swart and found Swart was “squarely grounded on the relationship between the out-of-state member and the in-state LLC” and not simply based on ownership percentage. The OTA then evaluated Jali’s facts and found no evidence it had “any ability or authority, directly or indirectly, to influence or participate in the management or operation” of the LLC that conducted business in California.
The Fifth Appellate District of the California Court of Appeal has struck another blow to taxpayers claiming California unconstitutionally discriminates against interstate commerce by permitting intrastate unitary businesses to file using either a combined reporting method or separate accounting method, while requiring interstate unitary businesses to file under the combined reporting method.
(This article originally was published by Law360 on August 21, 2019.)
The repercussions of the California Supreme Court’s August 2017 opinion in California Cannabis Coalition, et al. v. City of Upland, et al.1 continue to reverberate, leading San Francisco’s business taxpayers to wonder what practical precautions to consider.
In a February article, we analyzed the Upland opinion, the over 40-year history of California’s two-thirds supermajority voting requirement for passing local special taxes, and an introduction to the first five post-Upland litigation challenges, including San Francisco actions involving the validity of two separate Proposition C voter initiatives that passed in 2018 with a majority but not a supermajority vote. In a follow-up article last month, we provided an update on the status of these five supermajority tax challenges pending around the state, including trial court decisions made in the two San Francisco Proposition C actions.
The New York State Tax Appeals Tribunal (TAT) issued a decision that addresses sourcing “services” vs. the catch-all “other business receipts” for years prior to New York Tax Reform (tax years beginning prior to 1/1/2015). The TAT found that the taxpayer, who provided electronic litigation support to its clients, was not providing a “service” to its clients. Instead, the TAT found the taxpayer’s receipts were properly classified by the Department of Taxation and Finance as “other business receipts.” However, the TAT found for the taxpayer in determining where other business receipts must be sourced. The TAT found that the receipts should be sourced to where they are earned (as provided in the Department’s regulations) and found that the receipts were earned where the taxpayer performed the work resulting in the income, which was at the taxpayer’s Colorado location and not at the electronic devices of the taxpayer’s customers. Matter of Catalyst Repository Systems, Inc., DTA No. 826545 (Tax App. Trib. July 24, 2019).
After a successful SALT Retreat in Napa, Calif., the team headed to Foster City to present on topics at the COST State and Local Tax Workshop for Technology Companies. Marc Simonetti kicked things off by presenting on the session regarding market-based sourcing for tech companies. The following day Carley Roberts, Craig Becker, and Jeffrey Vesely spoke on a variety of topics including an overview of new and established local taxes in cities that are aggressively targeting businesses, property tax issues that impact the tech industry, and a question and answer panel with the experts. The presentations were very informative and the Workshop was a success!
(This article originally was published by Law360 on July 22, 2019.)
On July 5, the San Francisco Superior Court issued a pair of rulings in favor of the city and county of San Francisco, finding that two local special taxes introduced by voter initiatives were valid even though they passed with a simple majority vote and not a two-thirds supermajority vote.