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A California trial court granted summary adjudication in the American Catalog Mailers Association’s (ACMA) action against the Franchise Tax Board (FTB), invalidating FTB guidance that says certain online activities exceed the protections of Public Law 86-272 for state income tax purposes. This follows the court’s denial of ACMA’s first motion for summary adjudication, which we discussed in detail in an earlier blog post, where the court found ACMA did not carry its burden to show FTB Technical Advice Memorandum (TAM) 2022-01 and amendments to FTB Publication 1050 are facially invalid because they contradict PL 86-272.

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On November 7, 2023, the Supreme Judicial Court of Maine held a taxpayer’s receipts from the performance of pharmacy benefit management (PBM) services should be apportioned using a look-through approach.  Specifically, the court held such services receipts should be apportioned to the state where the prescription drug is dispensed by retail pharmacies to individual members (i.e., the market member method), rather than the state where the taxpayer’s client’s primary commercial and administrative headquarters is located (i.e., the market client method).

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https://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.pngIn the Appeal of Southern Minnesota Beet Sugar Cooperative (2023-OTA-342P) (Beet Sugar), the California Office of Tax Appeals (OTA) issued a precedential opinion holding the California Franchise Tax Board (FTB) is not entitled to apply its FTB Legal Ruling 2006-01 (Apr. 28, 2006) to prohibit taxpayers from including in their apportionment factors property, payroll, and sales that generated statutorily deductible income. The OTA’s guidance on the FTB’s interpretation and application of Legal Ruling 2006-01 in this opinion also has implications beyond the specific issue in Beet Sugar, as the FTB has been attempting to expand the application of the limited legal ruling to other inapplicable situations. For example, an opinion by the OTA in the Appeal of Microsoft Corporation & Subsidiaries (OTA Case Number 21037336) is also anticipated to be issued soon, which appeal concerns whether the FTB is entitled to apply Legal Ruling 2006-01 to prohibit taxpayers from including in their apportionment sales factors statutorily deductible foreign dividend amounts.

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The entire Pillsbury State and Local Tax (SALT) Team is very proud to congratulate our practice leader Carley Roberts for receiving the prestigious Benjamin F. Miller award during this year’s California Annual Meeting of the Tax Bar and Tax Policy Conference.

This award is presented annually by the California Lawyers Association’s Taxation Section to recipients recognized for having achieved professional excellence and notable contributions in the field of state and local taxation law akin to the attorney the award is named after, Benjamin F. Miller.

Carley has been achieving professional excellence and notable contributions to SALT, both in California and nationwide, for approximately 25 years and counting.  Throughout this quarter century, Carley has also worked prolifically towards successfully garnering effective collaboration and cooperation between the private and public sectors of SALT.

Congratulations Carley!

Read more: Carley Roberts Honored with Benjamin F. Miller Award by California Lawyers Association

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State & Local Tax special counsel Zack Atkins and counsel Evan Hamme recently served on panels discussing important developments in state and local tax at the Paul J. Hartman State and Local Tax Forum in Nashville, Tennessee.

Read more about their panels on Tax Notes (subscription required): Panelists Discuss Challenges of True Object Test for Mixed Transactions | Tax Notes and Transfer Pricing Relevant for Addback Exceptions, Panel Says | Tax Notes.

 

 

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The Pillsbury SALT team had a memorable time last week at COST’s 54th Annual Meeting in Las Vegas, NV.  Carley Roberts, Zachary Atkins and Evan Hamme were all speakers during the annual meeting, and the rest of the team attended a variety of substantive sessions on SALT issues and state tax trends.  On Wednesday evening, the team also hosted a unique and memorable client event in the SKYLOFTS at MGM Grand.

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Join Jeff Phang, Jeff Vesely and Robert Merten on day two of the California Lawyers Association’s 2023 Annual Meeting of the Tax Bar and Tax Policy Conference, when they will each speak on separate panels.

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9:40 – 10:40 AM Sourcing Income from Passthrough Entities & Developments Since Metropoulos – Jeff Phang
This panel will focus on the interplay between the California personal income tax law and the tax law for entities in the context of sourcing income—namely, income derived from an ownership interest in a pass-through entity or the sale of that ownership interest.

10:50 – 11:50 AM California Litigation Update – Robert Merten
This panel brings together well-known speakers from the Franchise Tax Board, California Department of Tax and Fee Administration and private practice for a candid overview of the important developments of SALT litigation on a national and state level.

1:45 – 3:15 PM Substantial and Occasional Developments in Alternative Apportionment for Corporate Income Tax – Jeff Vesely
This panel will discuss California’s alternative apportionment rules with a focus on the Substantial and Occasional Sale rule.

For more information or to register, please visit the event page.

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On July 3, 2023, Governor Phil Murphy signed into law A.B. 5323, enacting important revisions to New Jersey’s Corporation Business Tax (CBT)[1] including expanding the definition of what constitutes a “unitary business.”  The expanded definition now includes affiliated entities that may not have previously met the requirements for combined group membership for CBT purposes.      seal-of-new-jersey_800-300x300

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