The BR State + Local Tax Spotlight: October 2021
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Note from the Editor
Welcome to the October 2021 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 recent Michigan appeals court decision that reaffirmed an alternative method of apportionment was necessary to avoid unconstitutional distortion from including a large gain from the sale of a corporation’s business in its tax base while excluding it from the sales factor;
- A recent New York trial court decision to dismiss a False Claims Act lawsuit brought by the state’s Attorney General over allegedly fraudulent sales tax returns; and
- A recent Washington Supreme Court decision that upheld the application of the state’s Business & Occupation tax on 153 financial institutions.
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Michigan Court Again Holds It Was Unconstitutional to Include Gain from Sale of a Business in Tax Base but Not Sales Factor
By Craig B. Fields
The Michigan Court of Appeals recently reaffirmed its earlier decision that an alternative method of apportionment was necessary to avoid unconstitutional distortion from including a large gain from the sale of a corporation’s business in its tax base while excluding it from the sales factor. Vectren Infrastructure Servs. Corp. v. Dep’t of Treasury, 2021 Mich App LEXIS 5693* (2021). While the resulting level of distortion to support a constitutional challenge will depend upon the facts, this decision should assist taxpayers facing a similar statutory framework. Read More »
Case Dismissed: NY Court Throws Out Attorney General’s Lawsuit Alleging Fraudulent Sales Tax Returns
By Eugene J. Gibilaro
The Supreme Court of the State of New York for New York County dismissed a lawsuit brought by the state attorney general under the New York State False Claims Act alleging that a company made “reverse false claims” by failing to declare certain promotional payments that it received as receipts subject to sales tax on its sales tax returns. People v. B&H Foto & Electronics Corp., 2021 NYLJ LEXIS 988* (N.Y. Sup. Ct. Sept. 21, 2021). The decision confirms that what is relevant in determining receipts subject to sales tax in New York is the consideration that the end-user customer pays in a retail transaction, without regard to separate payments made pursuant to agreements between the retailer and the manufacturer. Read More »
When a Court Misses the Mark
By Nicole L. Johnson
The Washington Supreme Court recently reviewed the much-maligned additional Business & Occupation tax on certain financial institutions. Washington Bankers Ass’n v. Dep’t of Revenue, No. 98760-2 (Wash. Sept. 30, 2021). The Court reversed the trial court and held that the additional tax did not discriminate against interstate commerce—a finding that requires a (very large) stretch of the imagination. Read More »
WHAT’S SHAKING: BLANK ROME STATE + LOCAL TAX ROUNDUP
Blank Rome’s nationally prominent State + Local Tax attorneys are thought leaders in the community as frequent guest speakers at various local and national conferences throughout the year. Our State + Local Tax attorneys believe it is necessary to educate and inform their clients and contacts about topics that will impact their businesses. We invite you to attend, listen, and learn as our State + Local Tax attorneys interpret and discuss key legal issues companies are facing and how you can put together a plan of action to mitigate risk and advance your business in accordance with state and local tax laws. Read More »
© 2021 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.