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.
Court of Appeal Holds Transfer Tax Applies to Legal Entity Changes in Ownership
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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.
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What New York Can Learn From California’s Combined Reporting History
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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.
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United States Supreme Court to Review Ruling in Direct Marketing
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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.
Ocean Avenue LLC v. County of Los Angeles Affirmed; AB 2372 Passes Assembly
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On June 3, 2014, in a published decision, the California Court of Appeal for the Second Appellate District affirmed the Superior Court ruling in Ocean Avenue LLC v. County of Los Angeles, holding that even though 100 percent of an entity was sold, a reassessable change in ownership of the entity’s real property did not occur because no one person obtained more than 50 percent of the entity. Assembly Bill 2372 would change that result by requiring reassessment of an entity’s realty if 90 percent or more of its ownership interests were sold within a three year period, even if no one owner acquired more than 50 percent.
Heads They Win, Tails You Lose: New York Decombination and Discretionary Adjustments
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A New York state corporate franchise tax audit is almost as frustrating as participating in a coin toss with a one-sided coin. It seems like taxpayers cannot win. New York state auditors forcibly combine taxpayers that have filed separate returns and decombine taxpayers that have filed combined returns. Auditors also seem to use the commissioner’s discretionary authority to adjust a taxpayer’s income or expense arbitrarily, in place of a combination adjustment, when it leads to greater tax liability. In this A Pinch of SALT, we assert that the New York State Department of Taxation and Finance applies to its combined reporting and discretionary authority provisions arbitrarily to maximize its tax assessments.
The remainder of this article can be accessed in the May 19, 2014 edition of State Tax Notes.
70 Days and Counting: Clock Is Ticking to Claim Embedded Software Tax Exemption
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The amount of non-taxable embedded software being taxed in California is a staggering number. While companies own assets with millions of dollars of embedded software, few companies are maximizing their property tax savings through the embedded software exemption. The good news is that it is not too late to dig in and maximize your potential tax savings. Most businesses have until May 7, 20141 to file their annual Business Property Tax Statements (Form 571-L) with California counties.
The Deliberative Process Privilege in State Controversy Matters
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Taxpayers involved in state tax controversy matters often request information and documentation from state tax authorities to analyze audit adjustments. Some of those requests are thwarted by state tax authorities’ assertions of the deliberative process privilege to prevent the disclosure of information or documentation that may compromise the state tax authorities’ legal position.
The remainder of this article can be accessed in the December 10, 2012 edition of State Tax Notes.
Between a Rock and a Hard Place: Third-Party Enforcement Actions
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With the significant rise of third-party enforcement actions—especially consumer class actions and qui tam actions involving state tax questions—corporate taxpayers are being forced to assess a significant set of risks in connection with their compliance obligations.
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Intrastate Apportionment: Ripe for Equitable Relief?
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The California Franchise Tax Board has issued a chief counsel ruling stating that a registered broker-dealer must include the entire sales price received from the sale of securities—including the return of capital—in the sales apportionment factor. Interestingly, the chief counsel determined that California’s alternative apportionment provisions do not apply to the combined group’s intrastate apportionment result.