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.
(This alert was also published as a bylined article by Law360 on July 31, 2015.)
Over five years into a personal income tax residency audit by the California Franchise Tax Board (FTB), Gilbert Hyatt filed a civil suit in Nevada state court against FTB alleging tortious conduct by FTB auditors. After more than 17 years of litigation, including a previous trip to the United States Supreme Court, the High Court has again agreed to weigh in, this time to decide the extent the United States Constitution requires Nevada to provide the FTB immunity from such a civil suit.
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.
On March 10, 2015, the New Jersey Division of Taxation issued Technical Advisory Memorandum TAM-2015-1, explaining its policy regarding convertible virtual currency.
On March 3, 2015, the United States Supreme Court overturned the Tenth Circuit Court of Appeals’ decision in Direct Marketing Association v. Brohl. The Supreme Court held that the Tax Injunction Act (TIA), which bars federal courts from restraining the assessment, levy, or collection of state taxes, did not divest the federal district court of jurisdiction to decide whether Colorado’s use tax reporting provisions violate the Commerce Clause of the United States Constitution.
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.
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.
In 926 North Ardmore Avenue, LLC v. County of Los Angeles, the 2nd District Court of Appeal held that Proposition 13 changes in ownership prompted by transfers of legal entity interests should also be characterized as “realty sold,” resulting in the imposition of realty transfer taxes under the California Documentary Transfer Tax Act in cases even where no real property interests are transferred at all.
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.
On July 1, 2014, the United States Supreme Court agreed to review the 10th Circuit Court of Appeals decision in Direct Marketing Association v. Brohl.1 The Court of Appeals held that federal courts lack jurisdiction under the Tax Injunction Act (TIA) to address Direct Marketing Association’s (DMA) challenge to Colorado’s use tax notice and reporting provisions.
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