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NJ Tax Court Issues Ruling on Sales Tax Sourcing

On November 16, 2017, the Tax Court of New Jersey issued a ruling in Spirit Halloween Superstores, Inc. v. Director, Division of Taxation, concerning the sourcing of sales of tangible personal property for sales tax purposes....more

Massachusetts ‘Cookie’ Nexus Regulation Challenged... in Virginia Circuit Court

On October 24, Crutchfield Corporation filed a declaratory judgment action challenging the Massachusetts Department of Revenue’s “cookie” nexus regulation. The action asserts that the regulation violates the Commerce Clause...more

Pennsylvania Enacts Tax Bill

On October 30, 2017, Governor Tom Wolf signed House Bill 542 (“HB 542”) into law to make several tax changes that will generate revenue for Pennsylvania’s 2017/2018 budget. In addition to imposing entirely new tax obligations...more

Pennsylvania Board of Appeals Sends Sales Tax Refund Claims to Audit: What Do You Do?

The Pennsylvania Department of Revenue’s Board of Appeals (the “Board”) is issuing orders dismissing large and complex sales and use tax refund petitions “without prejudice,” while directing the Department’s Bureau of Audits...more

REMIC Excess Inclusion Income – Is It Included in Net Income?

Corporations and financial institutions that hold REMIC residual interests may have a Massachusetts corporate excise tax refund opportunity. REMICs are essentially pools of mortgages that are taxed on a pass-through basis...more

Taxpayer Challenges Department Authority to Adjust NOL Carryforward, When NOL Was Generated in Tax Years Otherwise Closed by...

Can a Department of Revenue auditor reduce a taxpayer’s deduction for a net operating loss (“NOL”) carryforward, even if the NOL was generated in a tax year that is closed under the statute of limitations? This question is...more

Filing Season Reminder: Department Guidance Regarding Massachusetts Partnership and C Corporation Tax Return Filing Due Dates

Effective for tax years beginning after December 31, 2015, the due date for filing federal tax returns for C corporations and partnerships were revised. See Public Law 114-41, the “Surface Transportation and Veterans...more

Massachusetts to Move Forward With New “Cookie” Nexus Regulation Effective October 1

On September 13, Massachusetts issued a final regulation that will require many “internet vendors” without traditional “physical presence” in Massachusetts to collect and remit sales and use tax, effective beginning October...more

South Dakota Supreme Court Strikes Down ‘Kill-Quill’ Law

Just two weeks after holding oral argument, the South Dakota Supreme Court issued its decision in South Dakota v. Wayfair, et al., striking down South Dakota’s “kill-Quill” law. South Dakota’s law would have imposed sales tax...more

Disallowance of Deduction for Interest Paid to Hungarian Affiliate Serves as a Reminder of Department’s Continued Audit Scrutiny...

A case recently resolved at the Appellate Tax Board serves as a reminder that Massachusetts’ auditors continue to aggressively challenge the following intercompany transactions: - Interest deductions for interest paid to...more

Filing Season Reminder: Revisions (and Challenges) to Alternative Apportionment Regulation

Any taxpayers considering taking an alternative apportionment position on its corporate excise tax returns this fall should remember that the Department adopted a revised alternative apportionment regulation, 830 CMR 63.42.1,...more

One Step Closer to Quill’s Downfall? South Dakota Supreme Court Hears Oral Arguments in 'Kill-Quill' Case

The South Dakota Supreme Court heard oral argument in South Dakota v. Wayfair, Inc. The case involves a South Dakota law enacted in 2016 that imposes an economic nexus standard to determine whether out-of-state retailers are...more

SJC Holds that Drop-Shipper has Burden of Proving Sales Were Not Subject to Sales Tax; Is Liable for Tax

In D & H Distributing Company v. Commissioner, the Supreme Judicial Court (“SJC”) considered whether the taxpayer, a distributor located outside of Massachusetts, bore the burden of proving that a drop shipment to a...more

Massachusetts State Tax Developments

Welcome to the latest Reed Smith update on recent developments in Massachusetts state tax. In this update, we’ll discuss the following developments: - Corporate excise tax implications of the Department’s decision to...more

Massachusetts Issues Proposed Regulation Imposing Sales or Use Tax Obligations on “Internet Vendors” Beginning October 1

On July 28, the Massachusetts Department of Revenue (the “Department”) issued Proposed Regulation 64H.1.7 (the “proposed regulation”) that, if adopted, would require “internet vendors” to collect and remit sales tax on sales...more

Pennsylvania Department of Revenue Rules That Information Retrieval Services Are Taxable

The Pennsylvania Department of Revenue has issued a letter ruling advising a vendor that its information retrieval service is subject to Pennsylvania sales tax. The rationale underlying the letter ruling echoes the arguments...more

Pennsylvania Senate Passes Tax Bill

Today, the Pennsylvania Senate passed an amended version of House Bill 542 (HB 542), which includes tax code changes that are estimated to generate $571 million in new revenue. (A brief overview of some of the noteworthy...more

Massachusetts Appellate Tax Board Denies Multiple Points of Use Sales Tax Refund Claims

The Massachusetts Appellate Tax Board (“ATB”) has issued an order denying three sales tax refund claims involving multiple points of use (“MPU”) sourcing. In each case, vendors had filed refund claims arguing that their...more

Recent Nexus Developments: Washington Enacts Legislation Imposing Sales Tax Obligations on “Marketplace Facilitators,” and Ohio...

Washington Governor Jay Inslee signed EHB 2163 July 7, imposing sales and use tax obligations on “remote sellers,” “referrers,” and “marketplace facilitators" beginning January 1, 2018. Businesses subject to the new law may...more

Minnesota Legislature Sends Bill to Governor to Require “Marketplace Providers” to Collect Sales and Use Tax

The Minnesota Legislature passed HF1 to impose sales and use tax collection obligations on “marketplace providers”–defined broadly to capture online websites that facilitate sales of tangible personal property from retailers...more

Pennsylvania Amnesty Begins This Week, but VDA Program Still the Better Option for Many Non-filers

Pennsylvania’s tax amnesty program begins April 21, 2017. Taxpayers that are considering amnesty should remember that Pennsylvania’s voluntary disclosure agreement (“VDA”) program for non-filers remains open during the...more

Pennsylvania Issues Revised Ruling on Sales Tax Treatment of Software-Related Services, Creating a Refund Oppsortunity for Some...

Last week, the Pennsylvania Department of Revenue issued a revised version of a previously issued letter ruling (Letter Ruling SUT-17-001) on the sales tax treatment of software support services. Although the revised ruling...more

MTC Proposed Apportionment Regulations Pass By Special Vote: Here’s What You Should Know

Today, the Multistate Tax Commission (“MTC”) held a special meeting where the whole Commission (a group of member states) voted to approve model apportionment regulations, including provisions concerning market...more

New Jersey Tax Court Clarifies Sales Tax on Software

The New Jersey Tax Court recently issued a decision concluding that pre-written software sold on tangible media was tangible personal property for New Jersey sales tax purposes. Notwithstanding this decision, most business...more

U.S. Supreme Court Denies Cert in Direct Marketing Association v. Brohl

Today, the U.S. Supreme Court declined to review the Tenth Circuit’s holding in Direct Marketing Association v. Brohl, which upheld Colorado’s use tax reporting regime on out-of-state taxpayers. In so doing, the Court also...more

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