WEEKLY ROUND-UP: BUSINESS CLIMATES, ONLINE SALES TAX PROPOSALS AND STATE TAX APPEALS TO THE U.S. SUPREME COURT

Highlights from the 9/30/16 issue of the Weekly State Tax Report :

  • State Tax Group Wrestling With Market-Based Sourcing Rules
    The Multistate Tax Commission’s sourcing regulations are receiving some pushback from financial service firms and other companies regarding the decision to deal with hedging, dividends and interest under UDITPA Section 18 instead of the mainline sourcing regulations in Sections 1 and 17.  
  • Profit Shifting Under Attack From Small Group of States
    A small number of states have enacted tax haven legislation.  The legislation typically falls into two distinct categories: blacklists of deemed tax havens or list of tax haven criteria. The legislation is intended to curb the practice of shifting profits abroad in order to take advantage of lower tax rates. 
  • New Jersey Worst in Business Climate Ranks: Tax Foundation
    While Wyoming remains the most competitive business climate New Jersey remains the least competitive, according to the Tax Foundation’s annual “State Business Tax Climate Index.”  According to the Index, New Jersey is home to some of the highest property tax burdens in the country. New Jersey also has both an inheritance and estate tax and maintains one of the “worst-structured individual income taxes in the country.”
  • New Jersey Lottery Winners Win Again, Avoid Income Tax Bill
    The New Jersey Tax Court ruled similarly in three cases, prohibiting the state from imposing gross income taxes on lottery winnings that were won prior to a 2009 legislative change. Prior to the June 29, 2009 change, lottery winnings exceeding $10,000 were exempt from gross income tax. In each of the cases, the proceeds would have been taxable under the plain language of the statute, however the court ruled that the winnings were not subject to tax based on the square corners doctrine.
  • Multistate Tax Group Slams Goodlatte Online Sales Tax Plan
    The Multistate Tax Commission shared concerns and criticisms of Rep. Robert W. Goodlatte’s (R-VA) origin-based sourcing sales tax proposal, noting that the proposal “creates political and constitutional issues that are as great as those it seeks to resolve.”
  • U.S. Supreme Court Teeing Up Potential State Tax Appeals
    The U.S. Supreme Court enters a new term with state and local sales tax controversies taking center stage. At least five certiorari petitions seeking review of state tax decisions ranging from property tax valuation and assessment to Multistate Compact apportionment elections have been submitted. It is likely that there are more petitions to come. 

Some notable developments from the State Tax Developments Tracker –Bloomberg BNA’s tool for monitoring important developments in all the states:

  • Alabama Department of Revenue Alerts Taxpayers Regarding Scammers Making Phone Calls to Collect Tax Debt, Claiming to be Staff
  • California Budget and Policy Center Publishes Issue Brief on Proposition 55
  • Indiana Department of Revenue Announces School Scholarship Credit Available for Individuals and Corporations
  • Missouri Department of Public Safety Proposes to Amend Rule Concerning Gaming Commission Records, Fantasy Sports
  • Tennessee Court of Appeals Holds Tax Exemption for Electric Cooperatives Unconstitutional, Finds No Association with Charity

For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.

In other developments…  

Federal: Mobile Workforce State Income Tax Simplification Act of 2015 Passes House by KPMG

California - Regulation amendment provides market based sourcing guidance for gross receipts from marketable securities, dividends, goodwill, and interest by PwC

Compiled by Chreasea Dickerson