The BR State + Local Tax Spotlight: June 2022
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Note from the Editors
Welcome to the June 2022 edition of The BR State + Local Tax Spotlight. We understand the unique demands of staying on top of important State + Local Tax developments, which happen frequently and across numerous jurisdictions. Staying updated on significant legislative developments and judicial decisions helps tax departments function more efficiently and improves strategy and planning. That is where The BR State + Local Tax Spotlight can help. In each edition, we will highlight for you important State + Local Tax developments that could impact your business. In this issue, we will be covering:
- A Texas Supreme Court decision to strike down a locality’s licensing fee that was calculated as a percentage of the licensee’s revenue;
- A Kansas Supreme Court decision that a former Pizza Hut franchisee rightfully filed a nonresident return in the state after meeting his evidentiary burden of establishing that he had changed his domicile to Florida; and
- A Massachusetts Supreme Judicial Court decision that the Department of Revenue had no statutory authority to tax the gain recognized by a nondomiciliary S Corporation from its sale of a 50 percent interest in an LLC.
We invite you to share The BR State + Local Tax Spotlight with your colleagues and visit Blank Rome’s State + Local Tax webpage for more information about our team. Click here to add State + Local Tax to your subscription preferences.
Eugene J. Gibilaro and Anna Uger
A Fee or a Tax? Beware of Localities Going Too Far
By Eugene J. Gibilaro
On May 20, 2022, the Texas Supreme Court held that a locality lacked authority under Texas law to impose a licensing fee on a construction trash-hauling company that was calculated as a percentage of the company’s revenue. Read More »
Where’s Home for the Franchise King?
By Nicole L. Johnson
Determining the location of a person’s domicile is a fact-intensive inquiry—with potentially large tax consequences. In a recent Kansas Supreme Court case, the then largest Pizza Hut franchisee in the world asserted that he was a Florida resident for 2005 and 2006, but the Kansas Department of Revenue (the “Department”) alleged that he never abandoned his Kansas domicile. On the line was an assessment of over $42 million, including interest and penalties. Read More »
Massachusetts High Court Rules, Although Constitutional, State Has No Statutory Authority to Tax Gain
By Craig B. Fields
Although the parties only argued the constitutionality of taxing the gain recognized by a nondomiciliary S Corporation from its sale of a 50 percent interest in a limited liability company (“LLC”), the Massachusetts Supreme Judicial Court (“SJC”) ruled that while such taxation is constitutional, it is not permitted under the Massachusetts statutes. Read More »