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https://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.pngThe 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. (Steuer v. Franchise Tax Board, No. A154691, 2020 BL 240383 (Cal. Ct. App. 6/29/20)). The Court of Appeal reversed the trial court and held that the trust was taxable on the entire capital gain generated from the sale of stock in various businesses. The case involves California’s unique and somewhat confusing system of taxing trusts. Generally speaking, the taxability of a trust is dependent upon the residency of fiduciaries (i.e., trustee) and beneficiaries. In this case, there were two trustees—one who was a California resident and one who was a Maryland resident, along with a contingent beneficiary who was a California resident.

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https://seesalt.pillsburylaw.com/files/2020/07/1200px-Seal_of_the_District_of_Columbia.svg_-300x300.pngThe District of Columbia Council finalized the 2021 fiscal year budget yesterday, which removed the recently enacted digital advertising tax. The Council’s July 28 vote formalized the elimination of a proposed 3% sales tax on gross receipts from traditional and digital advertising services and from the sale of personal information (e.g., IP addresses, , names, phone numbers, biometric data etc.). The proposal defined “digital advertising services” as “advertising services related to advertisements displayed on a digital interface, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising, or other comparable advertising.” “Digital interface” was defined as “any combination of hardware and software that an individual may use to access internet-based platforms such as websites, parts of websites, or applications.”

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In 731 Market Street Owner LLC v. City and County of San Francisco 731_Market_St-300x180(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.

Read the full article here.

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This November, California voters will decide whether commercial Split-Roll-Initiative-300x180and industrial properties will lose their Proposition 13 protection against property tax reassessment. Authors Craig Becker, Richard Nielsen, and Breann Robowski explain. 

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AB-85-300x180SeeSALT 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. (AB 85). The Senate and Assembly each achieved the two-thirds majority vote required for California tax increases (27-11 in the Senate and 56-20 in the Assembly), with Governor Newsom expected to sign the legislation later this week.

To view the full article, please click here.

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SealofTennessee-Seal-300x300The 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). Continue Reading ›

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SealofWashingtonStateSeal-300x300Earlier 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. Continue Reading ›

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The U.S. Court of Appeals for the Fourth Circuit held that a South Carolina law limiting increases in appraisedhttps://seesalt.pillsburylaw.com/files/2020/05/1200px-Seal_of_South_Carolina.svg_-298x300.png values of most commercial and industrial real properties to 15% within a five-year period violated the 4R Act because it discriminated against railroad properties.  CSX Transp., Inc. v. S.C. Dep’t of Revenue, No. 19-1154 (4th Cir. May 20, 2020). Continue Reading ›

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A San Francisco trial court judge has ruled that Proposition G, a parcel tax to fund educational purposes that passed with a 60.76% vote in 2018, is a valid voter initiative that did not requirehttps://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.png a two-thirds supermajority vote like local special taxes introduced by mayors or local boards of supervisors.  The same deciding judge already issued a pair of rulings in favor of San Francisco last July on similar supermajority vote validity-challenging actions concerning San Francisco’s Homelessness Gross Receipts Tax and Early Care and Education Commercial Rents Tax.  Both previous rulings are currently under separate appeals in the First District Court of Appeal.

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