SALT Blog - SALT Blawg

In response to the Texas Comptroller’s deficiency assessment of $269 million for uncollected sales and use tax, Amazon retaliated by filing suit in Travis district court for the production of “[i]nformation related to the audit and the assessment.” As of January 19, 2011, the Texas Comptroller had not been served and thus had no comment.

Other Texas retailers have complained to the Texas Comptroller of the unfair advantage given to Internet retailers such as Amazon who have not been collecting Texas sales and use tax.

The Washington legislature recently authorized the state’s first ever tax amnesty program.  As with many states that have enacted amnesty programs, Washington is facing significant budget challenges.  The amnesty program is anticipated to help combat those fiscal difficulties by generating approximately $24.4 million in revenue for the state and $3.9 million for local governments, while giving businesses a break from penalties and interest associated with back taxes.

Washington’s temporary amnesty program waives the penalties and interest associated with certain taxes and is slated to begin February 1, 2011 and end April 18, 2011.  The program applies to the following taxes: state business-and-occupation tax, public utility tax, state and local sales and use taxes – including general retail sales and use taxes, rental car taxes, King County food and beverage tax, sales and use tax on motor vehicle sales/leases, lodging taxes and brokered natural gas use tax.  Additionally, taxpayers can apply for amnesty for any unpaid invoice from the Washington Department of Revenue (“Department”) that lists penalties and interest due for tax periods before February 1, 2011 for any of the aforementioned taxes included in the program, including Department audit assessment invoices.  Notably, application under the program waives a taxpayer’s right to seek a refund or challenge the amount of taxes paid under the program.

Pennsylvania Governor Ed Rendell recently signed the Construction Workplace Misclassification Act (Act 72 of 2010, previously House Bill 400).  The new law holds employers in the construction industry criminally liable for the misclassification of employees as independent contractors.  The legislation goes into effect on February 11, 2011.  On that date, Pennsylvania will join sixteen (16) other states that have enacted similar legislation seeking to eliminate the misclassification of employees, including its neighboring states of Delaware, New Jersey, New York and Maryland.

Pennsylvania estimated that approximately nine (9) percent of the state’s workforce is misclassified as independent contractors.  Of that percentage, a quarter of the misclassified workers are in the construction industry.  By classifying workers as independent contractors instead of employees, employers can avoid paying unemployment compensation and workers’ compensation taxes, and may gain an unfair advantage in contract bids.

In an opinion filed December 30, 2010, the Supreme Court of Iowa has upheld a lower court decision imposing income tax on a franchisor (KFC), a Delaware corporation with its principal place of business in Louisville, Kentucky.  KFC had no physical presence within the state of Iowa, but licensed its system to related entities and independent franchisees.  KFC owned no restaurant properties in Iowa and had no employees in Iowa.