State and Local Thinking -- June 2016

State and Local Thinking -- June 2016SALT Alerts Colorado Supreme Court holds 'cost of capital' deductible for gas severance tax purposes
The Colorado Supreme Court on April 25 decided a severance tax case that has been litigated through the Colorado judicial system for more than a decade. In a case of first impression, the court held that the “cost of capital” is allowable as a deduction for transportation, manufacturing and processing costs in arriving at taxable income from the sale of natural gas extracted from Colorado. Read the SALT Alert.

Ohio Supreme Court rules Ohio statute unconstitutional as applied to nonresident owner of pass-through entity
The Ohio Supreme Court held that an Ohio statute that broadly imposes income tax on capital gains realized by out-of-state investors in certain closely held pass-through entities violated the Due Process Clause. Read the SALT Alert.

Oklahoma enacts budget package with tax provisions, including expansion of sales tax nexus and notice requirements
Oklahoma Gov. Mary Fallin signed several tax measures into law as part of the budget agreement reached to bridge the state’s $1.3 billion budget deficit. The legislation expands the sales and use tax nexus standard by amending the definition of “maintaining a place of business in this state.” Read the SALT Alert.

Connecticut enacts legislation shifting state to market-based sourcing
Connecticut Gov. Dannel Malloy signed legislation on June 2 that will shift the state to market-based sourcing under both the corporate and personal income tax systems. Read the SALT Alert.

Texas Appeals Court affirms bill pay services for banks are not taxable data processing services
The Texas Court of Appeals ruled on April 19 in favor of a taxpayer claiming a refund of $3 million in sales tax assessed during an audit of bill pay services the taxpayer provided for banks to allow banking customers to pay their bills online. Read the SALT Alert.

Maryland enacts tax legislation, including new private letter ruling program
Maryland’s 2016 legislative session resulted in a number of tax bills being signed into law by Gov. Larry Hogan on May 10 and May 19, as well as other tax bills being adopted into law on May 28 without the governor’s signature. Read the SALT Alert.

Vermont legislation enacts prospective notice requirements on noncollecting vendors and potential expansion of remote seller nexus
Vermont enacted legislation on May 25 that includes provisions for imposing sales and use tax notice requirements on noncollecting vendors, and expanding remote seller sales and use tax nexus provisions to vendors with a threshold level of sales or transactions within the state. Read the SALT Alert.

Texas comptroller rules on electricity transmission and distribution cost inclusion in cost of goods sold deduction
The Texas comptroller of public accounts issued a letter ruling on March 3 addressing the inclusion of certain costs incurred by different types of utility providers in the revised Texas franchise tax cost of goods sold deduction. Read the SALT Alert.

Texas Supreme Court nixes netting investment losses against other receipts
The Texas Supreme Court ruled on April 15 that the Texas comptroller cannot offset net losses from sales of capital assets and investments against other gross receipts in determining the revised Texas franchise tax sales factor denominator. Read the SALT Alert.

New York budget revises provisions governing corporate income tax, sales and use tax, and credits
New York enacted its 2016-17 budget bill on April 13. Among other things, it revises the state’s corporate income tax filing due dates to bring them into conformity with federal provisions. While the legislation doesn't include the groundbreaking reforms to the state’s tax system that were enacted in the past two budgets, provisions governing the state’s sales and use tax, credit programs and property tax systems have been revised. Read the SALT Alert.

Michigan amends personal property tax provisions, extends exemption filing deadline
Michigan Gov. Rick Snyder approved a package of bills on May 5 that amends various personal property tax exemption provisions for manufacturing property as well as related essential services assessments provisions. Most significantly, the deadline for filing Form 5278, Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, was extended to May 31, 2016. After 2016, the filing deadline will return to Feb. 20 of each year. Read the SALT Alert.

New Jersey Tax Court denies intercompany interest deduction under 'unreasonable exception'
The New Jersey Tax Court ruled that a taxpayer couldn't deduct interest payments made to its corporate parent in computing its New Jersey corporation business tax. The payments did not qualify for the unreasonable exception from the required related-party interest add-back.  Read the SALT Alert.

Tennessee enacts Hall tax cut, eventual repeal  
Tennessee Gov. Bill Haslam signed a bill on May 20 that will gradually phase out the Hall tax rate, currently at 6%, over the next six tax years. Accordingly, Tennessee will be free from all personal income taxes beginning in 2022. Read the SALT Alert.

Thought leadership from our State and Local Tax professionals Publications
  • July 1: Daily Tax Report, "Electronic Commerce: E-Retailers, Congress Feel Heat From States' Digital Tax Frenzy," Jamie Yesnowitz, SALT principal, quoted.
  • June 24: BNA Tax Management Special Report, "Top Experts Share Insights on Hottest Trends at Bloomberg BNA State Tax Advisory Board Roundtable," Jamie Yesnowitz  quoted.
  • June 23: State Tax Today, "Minnesota Supreme Court Finds Compact Created No Contractual Obligation," Dale Busacker, SALT director, quoted.

Tax professionals Meet Dana Lance, SALT practice leader for the Greater Bay Area, San Jose, Calif. 
Dana Lance is the SALT practice leader for the Greater Bay Area and is based in the San Jose, Calif., office. She has worked at Grant Thornton LLP for more than 10 years. Dana was previously State and Local Income and Franchise Tax business line leader for the Florida market territory’s four offices.

She has deep experience providing widely ranging tax services to businesses in several industries, including manufacturing, distribution and shipping industries, and focusing primarily on technology. Dana has extensive partnership experience serving the state and local tax needs of large multistate and multinational clients, as well as large private equity firms.

Among her practice concentrations are state tax minimization services, including assisting taxpayers with the development and design of effective state tax planning; state due diligence reviews and M&A transaction analysis and consulting; nexus reviews; voluntary disclosure agreement negotiations to reduce state tax exposures; accounting for income taxes and uncertain tax positions for both federal and state taxes; and compliance outsourcing and reviews.

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