TWIST - January 19, 2021

Summary of state tax developments in Alaska, Minnesota, New Jersey, and Tennessee.

Weekly TWIST Podcast Overview

This Week's Developments

Welcome to TWIST for the week of January 19, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

We have two decisions today addressing procedures issues. In the first, the Minnesota Supreme Court addressed whether the Department of Revenue’s tax order sent by regular, non-certified mail satisfied due process. The taxpayer missed the Commissioner’s audit notice and the subsequent assessment and only became aware of the outstanding lien when the Department levied his bank account. The taxpayer’s position was that the Department should have mailed him the tax order via certified mail and he cited to other decisions holding that certified mail was sufficient for due process.  The court determined that although there were decisions holding that certified mail was sufficient, that did not in turn mean that notice via certified mail was required.  In this case, there was no evidence that the state had actual knowledge that the initial notice did not reach the taxpayer and the taxpayer provided no evidence that, in this instance, regular mail was not “reasonably calculated” to reach the address and person to which it was sent.  

 In the second decision, an Administrative Law Judge (ALJ) for the Alaska Office of Administrative Hearings addressed whether the filing of an amended federal return extended the statute of limitations for filing a state refund claim. The taxpayer asserted that the authority governing the issue was a statute that required a taxpayer to notify the Department of any alteration or modification of the taxpayer’s federal income tax return within a 60-day period of the final determination. The ALJ disagreed and held that the three- year statute of limitations controlled the issue and therefore the refund claim was untimely.

In revised Technical Bulletin 89, the New Jersey Division of Taxation announced that because of the recent retroactive law change to the definition of an affiliated group, it is providing a one-time exception to prospectively allow a change to the combined group’s filing methods on the 2020 Corporation Business Tax return. Importantly, no retroactive changes will be permitted with respect to elections made for the 2019 privilege periods. In other words, no amended returns changing a filing election or reverting to the default water’s-edge filing methods will be permitted.  

Finally, the Tennessee Department of Revenue recently issued a ruling interpreting the state’s relatively new marketplace facilitator statute. In the ruling, the Department concluded that a taxpayer that facilitated sales for restaurants was considered a “delivery network company” excluded from the statutory definition of a marketplace facilitator. 

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Featured Speaker

Sarah McGahan

Sarah McGahan

Managing Director, State & Local Tax, KPMG US