Articles Posted in New York

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New York State increased the sales tax economic factor presence nexus threshold from $300,000 to $500,000. The change is retroactive to June 1, 2019. Accordingly, marketplace providers with no physical presence in the state are required to register and collect New York sales tax if the provider’s gross receipts from sales of tangible personal property in New York is equal to or exceeds $500,000 and facilitated more than 100 sales of tangible personal property delivered in the state. The sales are computed over the past four sales tax quarters. It’s not clear what prompted the state to increase the gross receipts threshold of the economic nexus standard—there are no other changes to the definition of marketplace provider, marketplace sellers or to any of the liability relief provisions. (For more information, access the recently issued marketplace provider guidance here, and the prior guidance here.)

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tei new yorkPillsbury 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.

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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).

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(This article was originally published by Bloomberg’s Daily Tax Report: State.)

Recent developments in several key states, including Illinois, New York, Minnesota, and Oregon, will impact many captive insurance companies. These states are moving to include certain captives in corporate income tax combined returns with parents and affiliates. The effect of combination is to tax the captives’ investment income and to disallow the deductions for premiums paid to the captives. New York and Minnesota are also using the federal definitions of “insurance” to determine whether captive insurance companies are combinable and subject to corporate income tax.

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(This article originally was published by Law360 on March 17, 2016.)

A New York state Division of Tax Appeals administrative law judge issued three determinations addressing the tax implications for unauthorized insurance companies, both life and nonlife.[1] Significant uncertainty has surrounded New York state’s taxation of unauthorized insurance companies since New York state amended its insurance tax provisions (Article 33) in 2003. The Department of Taxation and Finance even issued a technical memorandum in 2012 reversing its prior position on unauthorized life insurance company taxation. These ALJ determinations provide much needed clarity, although questions still remain.

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In Part I of this series, we shared our experience and insight regarding New York sales tax audits involving online services. We described our strategy of: (1) providing a highly technical description of how a service operates and what users can and cannot do; (2) emphasizing the role of employees or external data points, such as proprietary databases or communication links with third parties; and (3) comparing the primary purpose of the service to a more traditional (nontaxable) service.

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Since late 2008, the New York State Department of Taxation and Finance has routinely taken the position that charges for application service provider (ASP) services, software-as-a-serve, or other online services may be subject to New York sales tax as licenses of software, which are taxable as sales of tangible personal property. Some sellers began collecting sales tax on this basis, and the department has audited and assessed many sellers who did not.

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On May 15, 2015, the New York State Department of Taxation and Finance released Advisory Opinion TSB-A-15(2)S which concluded that sales of certain cloud computing services are not subject to New York State sales and use tax. The Advisory Opinion is noteworthy because of the Department’s position on the taxability of licensing prewritten software.

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