Upcoming National Meeting

2019 Canadian Tax Workshop For U.S. Companies

2 ½ day workshop covering the key tax issues that U.S. companies outside of Canada who are doing business with Canadians or in Canada need to know. The primary focus of the workshop will be on GST, HST and Income Tax. It will also cover QST, Payroll and Property Taxes. An interactive audit session covering Canadian taxes is also planned.

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Newsletters & Media

Cost Conscious

ISSUE 19-16; August 9, 2019

Impact of the U.S. Supreme Court Kaestner Case on COST Members – On June 21, the U.S. Supreme Court in North Carolina Department of Revenue v. The Kimberly Rice Kaestner 1992 Family Trust held the Due Process Clause prevents a state from taxing the undistributed income earned by a trust merely based on the presence of in-state beneficiaries (see prior coverage in COST Conscious Issue 19-13). Which

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Bloomberg TAX

Tax Return Privacy • Transfer Pricing • Beneficial Registries

 

This weekend roundup of Bloomberg Tax Insights includes a first-person account from former IRS Commissioner Lawrence Gibbs of the events that led to, and the drafting of, the tax code section that protects the privacy of everyone's tax return; a global survey of the anticipated impact of new transfer pricing models; the case against beneficial registries; a victory for all vendors in Illinois; and a victory for multinationals in Montana.

Key Kansas Lawmakers Challenge State's Remote Sales Tax Plan

 

Legislative leaders in Kansas are lining up against the Department of Revenue’s plan to be the only state to make remote small businesses collect its sales tax.

Arizona DOR Publishes Transaction Privilege Tax Newsletter Update

 

The Arizona Department of Revenue Aug. 1 published a newsletter on transaction privilege sales and use tax updates and changes. The publication includes information on: 1) filing and payment requirements for marketplace facilitators and remote sellers starting Oct. 1; 2) online lodging marketplaces; 3) local tax rate changes effective Sept. 1 and Oct. 1; 4) filing frequency and due dates; and 5) upcoming events. [Ariz. Dep't of Revenue, TPT Newsletter, 08/01/19]

Alabama Tax Tribunal Denies Family Limited Liability Entity Status Due to Late Filing

 

The Alabama Tax Tribunal Aug. 13 affirmed the Department of Revenue's (DOR) business privilege excise tax assessment against Taxpayer for corporate income tax purposes. Taxpayer elected to be treated as an electing family limited liability entity. The DOR disallowed the family entity status because Taxpayer didn't timely file the return. The DOR argued that Taxpayer's failure to timely file the return and form prohibited it from allowing Taxpayer the entity status. Taxpayer contended that its failure to timely file the return was a software mistake and that the DOR should have accepted the election after the fact and allowed Taxpayer the entity status. The tribunal noted that the statute required Taxpayer to timely file the form with the return, or at least on or before the due date of the return. However, the tribunal waived off the penalties for reasonable cause. Accordingly, the tribunal affirmed the DOR's assessment. [Ala. Tax Trib., Assoc. Tax Trib. Judge Ruling Docket No. BPT. 19-224-LP, 08/13/19]

Arkansas Appeals Office Affirms Denial of Sales Tax Refund on Purchase, Sale of Motor Vehicles

 

The Arkansas Office of Hearings and Appeals (OHA) Aug. 15 sustained the denial of a claim for refund of sales and use tax on motor vehicles he purchased and sold. Taxpayer purchased a new motor vehicle and then sold his used vehicle. Taxpayer registered the new vehicle, paid sales tax on the full purchase price, then sold the used vehicle and submitted a claim for a refund of the tax on the net difference between the total consideration for the new and used vehicles. The Department of Finance and Administration denied the claim and Taxpayer protested. The OHA found that: 1) the bill of sale for the used vehicle submitted by Taxpayer did not contain the purchaser's address; and 2) Taxpayer failed to comply with the refund requirements at the time of the registration of the new vehicle. Accordingly, the OHA sustained the denial. [Ark. Dep't of Fin. & Admin., Docket No. 19-516, 08/15/19]

Arkansas Finance Department Determines Church Exempt From Gross Receipts Tax on Revenues From Fundraising Events

 

The Arkansas Department of Finance and Administration (DFA) Aug. 9 provided general information about Arkansas's sales and use tax laws as applied to fundraising sales by a church. A Pastor requested a legal opinion concerning fundraising events sponsored by his church. The DFA noted the state law provides sales made by a church are exempt from the gross receipts tax, except when the church is engaged in a business for profit. The DFA, based on the information provided by the Pastor, observed that the church used the revenues received from fundraising events to support its activities, including trips, classes, and materials to enhance the family unit, and not for the purpose of making a profit. Therefore, the DFA determined such sales are exempt from the gross receipts tax. [Ark. Dep't of Fin. & Admin., Opinion No. 20190723, 08/09/19]

Arkansas Appeals Office Finds Finance Department Correctly Assessed Sales Tax on Vehicle Purchased by Taxpayer (Decision 3 of 3)

 

The Arkansas Office of Hearings and Appeals (OHA) Aug. 7 found the Department of Finance and Administration (DFA) correctly assessed sales and use tax on Taxpayer's vehicle purchase. The DFA proposed a gross receipt tax assessment accruing penalties and interest. Taxpayer disagreed stating that she returned the car due to some mechanical issues. The OHA found that the installment sale contract was ended prematurely, and records indicated that the vehicle had been repossessed. Taxpayer couldn't prove that the original contract was rescinded and all prior payments towards the relevant vehicle were returned to Taxpayer. The DFA established that Taxpayer: 1) took ownership and possession of a used vehicle; 2) didn't establish that the rescinded sale occurred; 3) failed to timely register the vehicle and pay the applicable taxes; and 4) failed to demonstrate a defense to the tax law enforcement. Consequently, the OHA sustained the assessment. [Ark. Dep't of Fin. & Admin., Docket No. 19-499, 08/07/19]

Arkansas Appeals Office Sustains DFA's Assessment Finding Ownership, Possession of Vehicle Triggers Tax Liability

 

The Arkansas Office of Hearings and Appeals (OHA) Aug. 8 found the Department of Finance and Administration (DFA) properly assessed the sales and use tax late payment penalty against Taxpayer. Taxpayer purchased a vehicle and failed to timely register the vehicle and pay the applicable taxes. The DFA issued a notice of proposed assessment assessing tax, interest, and penalty. Taxpayer timely protested, stating that he shouldn't have to pay taxes for a vehicle that he no longer possessed. The OHA noted that the governing statutes demonstrate ownership and taking possession of a motor vehicle triggers the tax liability. The OHA found that Taxpayer took ownership and possession of the vehicle and failed to demonstrate his contention that the governing law causes an unfair result. OHA held that repossession, even if voluntarily surrendered, is not a defense. Accordingly, the OHA sustained the DFA's assessment in full. [Ark. Dep't of Fin. & Admin., Docket No. 20-004, 08/08/19]

Arkansas Appeals Office Finds Finance Department Correctly Assessed Sales Tax on Vehicle Purchased by Taxpayer (Decision 2 of 3)

 

The Arkansas Office of Hearings and Appeals (OHA) Aug. 2 sustained the Department of Finance and Administration's (DFA) motor vehicle sales and use tax assessment. After purchasing a motor vehicle, Taxpayer or the co-buyer failed to timely register the vehicle or pay the sales tax. The DFA issued a gross receipts tax assessment. Taxpayer protested that they discontinued the possession of the vehicle. The OHA found that: 1) Taxpayer failed to show that a rescinded sale occurred and relieved Taxpayer from sales tax liability; and 2) discontinued possession or repossession of the vehicle, voluntary or involuntary, wasn't a defense to the enforcement of the tax law. Therefore, the DFA correctly assessed tax and penalties against Taxpayer. Accordingly, the OHA sustained the DFA's motor vehicle sales tax assessment. [Ark. Dep't of Fin. & Admin., Docket No.19-489, 08/02/19]

Arkansas Appeals Office Finds Finance Department Correctly Assessed Sales Tax on Vehicle Purchased by Taxpayer (Decision 1 of 3)

 

The Arkansas Office of Hearings and Appeals (OHA) Aug. 15 sustained the Department of Finance and Administration's (DFA) motor vehicle sales and use tax assessment. After purchasing a motorcycle, Taxpayer failed to timely register it or pay the sales tax. The DFA issued a gross receipts tax assessment. Taxpayer protested that he only drove the vehicle for three weeks before contacting the seller and telling them to repossess it because he couldn't afford it. The OHA held that Taxpayer was responsible for payment of sales tax for the purchase on or before the time of registration. The OHA found that: 1) Taxpayer failed to show that a rescinded sale occurred and relieved Taxpayer from sales tax liability on the purchase of the vehicle; and 2) discontinued possession or repossession of the vehicle, voluntary or involuntary, wasn't a defense. Accordingly, the OHA sustained the DFA's motor vehicle sales tax assessment. [Ark. Dep't of Fin. & Admin., Docket No.20-027, 08/15/19]

Tax Notes

Chicago Casino Not a Good Bet, Study Says

 

Opening a casino in downtown Chicago would not be financially feasible because of the "onerous tax and fee structure" imposed by recent legislation, according to a study commissioned by the Illinois Gaming Board.

Post-Wayfair Remote Sales Tax Estimates Fall Short

 

Remote sales tax estimates are falling short of predictions made before Wayfair for several reasons, including overly optimistic online sales growth projections and a failure to account for existing collections by large online retailers.

Ohio Lawmakers Get Hotel Subsidy After TCJA Changes

 

The Ohio House of Representatives is reimbursing out-of-town members for hotel stays during the legislative session after the federal Tax Cuts and Jobs Act suspended itemized deductions for work-related travel.

Pennsylvania Court Rejects Class Action Against Assessment Appeals

 

The Pennsylvania Commonwealth Court has dismissed a class action suit alleging that the uniformity clauses of the U.S. and state constitutions bar Allegheny County and Pittsburgh from appealing a property's assessment, finding that the owners had not exhausted their statutory remedies.

Kansas-Missouri Incentives War Ends in Truce

 

The governors of Kansas and Missouri have signed a truce on the states' incentives border war.

States Taking Up MTC Model Addressing IRS Partnership Audits

 

Five states to date this year have enacted legislation addressing the IRS’s centralized partnership audit regime, with most of the new laws closely following the Multistate Tax Commission’s model statute for reporting federal audit adjustments.

Virginia AG Opines on LLC’s Local Exemption Eligibility

 

A single-member limited liability company owned by a nonprofit must independently qualify for a local property tax exemption, according to an advisory opinion by the Virginia attorney general.

Illinois 2019 Tax Amnesty Begins October 1

 

Illinois's fall 2019 tax amnesty is expected to bring in $175 million, mainly through corporate and sales taxes.

North Carolina Democrats Urge Republicans to Negotiate on Budget

 

North Carolina House Democrats have urged Republican legislators to reach a budget compromise with Gov. Roy Cooper (D).

Massachusetts Mulling Streaming Entertainment Services Levy

 

A Massachusetts bill proposing a fee on Netflix and other streaming platforms has moved to the legislature’s joint telecommunications committee.

Featured Resources

COST - Council on State Taxation

Amicus Briefs

Jefferson Parish v. Walmart.com

COST filed an amicus brief on the merits on June 20, 2019 stressing to the Louisiana Supreme Court that a marketplace facilitator does not meet the definition of a “dealer” under the State’s law, violates due process because adequate notice was not provided, and the Parish of Jefferson’s interpretation could result in retroactive imposition of a tax from the Louisiana Dep’t of Revenue and 62 other

COST - Council on State Taxation

COST Studies, Articles & Reports

2019 State and Local Amnesty Programs

This report tracks state and local tax amnesty programs by state for 2019.

COST - Council on State Taxation

COST Comments & Testimony

Coalition Letter in Support of S.B. 790 - Reporting and Payment Requirements in Case of Underpayment from Federal Partnership Audit Adjustments

COST joined CalTax and other organizations in support of Senate Bill 790, a technical clean up bill to previous session’s measure related to reporting and payments requirements in the case of an imputed underpayment from federal partnership audit adjustments. The proposed clarifying changes will facilitate tax administration for the Franchise Tax Board (FTB), and ease reporting compliance for taxp