SeeSALT Blog
(This article originally was published by Law360 on January 16, 2020.)
The saga continues in Arizona v. California, Arizona’s U.S. Supreme Court challenge of California’s tax reach, but signs are strong it may be ending soon.
Last year, Arizona filed a motion to the court seeking to file a complaint against California under the court’s original and exclusive jurisdiction over controversies between states.1 Arizona contends California assesses and enforces its doing business tax (i.e., an $800 annual and minimum tax imposed on businesses doing business in the state) so expansively that it unconstitutionally “reaches out-of-state companies that do not conduct any actual business in California, and indeed have no connection to the state except for purely passive investment in California companies.”2
The Washington Court of Appeals held that Gartner, Inc.’s online research service was a digital automated service subject to the state’s retail sales tax and retailing Business and Occupation (B&O) Tax. Gartner, Inc. v. Washington Department of Revenue, No. 51637-3-II (Wash. App. Div. 2 Jan. 13, 2020). This decision addressed the scope of Washington’s “human effort” exclusion from the retail sales tax, the applicability of the “bundled transaction” and “true object” tests to offerings that contain taxable and nontaxable components, and the Internet Tax Freedom Act.
Pillsbury SALT was proud to present TEI/IPT Silicon Valley’s State and Local Tax Day & IPT Joint Meeting on December 5! The team presented a 3/4-day seminar that focused on topics related to the State and Local Tax implications of the Tax Cuts and Jobs Act, the U.S. Supreme Court’s decision in Wayfair, and other hot topics in state and local taxation.
Tax Executives Institute’s New York Chapter presents its 56th Annual Tax Symposium on December 12! The Symposium offers three concurrent technical tax sessions for Federal, State and Local and International Taxes with a wide range of important topics and great speakers. The State and Local Tax session will feature a New York Update Session with Michael Schmidt, New York State Commissioner – Department of Taxation and Finance and Deborah Liebman, Deputy Counsel, New York State DTF. In addition, acting Director, Division of Taxation, John Ficara will be joining for a New Jersey Tax Reform 2019 Edition discussion.
The Multistate Tax Commission (MTC) is updating its Public Law 86-272 guidance, “Statement of Information Concerning Practices of Multistate Tax Commission and Signatory States under Public Law 86-272,” to address internet activities. This guidance was last updated in 2001. The latest draft guidance, dated October 15, 2019, provides examples of when the use of an “interactive” website will defeat P.L. 86-272 immunity, even if the company has no other contact with the customer’s state. Such examples include:
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.”