SALT Blog - SALT Blawg

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

by Stewart Weintraub and Jennifer Weidler

Arizona is preparing to launch a tax amnesty program, slated to run from September 1, 2011 through October 1, 2011.  To participate in the program, taxpayers must file an original or amended return, an amnesty application, and pay in full any tax and interest due by October 1, 2011.  With the exception of the estate tax and property tax, the tax recovery program applies to every state and/or local tax obligation, including individual and corporate income tax, sales and use tax, withholding tax and partnership tax.  For annual tax filings ...

 by William Grimsinger

On July 29, 2011, suit was filed in the Texas Supreme Court alleging that the Texas Margin Tax is unconstitutional under the Constitution of the State of Texas because: (1) it imposes an income tax on a natural person’s share of partnership income without voter approval (contrary to the Bullock Amendment) and (2) the Comptroller’s interpretation of the tax violates the equal and uniform taxation clause of the Texas Constitution.

Under the original Margin Tax statute passed in 2006, any challenge to the tax statute must be brought in the Texas Supreme Court ...

 By Paul Masters

The long-contested constitutional issue concerning the New Jersey throw-out rule has finally culminated in a New Jersey Supreme Court decision recognizing the general constitutionality of the rule, but for its application to sales receipts attributable to states that choose not to impose an income tax. But first, we summarize what this decision did not do. The decision did not address in any significant way the current challenges to nexus that the states confront. Rather, the decision reaffirmed existing federal law, 15 U.S.C.A. §§ 381-84 (commonly referred to ...