Articles Posted in New York

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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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New York’s corporate tax reform includes sweeping changes affecting nearly every aspect of its corporation franchise tax. Although some taxpayers won’t feel the brunt of the changes until filing their 2015 tax returns in 2016, there are six decisions that should be made now. This article does not address imminent decisions required for New York City, because the city’s tax reform has not been finalized. However, the decisions discussed here will likely be required for the city, particularly if its tax reform is retroactively effective on January 1, 2015.

The remainder of this article can be accessed in the February 9, 2015 edition of State Tax Notes.

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On December 5, 2014, the New York State Department of Taxation and Finance issued TSB-M-14(5)C, (7)I, (17)S, explaining its policy regarding convertible virtual currency.

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As part of a sweeping law change, New York will require taxpayers to use a water’s-edge combined reporting method when filing corporate income tax returns beginning January 1, 2015.

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A New York state corporate franchise tax audit is almost as frustrating as participating in a coin toss with a one-sided coin. It seems like taxpayers cannot win. New York state auditors forcibly combine taxpayers that have filed separate returns and decombine taxpayers that have filed combined returns. Auditors also seem to use the commissioner’s discretionary authority to adjust a taxpayer’s income or expense arbitrarily, in place of a combination adjustment, when it leads to greater tax liability. In this A Pinch of SALT, we assert that the New York State Department of Taxation and Finance applies to its combined reporting and discretionary authority provisions arbitrarily to maximize its tax assessments.

The remainder of this article can be accessed in the May 19, 2014 edition of State Tax Notes.

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Taxpayers involved in state tax controversy matters often request information and documentation from state tax authorities to analyze audit adjustments. Some of those requests are thwarted by state tax authorities’ assertions of the deliberative process privilege to prevent the disclosure of information or documentation that may compromise the state tax authorities’ legal position.

The remainder of this article can be accessed in the December 10, 2012 edition of State Tax Notes.

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