Welcome to the June 2019 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 United States Supreme Court decision holding that North Carolina’s tax on a trust based solely on the existence of a resident beneficiary violated the Due Process Clause, (ii) an update on post-Wayfair activity, including recent Virginia guidance that requires taxpayers to aggregate certain sales of related entities for purposes of calculating the economic nexus thresholds; (iii) an Alabama Supreme Court decision holding that custom software is taxable (reversing over 20 years of guidance from the state) and that certain software services may be nontaxable if separately stated; (iv) New Jersey’s new mandatory combined reporting rules that are effective for taxable years ending on after July 31, 2019; and (v) a Texas Court of Appeals opinion applying the “essence of the transaction” rules to conclude that the taxpayer is providing a taxable data processing service and not an exempt information service.

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

United States Supreme Court Holds That State May Not Tax Trust Due Solely to Resident Beneficiary

By Jeff Glickman, SALT Partner

The Court's unanimous decision, while expressly limited to the specific trust at issue, provides taxpayers with opportunities to obtain state income tax refunds and to engage in estate tax planning to minimize state income taxes utilizing properly structured trusts.

Wayfair and Nexus: The Aftermath, Part 5 – Aggregation and Local Issues

By Jeff Glickman, SALT Partner

To celebrate the one-year anniversary of the Wayfair decision, this article addresses recent guidance from Virginia on its aggregation rules for computing the sales threshold, as well as the potential impact of the decision on local tax jurisdictions.

Alabama Supreme Court Holds That Custom Software Is Taxable

By Tina Chunn, SALT Senior Manager

The Alabama Supreme Court ruled that custom software is taxable (reversing over 20 years of guidance from the state) and that certain software services may be nontaxable if separately stated.

New Jersey Issues Guidance for Mandatory Unitary Combined Reporting

By Jeff Glickman, SALT Partner

As part of a major corporate tax overhaul, New Jersey enacted mandatory combined unitary reporting for taxable years ending on or after July 31, 2019, and taxpayers should take time to familiarize themselves with these rules and plan for the potential impact to their state tax liability.

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.