SALT Blog - SALT Blawg

 by William Grimsinger

On Monday, November 28, 2011, the Texas Supreme Court ruled that the margin tax does not violate the Texas Constitution (specifically, the Bullock Amendment at Article VIII, Section 24) because it is not a tax on the net incomes of natural partners and that the Court did not have jurisdiction to entertain an equal and uniform taxation challenge.

This decisive ruling, with seven justices in the majority and two dissenting, puts an end to speculation about the fate of the margin tax.  The margin tax will remain in place at least through 2012 and likely 2013.  However ...

 By Paul Masters with contributions by Jennifer Weidler in Chamberlain’s Philadelphia office.

State Regulations and Public Notices

California Board of Equalization issues a proposal to amend the definition of “retailers engaged in business in this state,” in conformance with AB 155. It will take effect either September 15, 2012 or January 2013. The effect of this change would be to expand the requirement for retailers to register with the Board and remit California use taxes, or to be subject to payment of these use taxes on such failure to remit.

Utah State Tax ...

by Stewart Weintraub and Jennifer Weidler

Each year the Pennsylvania State Tax Equalization Board ("STEB") calculates and publishes the common level ratio ("CLR") for each county in the state.  The Pennsylvania General County Assessment Law provides that there cannot be more than a 15% differential between the STEB CLR and the county's Established Predetermined Ratio ("EPR"). 72 P.S. § 5020-511(c).  For decades the STEB CLR for Philadelphia County fell slightly below, but within 15% of the county's EPR of 32%.  This year marked a drastic change for Philadelphia.  For tax year ...

 By Paul Masters

State DOR Letters and Policy Rulings

Illinois Department of Revenue has issued several rulings, including:

* explains how prescription drugs are taxed, and the Service Occupation Use Tax on tangible personal property transferred incident to sales of service;

* explains taxation of software maintenance agreements and the Service Occupation Tax;

* rules that a chemical manufacturer's containers used to ship fluid products to customers are not subject to sales or use tax because (i) the customers sell the products in the containers and provide the manufacturer ...

by Stewart Weintraub and Jennifer Weidler

As a means of increasing corporate tax collections, some states have turned to contingent-fee audit contractors – sometimes referred to as "bounty hunters."  These bounty hunter firms are compensated based upon a percentage of the amount of tax assessed, creating an incentive for the firms to not only aggressively audit taxpayers, but to stretch interpretations of the law to and beyond the limits.  Having an economic interest in the assessments resulting from the bounty hunter audits, creates an inherent conflict of interest.

Not ...

by Stewart Weintraub and Jennifer Weidler

The Washington Supreme Court is currently considering the legality of the state legislature's attempt to create a statutory amendment barring the granting of twenty-four (24) years of tax refund claims.  Tesoro Refining & Marketing Co., No. 39417-1-II (Wash. Ct. App. Dec. 21, 2010).  Tesoro Refining and Marketing Company ("Tesoro") is a manufacturer of bunker fuels.   Prior to 2009, Washington law permitted companies that manufacture and sell a qualifying fuel (e.g. bunker fuel) to deduct the amount derived from the sale of the fuel ...

State DOR Letters and Administrative Rulings

Illinois Office of Administrative Hearings respects the entity, and rules Department of Revenue cannot go after owner of corporation for use tax liability on vessel use in Illinois. Use tax is not a trust tax. It also rules that the foreign corporate owner of a vessel used in Illinois for 30 days/year has sufficient nexus to allow Illinois to impose use tax on value of vessel. Taxpayer allowed credit for tax paid outside the state. Correct tax base for assessment of use tax is the purchase price reduced by depreciation prior to first use in ...

State DOR Letters and Administrative Rulings

The Tennessee Department of Revenue rules that software configuration services are not subject to sales tax. The industrial equipment exemption does not apply as to sales tax in connection with the sale of compressed air with compressors on site. The assembly of leased equipment is subject to sales tax as services necessary to complete a sale.

In a shift, the Indiana Department of Revenue issues a statement that it will no longer impose sales tax on digital goods unless specific circumstances exist, citing the Streamlined Sales and Use Tax ...

 By Paul Masters

The Texas Office of the Attorney General and Allcat have filed their briefs for the argument challenging the constitutionality of the revised Texas Franchise Tax (aka, Margin Tax) under the Bullock Amendment. In a twist, the Texas Taxpayers and Research Association ("TTARA") filed an amicus letter that sides with Texas. TTARA is an organization representing major business entities in tax matters before the Texas legislature and the tax enforcement agencies. It had a significant role in connection with the development of the legislation creating the franchise ...

State DOR Letters and Administrative Rulings

The Indiana Department of Revenue provided guidance on what constitutes tangible personal property. That guidance includes the specific view that electricity is tangible personal property. It also discusses the taxation of intangibles in the state. It also ruled that medical devices are not exempt if there is not a prescription. So a sale of a medical device to a doctor or a hospital is not exempt as a device being prescribed. It may qualify for the sale for resale exemption, as the doctor resells the device to a patient, but the requirements ...