TWIST - November 2, 2020

Welcome to TWIST for the week of November 2, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

Our first development today is a decision in from a New Mexico Court of Appeals holding that a taxpayer was not required to file an amended return as a prerequisite to requesting a refund. For the tax year at issue, the statute did not specifically require a taxpayer to file an amended tax return. However, the Department’s regulation mandated that a taxpayer claiming a refund provide a copy of the appropriate fully amended return for the period in which the refund was claimed.  After a hearing officer concluded that the regulation was a proper interpretation of the law, the taxpayer appealed. On appeal, the court held that because the regulation effectively abridged the taxpayer's right to pursue a claim for refund, the language of the statute must prevail.

Next up, the South Carolina Administrative Law Court concluded that a statute allowing taxpayers subject to the License Tax an investment tax credit for qualifying property placed in service was ambiguous as to whether the credit limitation was $5 million annually or $5 million over the taxpayer’s lifetime. Because the credit worked as a deduction, that ambiguity had to be resolved against the taxpayer.

In Indiana, the Department issued a Letter of Findings rejecting a RV dealer’s position that it was taxable in other jurisdictions so that its receipts did not have to be thrown back to Indiana and included in the Indiana sales factor numerator. The taxpayer appeared to be arguing that because it reimbursed repair shops in the other jurisdictions for repairing its customers RVs and this enabled it to fulfill its warranty obligations, it was taxable in the other jurisdictions.  Finally, on Election Day, voters in certain states will be asked to decide on certain significant state and local tax measures. In many instances, approval of these ballot measures will result in tax rate changes, or new taxes.  In California, voters are being asked to end decades of established policy as to how commercial and industrial properties are taxed.   Please stay tuned to TWIST for more on the outcome of these ballot measures and thank you for listening.