Articles Posted in States

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The Alabama Tax Tribunal held the taxpayers’ wholesale sales of fuel that entered and exited the state via the Colonial Pipeline were subject to the state’s wholesale oil license fee. The sales in question were made to Alabama license holders and involved fuel imported from out-of-state. The fuel would either enter Alabama from out-of-state through the Colonial Pipeline or be injected in the pipeline at a point in Alabama. In either instance, the fuel was bound for final movement out of Alabama with there being no subsequent point in Alabama where the fuel could exit the pipeline.

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California Governor Gavin Newsom has signed legislation (i.e., S.B. 113) to, among other things, reinstate business tax credits and net operating loss (NOL) deductions originally limited by the enactment of A.B. 85 in 2020.

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Two organizations, the Washington Bankers Association and American Bankers Association (collectively, the “Associations”), are urging the U.S. Supreme Court to review the constitutionality of Washington’s business and occupation surtax on large financial institutions. On January 28, 2022, the Associations filed a cert petition arguing that the surtax discriminates against interstate commerce in violation of the Commerce Clause and that the Washington Supreme Court’s decision upholding the surtax is erroneous.

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California Supreme Court holds that courts can entertain arguments that a BID assessment scheme violates certain provisions of Proposition 218 when raised by a party who did not articulate these objections in public hearings held to consider protests.https://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.png

On December 20, 2021, the California Supreme Court reversed the court of appeal which had concluded that petitioners failure to present their objections to proposed business improvement districts (“BIDs”) and related assessment schemes at the appropriate public hearings meant they had not exhausted their extrajudicial remedies, a lapse that prevented the court from deciding petitioners’ claims on the merits.  Hill RHP Housing Partners, L.P. et al. v. City of Los Angeles, No. S263734.

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On September 30, 2021, the Washington Supreme Court upheld the constitutionality of the state’s 1.2% Business & Occupation (“B&O”) surtax on large financial institutions.  Wash. Bankers Ass’n v. State, No. 98760-2 (Wash. 2021).  The surtax, which went into effect January 1, 2020, applies to every “specified financial institution,” which is defined in relevant part as a financial institution that is a member of a consolidated financial institution group with consolidated annual net income of $1 billion or more. SealofWashingtonStateSeal-300x300

The Washington Bankers Association and the American Bankers Association (collectively, the “Associations”) filed a declaratory relief action seeking to invalidate the surtax on the grounds that the measure discriminates against interstate commerce in violation of the Commerce Clause.  In 2020, a Washington trial court entered summary judgment for the Associations, holding that the statute discriminates against interstate commerce in purpose and effect.  The trial court also held that the Associations had standing under the state’s Uniform Declaratory Judgments Act (the “UDJA”) to bring an action on behalf of their members challenging the surtax. Continue Reading ›

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This week, Governor Newsom vetoed Senate Bill 792 (Glazer), which would have required large online retailershttps://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.png to include with their sales tax returns an additional schedule that reports gross receipts based on the “ship to” or destination location.  The bill targeted online retailers with over $50 million in annual sales of tangible personal property.  Qualifying online retailers that failed to report this information would have been subject to a penalty of $5,000.

California imposes a statewide sales tax on retailers for the privilege of selling tangible personal property at retail within the state, measured by the gross receipts from each sale.  An additional sales tax of 1.25% (the Bradley-Burns Tax) is imposed on sales subject to the statewide sales tax, of which 1% is allocated to localities to use at their discretion and the remainder is distributed to county local transportation funds to support transportation programs. Continue Reading ›

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In One Technologies LLC v. Franchise Tax Board, an out-of-state California corporate taxpayer filed suit in California trial court challenging the state’s mandatory single sales factor apportionment formula on the basis its passage in 2012 via voter initiative Proposition 39 unconstitutionally violated the “single subject rule.”

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The California Department of Tax and Fee Administration (Department) has given notice that it proposes to amend California Code of Regulations, title 18, section (Regulation) 1706, Drop Shipments.  Regulation 1706, subdivision (c) provides that a drop shipper making a drop shipment must report and pay tax measured by the retail selling price of the property paid by the California consumer to the true retailer, unless the sale and use of the property are otherwise exempt.  The proposed amendments clarify that marketplace sales are generally not drop shipment transactions and provide more guidance about how a person can overcome the presumption they are a drop shipper. https://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.png Continue Reading ›

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Five years and six interested parties meetings later, California is finally ready to proceed with the formal rulemaking process to adopt substantial amendments to its market-based sourcing rules.  At the Franchise Tax Board’s September 9, 2021 meeting, FTB staff requested permission and received approval from its three-member Board to commence the formal regulatory process under California’s Administrative Procedure Act (APA) to amend California Code of Regulations, Title 18, section 25136-2 (Regulation 25136-2). https://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.png Continue Reading ›

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The West Virginia State Tax Department released new guidance, TSD-445, that clarified that streaming services are subject to sales and use tax in the state.  The Department’s guidance distinguishes streaming services from digital products, which are specifically exempted under the law.  The Department explains that streaming services are subject to a 6% state sales and use tax, in addition to up to 1% in municipal sales and use tax if applicable, because West Virginia taxes all services unless a specific exception or exemption applies.State-Seal-Spot-Color-300x300

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