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Cracks in the Texas Franchise Tax (Hancock v. American Airlines, Inc.¸ No. 15-24-00113-CV (Tex. App.—Austin, Apr. 9, 2026))

Zachary Milliken — Wed, 06 May 2026 09:00:01 -0400

The Texas Franchise Tax has often been the subject of litigation because of its hybrid structure—formally imposed on taxable margin rather than gross receipts but calculated using revenue-based inputs and apportionment rules. This structure has repeatedly exposed the tax to challenges arguing that despite legislative labeling to the contrary, in substance, it operates as a gross receipts tax. Against that backdrop, the Fifteenth Court of Appeals’ decision in American Airlines, Inc. v. Hancock represents a departure from the assumption that the tax’s structure alone ...

First Sales Tax Opinion by New Texas Intermediate Court of Appeals Could Spell Trouble for the Comptroller’s Recent Amendments to the Data Processing Services Rule

Bryan J. Dotson — Tue, 17 Mar 2026 09:00:02 -0400

The newly created Fifteenth Court of Appeals has issued its first sales-tax opinion, and its early signals should be on the radar of every Texas business, as well as tax professionals, in-house counsel, compliance teams, and industries that rely on exemptions or navigate complex tax classifications. In Hancock et al. v. ChampionX, LLC, the court held that the Texas Comptroller’s policy requiring manufacturers to pay sales tax on returnable containers and associated services is unlawful. While the underlying dispute involved specialized chemical containers, the ...

Is Every Exemption Certificate You’ve Accepted For Texas Sales Tax Valid? If Not, You Could Be On the Hook For the Tax With the Texas Comptroller.

C. Larry Carbo, III, Bryan J. Dotson — Thu, 11 Sep 2025 09:00:03 -0400

The State of Texas imposes a sales tax on most property and services.[1] A seller who makes a sale subject to the Texas sales tax is required by law to “add the amount of the tax to the sales tax.”[2] Once added, the Texas Tax Code says the following occurs:

The sales tax becomes part of the sales price;
The sales tax is a debt of the purchaser to the seller until paid; and
If unpaid, the sales tax is recoverable at law in the same manner as the original sales price.[3]

Sellers are not required to collect the sales tax if the purchaser provides an exemption certificate.[4] The exemption ...

SALT Insights: The Chamberlain Perspective Issue No. 1

Bryan J. Dotson — Tue, 11 Feb 2025 09:00:04 -0500

Stay current with the latest developments in state and local tax law through our comprehensive SALT Insights newsletter. This publication features in-depth analysis of key tax cases, regulatory updates, and expert perspectives from our tax professionals. Our newsletter covers critical topics including tax rulings, sourcing updates, and emerging trends that impact businesses and tax practitioners. Readers can expect timely coverage of significant court decisions, legislative changes, and practical guidance for navigating complex state and local tax matters. Keep ...

New Jersey Tax Court Vacated Couple’s Assessment and Ruled Section 965 Income Not Taxable as Dividends

Fri, 24 Jan 2025 09:00:05 -0500

In a win for a New Jersey couple, the New Jersey Tax Court concluded 2024 with a declaration that the couple’s Internal Revue Code (IRC) Section 965 income is not taxable as dividends for purposes of the New Jersey Gross Income Tax (GIT) Act.[1] On December 31, 2024, in a published opinion, the court granted the taxpayer’s summary judgment motion and held that the taxpayers’ undistributed earnings from certain controlled foreign corporations (CFCs), which were reported on their federal Form 1040 as Subpart F income, were not includible as dividends under the plain meaning of ...

Retroactive Rulings and Legal Precedents: The Debate Sparked by the Alcatel PA Supreme Court Case

Mon, 13 Jan 2025 09:00:06 -0500

The recent Pennsylvania Supreme Court decision in Alcatel-Lucent USA, Inc. v. Commonwealth[1] has generated widespread attention and debate concerning the retroactive or prospective application of legal principles. This blog article will discuss the recent decision and its likely impacts.

Majority Rule: Prospective Relief

During 2014, Pennsylvania law permitted taxpayers to take a net loss carryover deduction of the greater of 25 percent of income or $4 million. Thus, taxpayers with Pennsylvania taxable income below the $4 million cap could deduct their losses, reducing ...

State Wallet Watch: Tax Updates from the Pennsylvania 2024-2025 Budget

Tue, 06 Aug 2024 09:00:07 -0400

On July 11, 2024, Governor Josh Shapiro signed into law a $47.6 billion budget for the 2024-2025 fiscal year. The new budget includes significant tax reform in an attempt to address some of the financial issues facing Pennsylvania residents and businesses.

First, the budget includes some important, business-friendly changes. The Net Operating Loss (“NOL”) deduction limitation will increase by 10% over four years. For tax year 2024, the NOL carryforward deduction is limited to 40% of a corporation’s taxable income. However, beginning January 1, 2026, the NOL deduction ...

Kill the SALT Cap, Save the Institution of Marriage?

Tue, 16 Apr 2024 09:00:08 -0400

By Pete Lowy & Nga Tran-Medina

The officiant at your wedding probably didn’t conclude with: “I now pronounce you eligible to pay more in federal income taxes now that you’re husband and wife” (unless perhaps a Tax Court judge presided over your nuptials). But maybe they should have. It’s well known that married couples pay a “marriage penalty” – a general term for the various Code provisions and tax computations that make the total tax liability of spouses more than the sum of their individual tax liabilities if they had been allowed to file as being single.

These ...

To Defeat Fraud Penalties the Best Defense is a Good Offense

Mon, 22 Jan 2024 09:00:09 -0500

In every taxing jurisdiction in the United States, tax authorities may assert penalties if a taxpayer commits fraud. This Blawg entry focuses on the Texas Comptroller’s view of its authority to impose fraud penalties, and considerations for taxpayers when seeking to fight fraud penalties that the Comptroller asserts.

Texas Tax Code § 111.061 authorizes the Texas Comptroller to impose a penalty in the amount of 50% of any underlying tax liability if the failure to pay the underlying tax or report such tax when due “was a result of fraud or an intent to evade the tax.” This legal ...

Sweeping Tax Changes in New Jersey

Tue, 25 Jul 2023 09:00:10 -0400

On Friday, June 30, New Jersey lawmakers approved the state’s budget and enacted new legislation that would overhaul several provisions of the corporate tax system. The $54.3 billion budget was approved closely along party lines with contention, while the new provisions of the corporate tax system were approved unanimously without debate.

2024 Budget

Significant tax changes were made in the 2024 budget to help increase affordability for working and middle class families. One of the major programs that will receive funding through the new budget is the property tax relief ...