SALT Blog - SALT Blawg

The City of Philadelphia Department of Revenue issued Frequently Asked Questions (“FAQs”) regarding its Wage Tax policies in light of COVID-19.  Philadelphia applies the “requirement of employment” test in order to determine whether a non-resident’s base of operations is the employer’s Philadelphia location. If a Philadelphia employer requires a non-resident employee to perform duties outside of Philadelphia (including working from home), that employee is exempt from the Wage Tax for those days spent fulfilling that requirement.  However, if a non-resident ...

Pennsylvania

Earlier this year, the Pennsylvania Department of Revenue issued temporary guidance regarding telework during COVID-19 and the related tax implications thereof.  The Department has now issued an end date to its temporary policies: guidance issued by the Department is in effect until the earlier of June 30, 2021 or 90 days after the Proclamation of Disaster Emergency in Pennsylvania is lifted.

Ordinarily, the presence of employees working temporarily from home within Pennsylvania is sufficient to establish nexus for out-of-state businesses for purposes of the ...

In response to various issues created by COVID-19, the Philadelphia Department of Revenue (“Department”) has issued guidance to taxpayers related to the City’s Wage Tax, Use & Occupancy (“U&O”) Tax, and Business Income & Receipts Tax (“BIRT”).Wage Tax

On November 5, 2020, the Department issued revised guidance regarding Wage Tax withholding requirements for Philadelphia-based employers.  This is not a change in position; the guidance serves to explain the City’s policy that was in effect pre-COVID.  The guidance explains that Philadelphia applies the ...

During July, the Commonwealth Court handed down its decision in Synthes v. Commonwealth of Pennsylvania, 108 FR 2016, which was a closely watched case dealing with differing interpretations of Pennsylvania’s costs of performance (“COP”) statute.  Prior to 2014, the statute required services to be sourced to the location of the “income-producing activity.”  Where the income-producing activity occurred both within and without Pennsylvania, receipts were required to be sourced to the state where the greater proportion of income-producing activities occurred, based ...

A Texas appellate court handed down on August 13 reminds taxpayers that the Texas Comptroller refund procedures are laden with traps for the unwary. 

Comptroller Seeks to Dismiss Refund Suit

In the case, Hegar v. El Paso Elec. Co., the taxpayer, El Paso Electric, sued the Texas Comptroller for refund in district court on grounds that it had paid taxes on equipment that qualified for Tax Code section 151.318(a)(4)'s exemption for “telemetry units that are related to ... step-down transformers.”.  No. 03-18-00790-CV (Tex. App. Aug. 13, 2020).  The Comptroller pled that El Paso ...

The Internal Revenue Service is scheduled to publish its final regulations addressing attempts to end-run the 2017 Tax Cuts and Jobs Act’s cap on state and local tax deductions.

As readers will recall, prior to the TCJA’s amendment to Section 164 in December 2017, taxpayers were able to deduct the full amount of their state and local taxes (mostly property taxes and income taxes), subject to the limitation on itemized deduction.  The TCJA added Section 164(b)(6) which limits the aggregate deduction of these taxes to $10,000 (less if not filing a joint return).

This little provision ...

In recent years, the Pennsylvania Department of Revenue (“Department”) has become increasingly aggressive in auditing restaurants for the underpayment of sales tax. By taking proactive measures and understanding the audit landscape, restaurants can set themselves up to successfully defend against the potential consequences.

Keep “Auditable” Records

Many restaurants keep sales ledgers showing cash and credit totals of taxable and non-taxable sales (e.g., alcohol) and tips for each day. This may be enough for their accountants to file sales tax returns, but not for ...