SeeSALT Blog
This article was originally published by Tax Notes State.
The Pennsylvania Commonwealth Court released its decision in the much-anticipated Synthes USA HQ Inc. v. Commonwealth case July 24. The case addressed the proper interpretation of Pennsylvania’s sales factor sourcing statute in effect for tax years before 2014, which sourced service receipts to the location where the “income-producing activity” occurred. The commonwealth court deferred to the Pennsylvania Department of Revenue’s interpretation, which construed income-producing activities to occur where the service provider’s customer receives the benefit of the services (benefits-received sourcing method).
A New York trial court held that charges for storage services rendered in New Jersey were not subject to New York sales tax despite the fact that the property was originally picked up in New York. 
Pillsbury SALT attorneys Marc Simonetti, Carley Roberts and Nicole Boutros will present during TEI NY’s State and Local Tax Summer Update Meeting, sponsored by Pillsbury, on August 26.
Pillsbury partners 
The California Court of Appeal recently came down with a published decision in the Paula Trust case, a case involving the taxation of trusts and limited partners—two very nettlesome issues in California. (
(June 18, 2020), California appellate court affirms that local realty transfer tax does not apply when leasehold has a remaining term of 35 years or more. SeeSALT authors Craig Becker, Breann Robowski, Richard Nielsen, and Robert Merten III explain.
and industrial properties will lose their Proposition 13 protection against property tax reassessment. 
SeeSALT partners Jeff Vesely, Craig Becker, Carley Roberts and Breann Robowski break down Governor Newsom’s proposed tax legislation, recently passed by the California Legislature, to raise additional income tax revenue to assist in balancing the California budget. (
The Tennessee Court of Appeals held that a single member limited liability company (SMLLC) that is disregarded for federal income tax purposes is regarded for Tennessee excise tax purposes unless its single member is classified as a corporation for federal income tax purposes. The court also held that proceeds from the settlement of a legal malpractice claim constitute “business earnings” subject to excise tax where the proceeds represent lost business revenue. EmeraChem Power, LLC v. Gerregano, No. E2019-00292-COA-R3-CV (Tenn. Ct. App. June 1, 2020). 
Earlier this month, a Washington state trial judge struck down the state’s recently enacted Business & Occupation Tax (“B&O) measure on large out-of-state financial institutions finding that although the tax measure was facially neutral, the purpose and effect of the tax was discriminatory against out-of-state banks. See Washington Banker’s Ass’n. et ano. v. State of Washington et al., Docket No. 19-2-29262-8 SEA (Wa. Kings County Super. Ct. May 15, 2020). As background, the Washington Bankers Association and American Bankers Association (collectively “Bankers Associations”) filed a challenge to invalidate state House Bill 2167, which seeks to impose a higher B&O tax on out-of-state financial institutions whose annual net income equals to or exceeds $1 billion (the measure would nearly double the B&O tax on out-of-state financial institutions from 1.5% to 2.7%). The Bankers Associations sought to invalidate the law, which became effective January 1, 2020, on the grounds that the measure violates: (1) the state’s constitutional requirement to introduce a bill at least 10 days prior to the adjournment of a legislative session; and (2) the U.S. Constitution’s Commerce Clause because it discriminates against out-of-state financial institutions by imposing a higher tax rate on out-of-state financial institutions versus in-state institutions. On February 13, 2020, the trial court dismissed the Bankers Associations’ state constitutional challenge, finding that the court was prohibited from looking into legislative procedures preceding the enactment of a statute that is “properly signed and appears fair on its face.” However, the judge’s decision preserved the Bankers Associations’ federal constitutional cause of action i.e., the B&O tax measure violates the Commerce Clause because it discriminates against out-of-state financial institutions by creating a differential tax rate for in-state versus out-of-state financial institutions. Upon further briefing, both parties moved for summary judgement and oral argument was held in the matter.