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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.

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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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https://seesalt.pillsburylaw.com/files/2020/05/1024px-Seal_of_Mississippi_2014–present.svg_-300x300.pngThe Mississippi Supreme Court rejected a taxpayer’s corporate income tax refund claim as untimely, holding that the timely issuance of a notice of examination and commencement of an examination tolled the statute of limitations for the Department of Revenue to make an assessment or effect a refund, but not for the taxpayer to claim a refund.  Caesars Entm’t, Inc. v. Miss. Dep’t of Revenue, No. 2019-CA-00155-SCT (Miss. May 7, 2020). Continue Reading ›

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The California Office of Tax Appeals held the Franchise Tax Board abused its discretion in failing to abate interest for a 248-day delay caused by the FTB’s failure to assign a protest hearing officer to the taxpayer’s protest. Taxpayer wins involving interest abatement requests on appeal are fairly uncommon in California and even more uncommon in precedential opinions. This makes exploring a taxpayer’s recent win before the OTA especially worthy.

The FTB has discretionary authority to abate interest related to a proposed deficiency to the extent the interest is attributable in whole or in part to an unreasonable error or delay by an officer or employee of the FTB in performing a ministerial or managerial act. On appeal, the OTA only reviews FTB’s interest abatement determinations for abuse of discretion. This makes a taxpayer’s burden of proof on appeal much greater than the ordinary preponderance of the evidence standard. The taxpayer must show the FTB exercised its discretion “arbitrarily, capriciously, or without sound basis in fact or law.”

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https://seesalt.pillsburylaw.com/files/2020/04/1920px-Seal_of_New_Hampshire.svg_-300x300.pngIn this burgeoning era of creative and aggressive tax collecting efforts by localities, the New Hampshire Supreme Court has unanimously struck down a state statute from permitting localities to profit from sales of properties acquired by tax deed after the passage of three years.  The Court held the state statute unconstitutional under the state constitution’s taking clause, which prohibits localities from taking property without just compensation.

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Chambers-USA-2020-300x252Pillsbury SALT is proud to announce its inclusion in the Chambers USA 2020 Guide. In 2020, Chambers ranked 28 Pillsbury practices and 79 individual lawyers. Tireless work & deep client relationships again awarded Pillsbury SALT’s Carley Roberts, Jeff Vesely and Marc Simonetti individual recognition. Continue Reading ›

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US-Map_SALT-300x186State income tax relief in the form of tax return filing and tax payment extensions, and the deployment of related administrative guidance, has evolved rapidly in the last several weeks in the face of the COVID-19 crisis. Of the 45 jurisdictions, including the District of Columbia, that impose an income tax on corporations, 40 have established income tax relief to corporate taxpayers in the form of tax payment extensions, return filing extensions and/or various penalty and interest relief during the extension period. Arkansas, Minnesota and Montana are playing hardball, affirmatively announcing no income tax relief will be provided to corporate taxpayers. Massachusetts has announced it purportedly does not have the authority to extend income tax filing or payment deadlines to corporations but has provided late-filing and late-payment penalty relief. And unique as always, Florida still appears to be on the fence.
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