Articles Posted in Issues

Posted
by and

https://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.png

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.

Continue Reading ›

Posted
by , and

A Maryland state court struck down the state’s Digital Advertising Gross Revenues Tax (“Digital Ad Tax”) as invalid under both the federal Internet Tax Freedom Act (“ITFA”) and U.S. Constitution. https://seesalt.pillsburylaw.com/files/2021/02/200px-Seal_of_Maryland_reverse.svg_.png

Enacted February 12, 2021, Maryland’s Digital Ad Tax by its terms applies to any person with at least $1 million of annual gross revenues from digital advertising services in Maryland and global annual gross revenues of at least $100 million.  The tax applies broadly to “digital advertising services,” including banner advertisements, search engine advertisements, interstitial advertisements, and other comparable advertising services accessed on a digital interface in Maryland.  The Digital Ad Tax is imposed on revenue derived from digital advertising services in Maryland and applies at rates increasing from 2.5% to 10% depending on the taxpayer’s global annual gross revenue, regardless of where the revenue is earned. Continue Reading ›

Posted
by and

https://seesalt.pillsburylaw.com/files/2020/03/1200px-Seal_of_New_Mexico.svg_-297x300.png

A New Mexico Hearing Officer found that Gross Receipts Tax does not apply to a taxpayer’s markup for services performed outside New Mexico, but the taxpayer’s reimbursements for payroll to New Mexico employees are taxable New Mexico receipts.  In Protest of Talbridge, the taxpayer was a Texas employment agency with no offices in New Mexico that was the legal employer of individuals providing services to a client in New Mexico.  The client recruited and interviewed candidates and, if hired, provided the employee a list from which to select their desired payroll provider.  If the employee chose the taxpayer, the taxpayer charged the client the payroll expense plus a percentage (“markup”) as compensation for its services.

Continue Reading ›

Posted
by , and

The American Catalog Mailers Association (ACMA), which describes itself as the nation’s leading industry trade association advocating for catalog, online, direct mail, and other remote-selling merchants and their suppliers, has filed suit against the California Franchise Tax Board (FTB) in the San Francisco County Superior Court of California.

https://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.png

ACMA’s complaint seeks a judicial declaration that the FTB’s 2022 publicly-issued guidance related to Public Law 86-272 (PL 86-272) – specifically, Technical Advice Memorandum (TAM) 2022-01 and FTB Publication 1050 – are invalid because (1) they contradict PL 86-272 and the U.S. Constitution; and (2) the FTB did not properly follow the California Administrative Procedure Act’s required rulemaking process before publishing such guidance.  In the alternative, ACMA seeks a judicial declaration that the FTB’s new guidance applies on a prospective basis only.  ACMA also seeks attorney’s fees and costs of suit for bringing the action to enforce an important right affecting the public interest.

Continue Reading ›

Posted
by and

The Pennsylvania Governor signed H.B. 1342 to enact changes to the state’s corporate income tax.[1]  Pennsylvania-PA-State-SealThe legislation modifies the corporate income tax in three ways: (1) adopts a bright-line economic nexus standard; (2) adopts market sourcing for receipts from intangibles; and (3) reduces the corporate tax rate and gradually continues to reduce the rate over the next eight years. Continue Reading ›

Posted
by

Our federal tax colleagues analyzed the corporate tax provisions in the Inflation Reduction Act, including the 15-percent minimum tax on corporations and the excise tax on stock buybacks.

1661469940689-1

Read More: Inflation Reduction Act of 2022 Includes New Corporate Tax Provisions (pillsburylaw.com)

Posted
by and

The California Court of Appeal held a nonresident S corporation shareholder’s pro rata share of gain on the sale of goodwill classified as business income by the S corporation has a California source and is subject to tax for personal income tax purposes to the extent of the S corporation’s California apportionment formula and is not sourced 100 percent to the nonresident shareholder’s domicile. Continue Reading ›