State Tax Knowledge Update (37 items) - Sept 21, 2017

The following are state tax and business developments I have curated since September 12th, and posted in the LEVERAGE SALT LinkedIn group:

Some of the items may be on the same state/issue/topic, but they are from different sources which may give you a broader perspective to help your company or client.

1. VA sourcing rules constitutional IPA where work performed

2. AL group may use NOLs generated before consolidated election

3. State Rundown 9/13: The Year of Unprecedented State Budget Impasses Continues

4. Comments on South Dakota’s Challenge to Quill

5. Domestic tax quarterly webcast series: a focus on state tax matters

6. South Dakota Supreme Court – Sales tax economic nexus provisions unconstitutional; appeal to US Supreme Court expected

7. Virginia Denies Alternative Market Approach for Sourcing Sales

8. South Dakota Supreme Court Rules in Favor of Remote Retailers; Next Step US Supreme Court?

9. Florida Provides Guidance Regarding Sourcing of Services for Income Tax Purposes

10. Pennsylvania Department of Revenue Attempts to Tax Information Retrieval Services: An Overview of Letter Ruling SUT-17-002

11. Foxconn Tax Credit Package Enacted in Wisconsin

12. Zapper Fraud Case Results in Mandatory Real-Time Monitoring

13. INDIVIDUAL INCOME INSIGHTS: CHECKING UP ON CHECKOFFS

14. CORPORATE CLOSE-UP: VIRGINIA COURT DENIES CORPORATION USE OF ALTERNATIVE METHOD OF APPORTIONMENT

15. PROPERTY TAX POST: ARE STATES TAKING THEIR TAKINGS POWER TOO FAR?

16. CORPORATE CLOSE-UP: ILLINOIS (FINALLY!) FINALIZES MARKET-BASED SOURCING REGULATIONS

17. INDIVIDUAL INCOME TAX INSIGHTS: INCOME TAX CONSEQUENCES OF NONRESIDENT TELECOMMUTING

18. CORPORATE CLOSE-UP: THE FTB’S SMALL CAP SOLUTION TO ALLEGED FINANCIAL AND NON-FINANCIAL COMBINED REPORTING APPORTIONMENT DISTORTION

19. CORPORATE CLOSE-UP: DELAWARE CONTINUES DEVELOPING UNCLAIMED PROPERTY RULES

20. State Tax Filing Relief for Victims of Hurricanes Harvey and Irma

21. Examining the Potential Tax Implications of Streaming Video Distribution

22. Alabama Appellate Court Affirms that Certain Separate Company NOL Carryforwards Can Be Claimed on Consolidated Return

23. New Delaware Law Includes Retroactive Tax Law Changes for Series Captive Insurance Companies

24. Illinois Tax Tribunal Holds that Insurance Premium Financing Subs Must File as Part of Combined Return for Financial Organizations

25. New Mississippi Law Allows Department of Revenue to Contract with Third-Party Auditors on a Contingent Fee Basis

26. Proposed Regulations Reflect Recent Montana Law Changes that Expand Waiver of Composite Return or Withholding for Domestic Second-Tier Pass-Through Entities

27. Pennsylvania Trial Court Finds NOL Cap is Unconstitutional

28. Tennessee DOR Issues Chart and Examples Depicting Apportionment Calculations Under Various Elections

29. Virginia Circuit Court Denies Alternative Apportionment Request and Upholds Validity of Standard Cost-of-Performance Method to Apportion Income from Subscription-Based Services

30. Massachusetts DOR Finalizes New Regulation Adopting Bright Line Nexus for Some Remote Sellers

31. Proposed Amended Ohio Rule Addresses Bad Debts, Assignment of Accounts Receivables, and Financing Companies

32. Illinois DOR Proposes Use Tax Nexus Standards for Trade Show Retailers

33. DON'T MISS the 24th Annual Paul J. Hartman SALT Forum

34. 2017 Oregon Legislative Tax Update

35. How Much Does Your State Collect in Corporate Income Taxes Per Capita?

36. REMINDER: Supreme Court to Consider West Virginia Tax Credits Case

37. Maine: 2017 Legislative Changes

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LEVERAGE SALT to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at strahle@leveragesalt.com.

New York Advisory Opinion: Sales Taxability of Webinar and Live Stream Products

The New York Department of Taxation and Finance issued an Advisory Opinion concluding that the petitioner's webinar and live stream products are not taxable, but two of the optional services are subject to state and local sales tax.

Pennsylvania Court Rules NOL Limitation Unconstitutional (AGAIN)

The Pennsylvania Commonwealth Court ruled yesterday that the Pennsylvania net operating carryover deduction limitation is unconstitutional. The taxpayer, RB Alden Corp, is entitled to a 100% offset of its corporate net income tax.

The Court overruled all of the Commonwealth’s exceptions to the Court's June 15, 2016 decision, concluding that, consistent with Nextel, the $2 million net loss carryover deduction limitation set forth in section 401(3)4.(c)(1)(A)(I) of the Code violates the Uniformity Clause of the Pennsylvania Constitution as it applies to RB Alden, entitling RB Alden to a 100% offset of its corporate net income tax. As a result, RB Alden owes zero tax to the Commonwealth for Fiscal Year 2006.

Note: The Nextel case is currently pending before the Pennsylvania Supreme Court. Oral arguments were heard April 5, 2017. Nextel Commc'ns of the Mid-Atlantic, Inc. v. Pennsylvania, No. 98 F.R. 2012, 2015 BL 384486 (Pa. Commw. Ct., Nov. 23, 2015) During the year in the Nextel case (2007), the cap was $3 million or 12.5% of taxable income.

Pennsylvania's current cap is $5 million or 30% of taxable income, whichever is larger.

28 State Tax Developments You May Want to Know - Sept 12, 2017

The following are state tax and business developments I have curated since September 5th, and posted in the LEVERAGE SALT LinkedIn group:

1. State income tax return extended due dates 2016 calendar year

2. While Virginia Supreme Court Holds “Subject-To-Tax” Means “Actually Taxed,” Determination of “Actually Taxed” is Relatively Broad for Purposes of Addback Exception

3. Corporate Income Tax Rates around the World, 2017

4. Wrapping Up August – and Looking Forward to September

5. How Much Does Your State Collect in Corporate Income Taxes Per Capita?

6. The Virginia Tax Amnesty Program will run for a 62-day period, beginning on September 13, 2017, and ending on November 14, 2017.

7. Guidance for 2017 Tennessee Hall Income Tax Released

8. As Political Division Grows, State Budgets Come in Later (If at All)

9. How Did America's Richest State Become Such a Fiscal Mess?

10. Indiana Ruling Holds that Taxpayer Successfully Showed Nexus with Foreign Jurisdictions for Sales Factor Throwback Purposes

11. New York ALJ Rules in Favor of Taxpayer - Receipts from Online Services Sourced Out-of-State

12. New York State Department of Taxation and Finance Removes Draft Proposed Regulation Section 4-2.12 Regarding Receipts from Certain Services to Investment Companies

13. South Carolina Appellate Court Affirms that Satellite TV Provider Must Source Subscription Receipts Based on Market because Signal Delivery is Income-Producing Activity

14. New York Advisory Opinion Explains Taxation and Sourcing of Interactive Software with Customized Skinning

15. New New York Law Extends Certain Real Property Transfer Tax Rate Reductions to 1 September 2020

16. California FTB proposes new withholding regulation for pass-through entities

17. This week's local policy digest includes the NC Brunch Bill, a housing discrimination ordinance, and a balloon ban.

18. California partnership returns: penalty relief available for 2016 returns and revised extension period in 2017

19. NFL Superstars Sacked by Jock Taxes on Away Games

20. State Revenue Volatility: An Inevitable Challenge With a Workable Solution

21. States vs. Marketplace vs. Third-Party Sellers––The Amazon Sales Tax Challenge

22. First U.S. Prosecution Over ‘Zapper’ Software Nets Guilty Plea

23. New York Tax Office Loses Another Case Against Remote Company

24. South Carolina income producing activity at customer location

25. NORTH CAROLINA IMPORTANT NOTICE: SALES TAX BASE EXPANSION PROTECTION ACT

26. TENNESSEE: Is there more than one formula for apportioning franchise and excise tax?

27. TENNESSEE: 2017 SALES AND USE TAX GUIDE

28. Virginia Supreme Court Rules in Addback Case

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LS to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at strahle@leveragesalt.com.

9/11 & Hurricanes - Hold Onto What Matters

Good morning. 9/11. Hurricanes. Monday. The news is uplifting and encouraging (NOT!). I was going to write about state taxes like I always do, but I couldn't do it today. Too many more important things to talk about, to think about, to discuss.

Tragedies unfortunately are a part of life. Wish they weren't. But like they say, we can't choose what happens to us, we can only choose how we respond. Life is what we make it, or how we remake it. We always have to turn lemons into lemonade. Find the good in the bad. 

Well, if we are trying to find the good in the bad from the hurricanes, it could be that it should force us to work together. To not argue about petty stuff. To find commonality. To respect the human in all of us. To realize what is really important in life. Not things, but people. Not money, but people. 

The other thing it should teach us is what to hold onto and what to let go of. All of our material possessions are things that are temporary. They could go at any moment. They are things that can give us joy, give us pleasure, and help us accomplish objectives. But they are replaceable. People - friends, family and pets. They are what is important. 

So today, I just want to say - regardless of where you are, if you are in the middle of the storm, or simply watching it from afar - I hope you pause to focus today on the things that matter. I hope you give those you love a little extra attention today (and every day). Don't lose focus. Let's not lose ourselves and the things that are irreplaceable while pursuing what is.

What Type of Evidence Do You Need?

If you are not a lawyer and you work in the state tax field, over time, after reading court case after court case, you begin to learn what different legal terms mean. If you have read any articles or statutes and regulations regarding the burden of proof taxpayers or departments of revenue must meet when proposing alternative apportionment, you have probably read the terms:

• Preponderance of Evidence
• Clear and Convincing (or Cogent) Evidence

But what do these terms mean?

Preponderance of Evidence

The preponderance of evidence standard is met if the proposition is more likely to be true than not true. Effectively, the standard is satisfied if there is greater than 50 percent chance that the proposition is true.

For example, in Mississippi, starting January 1, 2015, the commissioner may require a taxable corporation that is affiliated with one or more corporations that are not taxable to file a combined return with the affiliated corporation or corporations if he establishes by preponderance of the evidence that the intercompany transactions of the taxable corporation have resulted in the shifting of taxable income from itself to another member or members of its affiliated group not subject to tax. The commissioner may also require a taxable group of affiliated corporations to file a combined return if he establishes by preponderance of the evidence that the intercompany transactions of the corporations have resulted in the shifting of taxable income between members of the affiliated group (Miss Code Ann Sec. 27-7-37(2)(a)(ii)).

Clear and Convincing Evidence

Clear and convincing evidence is a higher level of burden of persuasion than "preponderance of the evidence."

Clear and convincing proof means that the evidence presented by a party during the trial must be highly and substantially more probable to be true than not and the trier of fact must have a firm belief or conviction in its factuality. In this standard, a greater degree of believability must be met than the common standard of proof in civil actions, which only requires that the facts as a threshold be more likely than not to prove the issue for which they are asserted.

This standard is also known as "clear, convincing, and satisfactory evidence"; "clear, cognizant, and convincing evidence"; and "clear, unequivocal, satisfactory, and convincing evidence"; and is applied in cases or situations involving an equitable remedy or where a presumptive civil liberty interest exists.

For your reference, the following is a sample list of cases that have discussed the level of evidence necessary to meet the burden of proof:

1. Equifax, Inc. v. Mississippi Dep’t of Revenue, No. 2010-CT-01857-SCT (Miss. 2013) 
2. CarMax Auto Superstores West Coast, Inc. v. South Carolina Department of Revenue, Docket No. 4953 (S.C. Ct. App. 2012) 
3. Microsoft v. Franchise Tax Board, 139 P.3d 1169 (Cal. 2006)
4. British Land (Maryland) Inc. v. N.Y. Tax App. Trib., 85 N.Y.2d 139, 147-48 (N.Y. Ct. App. 1995)

Note: the definitions above were obtained from "legal burden of proof" - Wikipedia. Other sources provide similar definitions.