State and Local Thinking -- January 2016

State and local Thinking - January 2016SALT Alerts SALT Alerts are available via Twitter.

Illinois Department of Revenue addresses charges associated with sales tax treatment of computer software

The Illinois Department of Revenue has issued guidance in the form of a general information letter to a company in the business of selling computer software. Specifically, the department discussed the taxability of computer software and charges related to the sale of software, including associated delivery charges. Read the SALT Alert.

Missouri offers new incentive program for data storage
Missouri has enacted legislation providing new incentives for the location and expansion of data centers within the state. The incentive program offers qualifying taxpayers an exemption of state and local sales and use taxes incurred through activities required to construct a new data center or expand an existing data center. Read the SALT Alert.

Indiana Tax Court rules transfer pricing studies should be respected when determining Indiana income
The Indiana Tax Court on Dec. 18, 2015, granted a taxpayer’s motion for summary judgment and held that the Indiana Department of Revenue improperly adjusted the taxpayer’s Indiana source income to correct a perceived unfair reflection based on application of Indiana’s standard sourcing rules. Read the SALT Alert.

Texas ALJ affirms combined reporting requirement for commonly owned brother-sister entities
A Texas administrative law judge (ALJ) recently affirmed that the requisite controlling interest for filing combined group reports may be held by a set of several common owners in accordance with the legal definition of an “affiliated group” for revised Texas franchise tax (RTFT) purposes. Common ownership was determined under a plain reading of the RTFT statutes even though none of the common owners held more than a 50% ownership interest. Read the SALT Alert.

Connecticut enacts legislation amending mandatory combined reporting, adopting single sales factor apportionment
Connecticut Gov. Dan Malloy on Dec. 29, 2015, signed a budget bill passed by the legislature during a recent special session that makes many tax law changes, including amendments to the mandatory unitary combined reporting statutes and adoption of a single sales factor apportionment formula. Read the SALT Alert.

California Supreme Court denies use of Multistate Tax Compact’s equally weighted three-factor apportionment election
The California Supreme Court on Dec. 31, 2015, unanimously reversed a 2012 decision reached by the California Court of Appeal and held that taxpayers are precluded from making the election under the Multistate Tax Compact to use the equally weighted three-factor apportionment formula for purposes of the California franchise (income) tax. Read the SALT Alert.

Maryland Circuit Court affirms intangible holding company had corporate income tax nexus
The Maryland Circuit Court for Anne Arundel County recently affirmed a Maryland Tax Court decision holding that an out-of-state intangible holding company had corporate income tax nexus with Maryland because it was considered to have no real economic substance as a business entity separate from its parent company. In affirming the Tax Court, the Circuit Court agreed that a Maryland Court of Appeals decision, Gore Enterprise Holdings, Inc. v. Comptroller of the Treasury, was factually similar to the instant case and must be followed.  Read the SALT Alert.

SALT top stories of 2015
The year 2015 was notable in large part because of a series of decisions issued by state and federal courts that could pave the way for future resolution of several gray areas in state and local taxation. For example, the U.S. Supreme Court issued several major decisions affecting state and local taxes, including Obergefell v. Hodges and Comptroller of the Treasury v. WynneRead the SALT Alert.

Tax webcasts and events Significant SALT developments for 2015 and predictions for 2016 webcast
Thursday, Jan. 28, 3 p.m. CT
Efforts to reform SALT regimes and to interpret recently adopted SALT changes through regulatory action have rapidly continued throughout 2015. Taxpayers are focusing on new rules that affect longstanding income and indirect tax filing requirements and sourcing provisions. The impact of the U.S. Supreme Court’s decision in Wynne also continues to resonate. Members of Grant Thornton’s SALT – National Tax Office will discuss significant SALT developments from 2015 and SALT trends expected in 2016.  

Partnership creation and care with no regrets webcast
Thursday, Feb. 4, 3 p.m. CT
Join us for an important review of economic and tax provisions in partnership and LLC operating agreements – including their administration from the perspectives of both the drafting attorney and the accountants who apply and administer those provisions. This presentation will identify and discuss commonly encountered mistakes, oversights and constraints; their potential consequences; and tips on how to avoid them. 

Understanding the United States’ response to OECD-BEPS documentation actions webcast
Thursday, Feb. 18, 3 p.m. CT
The IRS recently proposed regulations for country-by-country reporting. The regulations do not break new ground, because they largely mirror the OECD’s previously published model template. However, lurking beneath the surface are numerous complex procedural, policy and practical considerations that must be carefully analyzed. Tune in to our webcast to learn about the IRS’s proposed requirements, related issues and the possible impact on multinational enterprises. Listen to a non-U.S. viewpoint regarding the proposals and hear about opportunities, strategies and practical considerations. 

Replay past tax webcasts Webcast are available for replay for one year after the original broadcast date.<

The following webcasts are available for replay:

Retail and restaurants: Should you buy into the new repairs safe harbor? — The remodel/refresh repairs safe harbor for retail stores and restaurants provided in Rev. Proc. 2015-56 offers an approach that may reduce disputes regarding the deductibility or capitalization of remodel and refresh projects. Listen to a discussion of the safe harbor and potential opportunities and issues for retailers, restaurants and their lessors during implementation. 

Understanding what the $680 billion tax deal means to your business — Lawmakers enacted a groundbreaking tax and spending bill in December that makes more than $680 billion in tax changes. Twenty-two popular tax provisions are now permanent, and the bill made important changes to the R&D credit, REIT rules, bonus depreciation, alternative fuel credits, health care reform excise taxes and many other provisions. Replay the webcast to learn what’s been made permanent, what’s been enhanced and what’s next for the tax provisions that are still temporary. 

Thought leadership from our State and Local Tax professionals Publications
  • Jan. 16, State Tax Today, “Victory in Vermont: Top State Court Holds Ski Resort Is Not Unitary,” written by SALT Principal Jamie Yesnowitz, SALT Director Chuck Jones and SALT Director Lori Stolly.
  • Jan. 13, Bloomberg BNA's  Daily Tax Report, “MTC and States Continue Movement to Market-Based Sourcing,” Jamie Yesnowitz quoted.

Tax professionals Meet Veronica Caputo, SALT senior manager in the Philadelphia office
Veronica Caputo, SALT senior manager in the Philadelphia office, has 15 years of tax experience in both public accounting and private industry. She has focused on federal, state and local income and franchise tax compliance, tax accounting (ASC 740 and FAS 5) and consulting. Veronica has a broad background working with businesses in the manufacturing, consumer products, wholesale, financial services and pharmaceutical industries.

She began her career in the SALT practices of Arthur Andersen and KPMG. Before joining Grant Thornton, Veronica was the senior tax manager for a large privately owned manufacturing/wholesale enterprise and the tax manager for a privately held financial services company.  

Veronica earned an MS in Taxation from Villanova University and a BS in Accounting from Bloomsburg University.

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