SALT Blog 

 By Paul Masters

The Texas Office of the Attorney General and Allcat have filed their briefs for the argument challenging the constitutionality of the revised Texas Franchise Tax (aka, Margin Tax) under the Bullock Amendment. In a twist, the Texas Taxpayers and Research Association ("TTARA") filed an amicus letter that sides with Texas. TTARA is an organization representing major business entities in tax matters before the Texas legislature and the tax enforcement agencies. It had a significant role in connection with the development of the legislation creating the franchise ...

State DOR Letters and Administrative Rulings

The Indiana Department of Revenue provided guidance on what constitutes tangible personal property. That guidance includes the specific view that electricity is tangible personal property. It also discusses the taxation of intangibles in the state. It also ruled that medical devices are not exempt if there is not a prescription. So a sale of a medical device to a doctor or a hospital is not exempt as a device being prescribed. It may qualify for the sale for resale exemption, as the doctor resells the device to a patient, but the requirements ...

State DOR Letters and Administrative Rulings

The Wisconsin Appeals Commission ruled services are not presumed to be subject to sales tax. In looking to whether barge fleeting services are “taxable services,” the plain language of the statutes does not impose the sales tax and thus the state cannot interpret into the taxation of services those services that are not clearly included. Same rule follows inTexas.

Illinoispublished a ruling on the applicability of the manufacturing exemption in connection with a meat processing facility, and what parts of the plant equipment would ...

State DOR Letters and Rulings

Florida ruled that when a cleaning service provider uses cleaning supplies to perform the cleaning services, sales and use tax is due on those supplies. However, to the extent those supplies are not used, but sold to a customer for their use, the transaction is exempt as a sale for resale.

The Texas Comptroller ruled that a series LLC would be treated as a single entity for Texas franchise tax purposes. The entity cannot be broken up into separate parts, but must file as one.

Alabama ruled that winter park provided amusement services subject to sales tax. The ...

by Stewart Weintraub and Jennifer Weidler

This past week, Michigan senior citizens packed into the Michigan Supreme Court to hear oral arguments over the legality of a proposed change that would impose a tax upon their public pensions.  Notably, this is not the first time that Michigan was involved with litigation concerning its taxation of pension plans.  During the late 1980s, the U.S. Supreme Court decided a case involving the Michigan Income Tax Act ("Act").  The Act provided an exemption from taxation for all retirement benefits paid by the State or its political ...

The Alliance for Main Street Fairness Launches Website Targeting Amazon.com

On August 25th, the Alliance for Main Street Fairness launched a website that asked individuals to anonymously submit stories relating to Amazon.com's alleged efforts to avoid collecting state sales taxes. The Alliance, representing mainly brick-and-mortar business, has pushed for states to enact "Amazon" laws, arguing that such laws promote tax fairness.  Conversely, opponents to "Amazon" laws believe that states are reaching beyond their constitutional limits.

Although Supportive of "Amazon ...

by Stewart Weintraub and Jennifer Weidler

Earlier this week, the New Jersey Superior Court, Appellate Division, affirmed a decision of the Tax Court of New Jersey finding that a lack of nexus existed for distributions made to a foreign limited liability partner from a partnership with an in-state presence. See, BIS LP Inc. v. Division of Taxation, Docket No. A-1172-09T2 (NJ Super. Ct. 2011).

BIS, the taxpayer at issue, was a foreign corporation with no place of business, property, employees or agents in the state of New Jersey.  Its only interest was its ninety-nine percent (99 ...

Texas Supreme Court Rules “Pole Tax” Does Not Violate First Amendment

In a unanimous decision Texas Supreme Court rules stripper "pole tax" does not violate First Amendment. The decision reverses a 2-1 Third Court of Appeals decision, which had held the tax violated the First Amendment in upholding the trial court’s ruling. The decision remands the case to the trial court, where three arguments remain, all based on challenges to the tax under the Texas Constitution.

New Jersey Appeals Court Upholds Tax Court Finding No Unitary Nature of Limited Partnership

New Jersey ...

The Solicitor General of the Texas Attorney General has taken the lead and on August 18, 2011 filed a short response to Allcat's petition to declare the new Texas franchise tax unconstitutional. In summary, Texas argues that (i) a tax on the income of an entity does not constitute a tax on a person’s share of that entity’s income, (ii) that the Texas Supreme Court’s ruling should be narrowed to a natural person with an interest in a limited partnership (as opposed to striking down the franchise tax in toto), and (iii) that the last two issues raised by Allcat are not properly before the ...

Tax Foundation Report Opines Texas Margin Tax Not a Model Act

A recent Tax Foundation report concludes that the Texas margin tax - untried when enacted in 2006 - collected less revenue than expected, caused significant confusion and compliance costs, resulted in litigation and controversy, and should not be tried in other states.

Tennessee and New York Opine Electronic Goods Not Subject to Sales Tax

Tennessee provided a written opinion that paper shop drawings would be subject to sales tax, but not a digital (paperless) version of the same. New York authorities similarly concluded