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State + Local Tax Insights -- Spring 2013

In This Issue: Factor Representation: Is It Unconstitutional for a State to Have It Both Ways?; Upcoming Speaking Engagements; Expanded California Sales and Use Tax Exclusions for Advanced Manufacturing Projects; and...more

Bill Aims To Make Foreign Nonqualified LLC Contracts Voidable

As discussed in prior posts, “transacting intrastate business” is not the same as “doing business”. See You may Be Doing Business in California Even When Not Transacting Intrastate Business. The former is what determines...more

The State Of California Seeks Back Taxes From Small-Business Shareholder- Not So Fast

A closer look at federal constitutional case law would seem to indicate that the State of California may not find it so easy to seek refunds plus interest after all....more

FTB Retroactively Denies "Qualified Small Business Stock" Personal Income Tax Benefits

On December 21, 2012, the Franchise Tax Board ("FTB") released Notice 2012-03 (the "FTB Notice"), which notice outlines the procedures the FTB will apply in response to the Court of Appeal's recent decision in Cutler v....more

FTB issues Notice to Retroactively Deny "Qualified Small Business Stock" Tax Benefits. Amended Returns Should be Filed.

A California appellate court recently held as unconstitutional the California statutes extending the benefits of selling “qualified small business stock” (QSBS) to California taxpayers. In Cutler v. Franchise Tax Board (2012)...more

N.J. Increases Tax on P.L. 86-272-Protected Companies—Should You Comply?

In the days leading up to Monday’s deadline to file CBT returns, some of our clients that are protected from New Jersey income tax by P.L. 86-272 have asked us whether they should comply with New Jersey’s Alternative Minimum...more

Gillette Reinstated. If Compact is Elected, LCUP Penalty Shouldn't Apply

The First Appellate District of the California Court of Appeal has once again held that California taxpayers may avail themselves of the Multistate Tax Compact (the Compact) election, which allows for taxpayers to file...more

A Close Shave: California Court of Appeal Rules on Multistate Compact Election

On October 2, 2012, the California Court of Appeal issued an opinion on rehearing in The Gillette Company et al. v. Franchise Tax Board, reversing in full the trial court’s decision in favor of the Franchise Tax Board (FTB)....more

North Carolina Court of Appeals Latest to Offer Taxpayer Setback for Intercompany Transactions

The North Carolina Court of Appeals recently issued a decision against the taxpayer in Delhaize America, Inc. v. Lay, No. COA11-868, (Aug. 21, 2012). It is the latest in the string of taxpayer defeats whereby a taxpayer...more

Act 55 Charitable Exemption Standards Undermined Further

The usefulness of the objective Charitable Exemption Standards set out in Act 55 of 1997, the Purely Public Charity Act, seems to have been further undermined by a recent Commonwealth Court decision. As discussed in our May...more

Religious Camp Exemptions Continue Under Attack

In our May newsletter, we discussed the Pennsylvania Supreme Court’s decision upholding denial of real estate exemption to a religious camp. Mesivtah Eitz Chaim of Bobov, Inc. v. Pike County Board of Assessment Appeals, ___...more

Law That Allows Taxpayer To Defer Capital Gains On Sale Of Small Business Stock With The Subsequent Purchase Of Stock In...

A court of appeal recently found unconstitutional a Revenue and Taxation Code provision that allows a taxpayer to defer capital gains when he or she sells stock in a qualified small business if the taxpayer uses the gain to...more

CA’s 20% LCUP Penalty Shouldn’t Apply to Compact Elections Under Gillette

Friday, Reed Smith partner and former FTB Chief Counsel Brian Toman submitted a written request for consideration at the FTB's meeting yesterday for the FTB to interpret the 20 percent Large Corporate Understatement Penalty...more

Religious Institutions: September 2012 Update

A corporation is an artificial or fictional person, ordinarily distinct from both its individual members or shareholders and its subsidiaries and affiliates, even when owned by just one person. A key reason many organizations...more

Tri-State Tax Alert

From our offices in Boston, Portland, and Portsmouth, Pierce Atwood’s State and Local Tax Group provides litigation, planning, transaction, regulatory, and legislative services to business, associations, and individuals on...more

Recent Developments in the State Taxation of Pass-Through Entities and Their Owners

State and local taxation of pass-through entities continues to present complex issues for the owners of those entities, especially when the pass-through entities are conducting business in multiple states. Compared with...more

Back to the Future for Real Estate Tax Exemptions and PILOTs/SILOTs? Charities Must Meet HUP Test and Act 55, Pennsylvania High...

For charitable organizations in Pennsylvania, obtaining and preserving real estate tax exemptions just got a little more difficult. The Pennsylvania Supreme Court has ruled that the statute intended to clarify the...more

For Corporations, a "Virtual Office" in New Jersey Can Lead to an Actual Tax

For out-of-state corporations that do business in New Jersey through the use of “virtual offices,” the recent decision by the Appellate Division of the Superior Court of New Jersey in Telebright Corporation, Inc. v. Director,...more

•United States v. Home Concrete & Supply

Brief Amici Curiae Of National Federation Of Independent Business Small Business Legal Center And CATO Institute in Support Of...

Since the foundational administrative law case of Chevron v. Natural Resources Defense Council (1984), courts have given significant deference to executive agency interpretations of federal law. United States v. Home Concrete...more

Be Ready to Pounce on a Texas Margins Tax Challenge

On July 29, 2011, Allcat Claims Services, L.P. (Allcat) and one of its individual partners filed a petition with the Texas Supreme Court seeking a declaratory judgment that the Texas margins tax (TMT) is unconstitutional...more

New Jersey Supreme Court Holds Throwout Rule Is Facially Constitutional, But Unconstitutionally Applied

On July 28, 2011, the New Jersey Supreme Court denied a taxpayer's claim that New Jersey's Throwout Rule (which excludes certain sales from the denominator of the sales apportionment factor) is facially unconstitutional....more

North Carolina Court Strikes Down 25% Penalty for Failure to File Combined Return

On January 12, 2011, the North Carolina Superior Court held that the imposition of a 25% penalty for failure to file a combined return, lacked adequate procedural due process and violated the North Carolina Constitution.1 The...more

PA Personal Income Tax Notes: Prohibition Of Loss Carryovers By S Corporation Shareholders Constitutional

On November 18, 2010, a three-judge panel of the Commonwealth Court ruled, in DelGaizo et al. v. Commonwealth, Nos. 558 F.R. 2008 and 37 F.R. 2009, that Section 307.10(b) of the Tax Reform Code, 72 P.S. § 7307.10(b), does not...more

Sandy Springs Restructures Its Business and Occupation Tax

The Sandy Springs, Georgia, City Council revised its Business and Occupation Tax ordinance on December 21, 2010 in an effort to foster economic development and alleviate the potential chilling effect on the City’s business...more

Sutherland Salt Shaker Vol. 1 No. 11- November 2010

IN THIS ISSUE: The California Tax Shakeup; New Jersey Supreme Court Catches a Throwout Case; Massachusetts Supreme Judicial Court Says Tax Exemption Should Be Construed Broadly;SALT Pet Of The Month; Georgia Proposes to Shift...more