The Pennsylvania Governor signed H.B. 1342 to enact changes to the state’s corporate income tax. The legislation modifies the corporate income tax in three ways: (1) adopts a bright-line economic nexus standard; (2) adopts market sourcing for receipts from intangibles; and (3) reduces the corporate tax rate and gradually continues to reduce the rate over the next eight years. Continue Reading ›
Articles Posted in Pennsylvania
Pennsylvania’s Agency Deference Bait and Switch: Synthes USA
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).
The Evolution of Software as a Service Taxes Post-Wayfair
(This article originally was published by Law360 on May 17, 2019.)
In the last year, several state legislatures have enacted laws and several state courts have published decisions on whether software as a service, or SaaS, is subject to sales and use tax. These developments impact many SaaS providers, especially due to the expanded nexus provisions that many states are enacting after the United States Supreme Court’s South Dakota v. Wayfair Inc. decision.1 The states have gone in different directions—Indiana enacted legislation exempting SaaS, while Iowa and Rhode Island began taxing SaaS. The Massachusetts Appellate Tax Board and the Pennsylvania Board of Finance and Revenue have both issued decisions clarifying the taxability of SaaS offerings.
Transparency Versus Confidentiality in 2019 Tax Disputes
(This article was originally published by Law360 on January 15, 2019.)
The growing tension between government promises of transparency and taxpayers’ right to confidentiality is likely to continue in 2019. Although the spirit of government transparency to enhance public access is well-meaning, this lofty goal often conflicts with taxpayer confidentiality and the associated expectation of privacy. Striking the appropriate balance between these two often conflicting positions can prove difficult, as highlighted by two recent developments, namely, the Pennsylvania Board of Finance and Revenue’s push to record and publish hearings on its website and the California Office of Tax Appeals’ attempts to address concerns regarding closed hearings and sealed records.