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State DOR Letters and Administrative Rulings

The Wisconsin Appeals Commission ruled services are not presumed to be subject to sales tax. In looking to whether barge fleeting services are “taxable services,” the plain language of the statutes does not impose the sales tax and thus the state cannot interpret into the taxation of services those services that are not clearly included. Same rule follows inTexas.

Illinoispublished a ruling on the applicability of the manufacturing exemption in connection with a meat processing facility, and what parts of the plant equipment would qualify for the sales tax exemption.

The Missouri State Tax Commission set aside an assessor's appraisal for property tax in favor of the income approach used by taxpayer as the taxpayer’s report was substantial and persuasive, recognizing actual economic conditions affecting the subject property.

The Missouri Department of Revenue ruled on the application of sales tax for cabinet manufacturing, finding that the transactions by a cabinet manufacturer would be exempt where title to the cabinets transferred to the customers passed after installation. It also ruled that devices used merely to improve appearance, but not required for medical purposes, is not exempt from sales tax as a medical device. Also, an online ticket broker with no nexus to Missouri is not required to collect sales tax Missouri for tickets sold to Missouri customers or for events in Missouri. It ruled on the concept of integrated manufacturing, and looked to prior decisions that greatly expanded the term such as the “manufacture” of telephone calls. Finally, information services are not subject to sales tax.

New Yorkoffered guidance in dealing with sales tax on transactions in which a person purchases a coupon for a reduced price for goods or services via the Internet. Think Groupon. It also offered guidance for sales tax liability of members of limited liability companies and partners of limited liability partnerships.

State Regulations and Public Notices

Rhode Islandhas published the final version of its regulations on the sales taxation of computer programs  There are no significant changes to the final version from that originally proposed.

The North Carolina Department of Revenue advised on “major” sales tax changes by the state legislature for both persons who are registered before the department and other taxpayers.

State Legislative Affairs

Michigan State Representatives Kowall and Ananich introduced HB 5004 that would introduce a New York-style Amazon law to require Internet retailers to collect use tax inMichigan.

There is a rumor circulating in the Beltway that the Main Street Fairness Act may be combined with other legislation in an effort to secure GOP support. The Main Street Fairness Act would use federal legislation to allow states to require persons selling taxable items but who are currently beyond the reach of the states to actually collect relevant state use taxes. Currently the bill lacks significant support (including any GOP legislators).

California law, in connection with its unclaimed property statutes, has extended “no apparent commercial value” property to be held for seven years, which is an increase from the prior rule that a holder must retain such property for 18 months.

Judicial and Administrative Decisions

In a case of first impression, the Colorado Court of Appeals has ruled that electricity is tangible personal property, and thus machinery used in the generation of electricity qualifies for the manufacturing exemption from sales and use tax. Other states have also treated electricity as tangible personal property, including Texas (Tex. Tax Code § 151.317) and Indiana.

The New Jersey Superior Court ruled against a taxpayer on an appeal of a property tax dispute. In the instant case, the taxpayer, who was without legal counsel, ignored previous court rulings requesting filings and appropriate responses. The court recognized the taxpayer’s apparent indifference to court orders and ruled against the taxpayer on the second run through the appellate court system, having already given the taxpayer a chance once before to amend his responses.

In the PRA Government Services case, in which anAlabamacourt is asked to rule on the legality of a class action against contingent fee  auditors for a state agency, the taxpayers have amended the complaint to add hundreds of local jurisdictions as defendants. This could be a key case dealing with class actions and the proper use of contingent fee auditors by state agencies.

The Alaska Superior Court ruled that the property tax exemption granted to married couples is discriminatory as applied to same-sex couples.

Other Documents

The handout used at the last Houston Bar Association tax luncheon is provided, which outlines the latestTexas legislative updates to the Tax Code, and recent judicial updates involving theTexas franchise tax, including the current constitutional challenge to the revisedTexas franchise tax at the Texas Supreme Court.