It was perhaps viewed as a close shave prior to the California Court of Appeal’s issuance of its opinion in Gillette Co. & Subsidiaries v. Franchise Tax Board, No. A130803 (Ct. App., July 24, 2012), but in fact, the court soundly rejected the California Franchise Tax Board’s (FTB) arguments that taxpayers were not entitled to make a so-called “Compact election” and file California tax returns using the Uniform Division of Income for Tax Purposes Act’s (UDITPA) equally-weighted, three-factor apportionment formula. This advisory explains how the court’s decision has ramifications beyond California and how it likely impacts most multistate businesses.
The advisory is provided in PDF on the Alston & Bird website: www.alston.com/publications/SALT-advisory-gillette-ftb
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A memorandum dated July 19, 2012, from the MTC Counsel to the chair of the MTC Income and Franchise Tax Uniformity Subcommittee proposes adoption of a uniform regulation akin to, or actually adopted under the states’ version of, I.R.C. Section 482. The proposal is posted on the MTC website.
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On June 21, 2012, the North Carolina General Assembly enacted its annual updates and so-called technical revisions of the revenue laws. Session Law 2012-79.
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The Governor of North Carolina signed Session Law 2012-43, which suspends the authority of the NCDOR to force corporate combinations for years beginning on or after January 1, 2012 until the DOR issues and has approved an administrative rule defining the standards for forced combinations.
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In what is hopefully one of the last of the old modifiable decisions in tax cases by North Carolina Administrative Law judges, the NCDOR allowed the ALJ to relieve a shareholder of transferee tax liability, but still modified the ALJ opinion. 10 REV 04058; Cherry v. Dep't of Revenue (May 16, 2012).
The Case: The DOR wanted to collect a corporation’s sales taxes from one of its shareholders. The corporation had operated a restaurant that closed. The DOR auditor caused the petitioner Cherry to sign sales and use tax forms after the fact. When the taxes were not paid the DOR attempted to collect them from Cherry under the “responsible person” statute. The ALJ rejected the DOR claims due to Cherry’s lack of control over the day to day operations of the corporation.
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Technocom Business Systems Inc. v. North Carolina Dep't of Revenue; No. COA11-655 (NCAPP 2/21/2012). Taxpayer sold and leased equipment. It also serviced the equipment sold and leased and charged customers for the maintenance service. It also bought property to use in performing its service agreements. It did not pay use tax on the purchases of that property. A final determination was made that taxpayer owed use tax on its purchases of such property. Taxpayer also erroneously collected sales tax on the charges for its maintenance agreements, which were services and not taxable sales of property. A final determination was made that such maintenance agreement charges were not subject to sales tax.
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Earlier this year the General Assembly made significant changes in the statutes authorizing forced combinations of multistate corporate groups for income tax filing. The DOR has been scrambling to figure out how to enforce the old law and the new law, as reflected in three notices it has issued, discussed below, as well as a revised voluntary disclosure program discussed below. The changes offer significant promise for corporate taxpayers.
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Please click here to read an article by Ethan Millar and Kendall Houghton on current developments in unclaimed property. This article was published in the Sept. 12 edition of State Tax Notes.
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Please click here for a recent paper by Atlanta SALT partners Jeff Glickman and Mike Petrik regarding two of the most significant issues in state tax during 2011: click-through nexus provisions (or "Amazon laws") and the taxation of cloud computing.
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Click here to read a chapter by SALT partner Mary Benton (with Art Rosen and Cass Vickers) that recently appeared in the materials for the 2011 NYU Institute on State and Local Taxation conference.
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States have recently started to use third party contract auditors to conduct transfer pricing audits of taxpayers. Such audits have resulted in large assessments made pursuant to the states' "discretionary authority." This article, recently published by Kendall Houghton and Maryann Luongo in the IPT's August 2011 Tax Report (see p. 15), discusses the use of third party contract auditors in the transfer pricing arena as well as some of the issues that arise during such audits.
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Who are the representatives, adjudicators, and other people involved in a property tax appeal? This presentation, given by Mary Benton and Tim Peaden at this year's IPT Annual Conference in San Antonio, explores that question.
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This presentation was given by Tim Fallaw at this year's CBIZ and MHM Annual Conference.
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Last week, Alston & Bird’s Jack Cummings served as local counsel to the Council On State Taxation (COST) in the preparation and filing of COST’s amicus brief urging the N.C. Supreme Court to review the Delhaize case. The case involved North Carolina’s forced combination of Delhaize and one of its affiliates. The argument portion of the brief can be viewed by clicking here. We will update this blog as soon as we learn whether the N.C. Supreme Court has decided to grant review in this case.
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For contested cases appealing proposed decisions of the NCDOR on tax disputes to the NC Office of Administrative Appeals filed on or after January 1, 2012, a new set of rules will apply. The principal change is that the decision of the ALJ will be final, subject only to an appeal to the Superior Court on the record. The General Assembly has eliminated the power of the DOR to revise the ALJ’s decision. Since 2008 the DOR has used this power to change both the outcomes and the reasonings of the ALJ’s decisions.
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The NCDOR has posted on its website a Notice stating the Secretary’s view of the effective dates in the recently enacted statute that changes the way the Secretary will force combinations of corporate taxpayers after 2011. For prior coverage see this blog’s post on June 20, 2011.
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Please click here to enjoy an article published in State Tax Notes today by Kendall Houghton and Maryann Luongo. The article is titled, "No Improved Visibility for Cloud Computing Taxation," and it discusses the recent guidance - and lack of guidance - from the states concerning state taxation in "the cloud."
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Please click here to read a recent article by Kendall Houghton and Maryann Luongo titled, "Holders Fight New Jersey's Stored Value Card Law, Finding that Not All Arguments Have Been Fully Redeemed."
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Please click here for my recent presentation entitled, "Businesses and State Revenue Departments: Where the Battles Are in 2011."
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On June 18, 2011 the General Assembly ratified and sent to the Governor House Bill 619 concerning corporate combined income tax returns.
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