TWIST - July 20, 2020

Welcome to TWIST for the week of July 20.  This is Sarah McGahan from KPMG’s Washington National Tax state and local tax practice.

First up today we are going to cover a few sales and use tax developments. The District of Columbia is considering legislation that would impose a three percent sales and use tax on the sale of advertising services and personal information. The proposal is included in the 2021 Budget Support Act, which already passed its first reading and will be voted on for a second time this week. If enacted, the legislation would take effect on October 1, 2020.  In the District, legislation—unless emergency or temporary in nature— must be approved by the D.C. Council, signed by the mayor, and then is subjected to a 30-day congressional review period before it is enacted.

In other news, in Ohio, the Tax Commissioner addressed in a ruling whether a taxpayer was providing taxable electronic information services.  The taxpayer’s service allowed its customers to obtain responses to survey questions according to specific demographics that the customer selected. Customers provided their survey questions through an online platform and survey results were delivered to customers via the platform. The Commissioner concluded that the relevant end product at issue was the survey results or data provided to the customer and that product was a taxable “electronic information service.”

Finally, two states, Georgia and South Carolina, issued rulings addressing the same issue— whether sales tax is imposed on various fees and charges for allowing customers access to electric vehicle charging stations. In Georgia, the Department of Revenue ruled that the taxpayer was not a utility selling electricity at retail and was not required to collect tax on its charges. However, it was required to pay sales and use tax on its purchases of electricity. In South Carolina, in contrast, each of the taxpayer’s fees/charges were considered the retail sale of electricity subject to South Carolina sales tax. The sale of electricity to the taxpayer by its utility provider was considered a wholesale sale not subject to sales tax.

In corporate income tax news, in Oregon a wholesale provider of electricity and natural gas argued that it was not a public utility required to use a special apportionment rule for the tax years at issues.  The tax court agreed with the taxpayer, holding that the definition of a public utility required that some segment of the public must acquire a right to buy or otherwise use a company’s commodity or service, which it was not present in the case.  

 Finally, a number of states issued new guidance on whether and how the state conforms to various aspects of the federal CARES Act.  In addition, Arizona issued a ruling clarifying that taxpayers that failed to make transaction privilege tax payments in a timely manner due to COIVD-19 had a reasonable basis for such failure.  A separately issued document outlines the steps for requesting the abatement of any penalties related to late filings.

Thank you for listening and stay well. 

To read about the recent state and local tax guidance on extensions in response to COVID-19, please click here and bookmark KPMG TaxNewsFlash-United States to stay current as more guidance is regularly released.