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In 1993, the California Legislature amended Revenue and Taxation Code (RTC) sections 6011 and 6012 to exclude from California sales and use tax amounts charged for intangible personal property transferred with a technology transfer agreement (TTA) if the TTA separately stated a reasonable price for the tangible personal property (TPP). Nine years later, the State Board of Equalization (SBE) adopted Regulation 1507, Technology Transfer Agreements, to implement and interpret the TTA statutes and to incorporate the California Supreme Court’s holding in Preston v. State Board of Equalization, 25 Cal.4th 197 (2001). Subsequent litigation over the next 13 years in Nortel Networks, Inc. v. State Board of Equalization, 191 Cal.App.4th 1259 (2011) and Lucent Technologies, Inc. v. State Board of Equalization, 241 Cal.App.4th 19 (2015), invalidated portions of Regulation 1507, as well as Regulation 1502 (Computers, Programs and Data Processing). In the nine years since the Lucent decision, the SBE and its successor, the California Department of Tax and Fee Administration (CDTFA), have been engaged in a seemingly endless regulation project.

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The New Mexico Court of Appeals has held that a multinational oil and gas production company did not constitute a “unitary corporation” with its foreign subsidiaries, pursuant to statutory carve-out language regarding the term “unitary corporation.”

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The New Jersey Tax Court held that a taxpayer was entitled to a refund of corporation business tax (CBT) for tax years 2011 and 2012 after determining the taxpayer correctly used a market-based sourcing methodology to source service receipts to New Jersey.  In its unpublished April 11, 2024, opinion, the court rejected the argument that the law and regulations in effect during the tax years at issue, which preceded 2018 legislation adopting market-based sourcing, required the use of a cost of performance (COP) methodology.

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Zack Atkins’ comments in Law360 Tax Authority regarding newly passed legislation in Tennessee that could provide taxpayers with up to $1.6 billion in rebates for portions of three years of past payments and up to $400 million in new savings each year.

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https://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.pngThe May Revision of California’s 2024-2025 state budget seeks to block refund claims, worth approximately $1.3 billion for historical tax years, and $200 million per year going forward, by codifying informal guidance recently rejected by the Office of Tax Appeal’s (OTA) decision in the Matter of the Appeal of Microsoft Corporation & Subsidiaries (Appeal of Microsoft) and by granting the Franchise Tax Board’s (FTB) quasi-legislative rulemaking authority exempt from the procedural protections afforded by the Administrative Procedure Act.  The May Revision also proposes to suspend net operating loss (NOL) deductions and limit tax credit utilization to $5 million per year for tax years 2025-2027; however, the legislature proposes to apply the changes to tax years 2024-2026 instead.

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