Weekly Round-Up: Kansas Mud? State Attempts to ‘Clarify’ its Treatment of Reimbursement Costs


In a decision that addresses the complications of how to compute sales and use tax, the Kansas Court of Appeals scrutinized the state's taxing statutes to clarify that reimbursement of travel expenses were exempt from sales tax because they were not sold at retail. In its effort to shed light on the issue, however, the court, in In Re Cessna Employees Credit Union, No. 105,139, (Kan. Ct. App. April 6, 2012),may have muddied the waters and created an opportunity for the government to impose what some would argue is nothing short of double taxation.

On top of this, just one month after the Kansas Court of Appeals' ruling in Cessna, the Kansas Department of Revenue issued an opinion letter that appeared, at first glance, to contradict the Cessna ruling.

In Cessna, the court of appeals ruled that JHA's reimbursement of travel expenses was not subject to sales tax because they were not “sold” at retail, and therefore not includable in the total selling price. However in the opinion letter, the department found reimbursement of repair or service payments must be included in the tax base and subject to sales tax.

How do we reconcile the department's decision above with the court of appeals decision in Cessna, which prohibited the inclusion of reimbursement expenses in the total selling price? To find out, check out the complete article by Bloomberg BNA State Tax Law Editor Jeanne Rauch-Zender in this week's issue of the Weekly State Tax Report.   [which can be read in its entirety here]

In other developments…

State credit ratings as of July 13, 2012 , by Nick Kasprak of the Tax Foundation.

Indiana finds taxpayer must calculate consolidated return on post-apportionment basis , PricewaterhouseCoopers reports.

States optimistic about their chances of taxing remote sellers , Accounting Today reports.

Amazon, forced to collect a tax, is adding roots , according to theNew York Times.

Answers to Indiana DOR’s $526 million in tax mistakes expected in December , Tom Lo Bianco of Bloomberg Businessweek explains.

Amazon shoppers will squeeze through California tax loophole ,CNET reports.

Compiled by Priya D. Nair
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