TWIST - October 12, 2020

Welcome to TWIST for the week of October 12, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

Our first development today is a Court of Appeals decision from Massachusetts. The court overturned an Appellate Tax Board ruling holding that the Indiana Utility Receipts Tax (URT) was required to be added back in computing Massachusetts corporate excise. Under Massachusetts law, taxpayers must add back taxes “measured on or by income, franchise taxes measured by net income, franchise taxes for the privilege of doing business, and capital stock taxes imposed by any state.”  In the court’s view, the URT was imposed on specifically enumerated receipts, including receipts from the retail sale of natural gas and electricity and was fundamentally similar to transaction taxes on retail sales, which could be deducted in computing Massachusetts corporate excise.

The Arizona Department of Revenue issued a ruling addressing a conflict between the transaction privilege tax sourcing provisions in the Arizona state statutes and the Model City Tax Code. In the ruling, the Department concluded that because Arizona’s state statute reflected the general administrative laws for sourcing sales, leases, and rentals of tangible personal property, the state sourcing statute superseded inconsistent provisions in the Model City Tax Code.

In New York City, the Department of Finance concluded that a lease termination fee paid over a 48-month period was not subject to New York City Commercial Rent Tax, as the fee was not consideration paid for the right to occupy or use the premises.

Finally, House Bill 954 was enacted in Vermont that makes several miscellaneous changes to the state’s tax laws, including requiring marketplace facilitators to collect the Universal Service Charge on behalf of marketplace sellers on all retail sales of prepaid wireless telecommunications services subject to Vermont sales and use tax. The bill also makes a few income tax changes, including updating the state’s conformity to the IRC to the Code as in effect on December 31, 2019.

Thank you for listening and stay well.