Welcome to the February 2020 Issue of the Aprio State & Local Tax (SALT) Newsletter

With dozens of different taxes imposed by the 50 states (and thousands of local jurisdictions), we recognize how challenging it is to keep up with current issues and developments. This newsletter is designed to provide insights on developments in state and local taxes including new legislation, regulations, rulings and cases addressing issues such as corporate and personal income taxes, sales and use taxes, nexus, franchise/net worth taxes, etc.

This issue of the newsletter contains articles addressing (i) a Michigan case that potentially opens the door for states to apply Wayfair-related economic nexus principles to income taxes for years prior to the Wayfair decision; (ii) a Washington Court of Appeals decision that highlights how state sales tax taxability classifications are being applied to services offered via software; (iii) a New York Tax Appeals Tribunal opinion explaining how the form of a taxpayer’s gift card promotion can give rise to sales tax liability if the taxpayer’s application of sales tax to those promotional transactions does not follow the form of the promotion; and (iv) revised Texas policy guidance that may cause certain taxpayers to owe Texas Franchise Tax for prior periods.

In case you missed prior issues of this newsletter, please click here. 

If you have any comments, questions or suggestions regarding current or future topics, or if you would like to learn more about Aprio's SALT Practice, please email us at jeff.glickman@aprio.com. Thank you.

Jeff Glickman, J.D., LL.M.

Partner-in-Charge, State & Local Tax Practice

Michigan Court of Appeals Tells Tax Tribunal to Consider Income Tax Nexus in Light of Wayfair

By Jess Johannesen, SALT Manager

A few jurisdictions have begun to enact Wayfair-type economic nexus rules for income tax purposes, but this Michigan case raises the possibility that states may apply economic nexus principles for periods prior to the Wayfair decisions.

Washington Court Holds that Fees for Access to Online Research Library are Taxable as a Digital Automated Service

By Betsy Tuck, SALT Manager

As businesses provide more products/services using technology, determining the proper sales/use tax treatment is more difficult given varying state classifications as to what is and is not taxable.

New York Tax Appeals Tribunal Rules that Gift Card Promotion Does Not Reduce Sales Tax Value

By Tina M. Chunn, SALT Senior Manager

The application of sales/use tax to a particular transaction often depends on the form in which that transaction is structured, and a business's failure to respect that form may give rise to sales/use tax liability.

Texas Revises Policy on the Inclusion of Net Gains in the Gross Receipts Factor

By Jeff Glickman, SALT Partner

Several years after a Texas Franchise Tax case determined that only net gains, but not net losses, are included in the denominator of the apportionment factor, Texas has issued revised policy guidance that now applies those same principles to the numerator of that factor as well, thereby increasing the apportionment percentage for certain taxpayers for prior periods.  

About Aprio's State and Local Tax Practice

Aprio's State and Local Tax (SALT) practice advises clients on the state and local tax implications of their business operations, allowing clients to strategically minimize their liabilities and risks. Our team has over 50 years of combined SALT experience working in industry, state departments of revenue, public accounting and private law practice. We specialize in all areas of SALT, including matters related to state tax nexus, corporate and personal income taxes, sales/use tax, franchise/net worth taxes, credits and incentives, and mergers and acquisitions. In addition, we represent clients in administrative matters before state revenue departments around the country, including audit defense and settlement negotiations, pursuing voluntary disclosure agreements and obtaining letter rulings.