LexisNexis® Legal Newsroom
Keep it in the Family: North Carolina Appellate Court Finds Taxation of Trust Violates Due Process

By Ted Friedman and Madison Barnett The North Carolina Court of Appeals held that it would violate Due Process to impose income tax on an out-of-state inter vivos trust because the trust lacked a sufficient connection with North Carolina. The trust was created and governed by laws outside of North...

Taxing the Internet Media Stream - South Carolina Determines Streaming Media Charges Are Taxable

By Robert Merten and Madison Barnett The South Carolina Department of Revenue issued a revenue ruling concluding that charges paid by customers to stream media content over the Internet, such as movies, music and television programs, are subject to state sales and use tax. Under South Carolina law...

Because ... It's All in the Cloud: Sales of Cloud-Computing Services Do Not Create Nexus in Virginia

By Nick Kump and Amy Nogid The Virginia Department of Taxation (Department) ruled that a company’s sales of cloud computing services did not create nexus with Virginia for corporate income tax purposes. The Department also said that in applying P.L. 86-272, it uses the same “solicitation”...

Louisiana's "Quest" for Market-Based Sourcing Denied: Appellate Court Holds Medical Tests Performed in Texas Are Not Sourced to Louisiana

By Nick Kump and Scott Wright The Louisiana Court of Appeal held that income derived from diagnostic testing of Louisiana patients’ blood samples and other medical specimens performed in Texas should be sourced to Texas for corporate income tax apportionment purposes. The taxpayer, which operates...

Power to the People: Mississippi Supreme Court Upholds Right to Jury Trial in Tax Assessment Appeals

By Jessica Eisenmenger and Tim Gustafson The Supreme Court of Mississippi held that a county had the right to a jury trial in an appeal of the county’s ad valorem tax assessment. In reaching its decision, the court relied on centuries-old customs, practices and decisions upholding the right to...

Kentucky Court of Appeals Finds Retroactive Statute Constitutional

By Chelsea Marmor and Andrew Appleby The Kentucky Court of Appeals held that a Kentucky statute, which retroactively reduced vendors’ 1% deduction of the sales tax collected and remitted to Kentucky to $1,500 in any monthly reporting period, did not violate the Kentucky Constitution. Wal-Mart...

Empty Miles, Empty Factor? Texas Comptroller Clarifies "Empty Miles" Treatment in Transportation Apportionment Factor

By Chelsea Marmor and Tim Gustafson The Texas Comptroller of Public Accounts issued a franchise tax letter clarifying that “total mileage” for purposes of computing the Texas special apportionment formula for transportation receipts may either include or exclude “empty miles”...

Generating Steam Heat: Materials and Labor Used to Build Power Plant Exempt From Florida Sales Tax

By Mike Kerman and Jonathan Feldman The Florida Department of Revenue advised that certain materials and labor a taxpayer plans to use to construct a combined heating and power plant will be exempt from Florida sales and use tax. The plant will produce electricity for sale. Florida exempts purchases...

Louisiana DOR Proposed Unique--and Troubling--Addback Regulation

The Louisiana Department of Revenue has proposed a new regulation expansively interpreting Louisiana’s recently enacted related party expense addback statute. Earlier this year, Louisiana enacted a new statute requiring taxpayers to add back interest expenses, intangible expenses and management...

Keep on Streamin': Kentucky Court Holds Taxes Inapplicable to Streaming Video Service

By Charles Capouet and Maria Todorova The Franklin County Circuit Court held that Netflix’s subscription-based streaming video service was not subject to Kentucky’s gross revenues tax, excise tax and school tax (“telecommunications taxes”) imposed on “multichannel video...

Two Bites, Zero Success: South Carolina Court of Appeals Determines Department Did Not Satisfy Its Burden to Justify Alternative Apportionment

By Elizabeth Cha and Timothy Gustafson On October 26, 2016, the South Carolina Court of Appeals reversed a lower court ruling and determined the Department of Revenue (Department) failed to satisfy its burden of showing that the statutory apportionment formula did not fairly represent Rent-A-Center...

West Virginia Court Rules that Credit for Taxes Paid to Other States Must Include Local Taxes

By Mike Kerman and Open Weaver Banks The West Virginia Supreme Court held that a credit for taxes paid to other states on purchases of motor fuel is constitutional only if interpreted to include taxes paid to subdivisions of other states. The court determined that a credit that applies only to taxes...

Georgia Tax Tribunal Issues Two New Decisions on Remote Seller Nexus and Georgia Tax Credit Elections

The Georgia Tax Tribunal, in its first published decisions in more than a year, held that: Scholastic Book Clubs has nexus in Georgia and must collect sales tax as a result of its relationship with teachers in the state; and In a case affording significant deference to the Department’s regulations...

Alabama Tax Tribunal Determines Taxpayer Properly Deducted Dividends from REIT

By Nicole Boutros and Eric Coffill The Alabama Tax Tribunal held that a taxpayer banking corporation properly deducted dividends received from an affiliated real estate investment trust (REIT) for financial institution excise tax purposes because the REIT qualified as a “corporation.” The...

Florida Issues Nexus Guidance for Reinsurers

By Charles Capouet and Andrew Appleby The Florida Department of Revenue determined that a reinsurer did not have nexus with Florida for corporate income tax purposes. The Department first asserted that an insurer or reinsurer would have nexus with Florida if it was authorized to transact business in...

Kentucky Court of Appeals Holds that Kentucky DOR Must Publish Final Rulings

By Chris Lutz and Carley Roberts The Kentucky Court of Appeals held that the Kentucky Department of Revenue must publish final administrative rulings, even when those rulings are not appealed to the Board of Tax Appeals. The Office of Attorney General had previously determined that the Department’s...

Maybe Next Season? Georgia Tax Bills Collapse in Last Day of Session

The Georgia General Assembly passed significant tax legislation impacting selected industries, but failed to pass a number of broader tax bills: Passed legislation impacts telecommunications, film production and music production companies and causes the review of all income and sales and use tax...

Not So Fast: Tennessee Chancery Court Prohibits Department of Revenue from Enforcing Sales Tax Collection By Out-of-State Retailers

By Eric Tresh and Liz Cha On April 10, 2017, a Tennessee Chancery Court ordered that the Tennessee Department of Revenue is temporarily prohibited from enforcing a regulation that requires out-of-state retailers making annual sales in excess of $500,000 to collect and remit sales tax. The Order arises...

Arkansas Does Not Apply US-Canada Income Tax Treaty to State Income Tax

By Madison Barnett and Stephanie Do Many foreign companies are surprised to learn that US states are not generally bound by income tax treaties entered into by the US with foreign countries. Under these treaties, for US federal income tax purposes, certain non-US corporations and residents of foreign...

Georgia DOR Rules that Sales to Out-of-State Purchasers Are Subject to Sales Tax When Delivered to In-State Assembly Facility

By Chris Lutz and Andrew Appleby In Georgia Letter Ruling SUT-2016-24, the Georgia Department of Revenue ruled that sales of software equipment delivered to a Georgia assembly facility on an out-of-state customer’s behalf were subject to Georgia sales and use tax. In the ruling, the taxpayer...

Tennessee Federal Court Holds That State Sales Tax on Railroad Carriers Does Not Violate the 4-R Act

By Liz Cha and Eric Coffill The United States District Court for the Middle District of Tennessee held that Tennessee’s sales tax on railroad carriers for the purchase or use of diesel fuel was not discriminatory under the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act) even...

It's the End Product that Counts: Texas Comptroller Finds Payment Risk and Fraud Prevention Solutions Should Be Apportioned as a Service

By Nick Kump and Todd Lard The Texas Comptroller of Public Accounts has issued a private letter ruling finding that a Texas company’s revenue from sales of real-time payment risk and fraud prevention services should be sourced to the location of Taxpayer’s customers. In Texas, receipts...

Georgia Senate Special Tax Exemption Study Committee Holds First Meeting

The Georgia Senate Special Tax Exemption Study Committee held its initial meeting to plan evaluation of Georgia income and sales tax exemptions by December 1, 2017. The special study committee was created by a Georgia Senate Resolution during the 2017 Legislative Session. The Committee will prioritize...

Texas Supreme Court Upholds Local Ad Valorem Tax on Stored Gas

By Jessie Eisenmenger and Jonathan Feldman The Texas Supreme Court held that a non-discriminatory tax on stored gas held for future resale does not violate the Commerce Clause of the US Constitution. Harris County imposed an ad valorem tax on natural gas stored in the county on January 1 of the tax...

North Carolina Supreme Court Determines that Bank's Market Discount Income Is Not Deductible as Interest

By Liz Cha and Open Weaver Banks The North Carolina Supreme Court affirmed the North Carolina Business Court’s decision that Fidelity Bank was precluded from deducting “market discount income” from US bonds for North Carolina corporate income tax purposes. Fidelity Bank acquired US...