TWIST - February 8, 2021

Welcome to TWIST for the week of February 8th, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

In indirect tax news, the California Office of Tax Appeals recently concluded that a taxpayer’s provision of elective prenatal imaging services, which included copies of the images captured on photographs and stored on CD’s and DVD’s, constituted the taxable sale of tangible personal property. The Administrative Law Judge rejected the taxpayer’s argument that the true object sought by its patients was the service of prenatal ultrasound. In the ALJ’s view, the fact that the ultrasound was elective and not a medical necessity, and the taxpayer’s focus on the quality of resulting photos, evidenced that the true object of the transaction was obtaining the tangible personal property.

In other indirect tax news, the Illinois Department of Revenue recently issued two Compliance Alerts addressing the obligations of remote retailers, marketplace sellers, and marketplace facilitators. Specifically, the alerts discuss whether marketplace facilitators or marketplace sellers are required to collect and remit fees and taxes, other than state and local Retailer’s Occupation Tax, that are imposed on certain types of transactions.

In local tax news, recall that in May 2020, voters in the Portland, Oregon metro area approved a ballot measure imposing a new one percent business profits tax on businesses with gross receipts over $5 million. A new one percent income tax is also imposed on individuals. Both taxes are effective January 1, 2021. A new FAQ document issued by Metro provides some additional guidance on these taxes- much of the information directed to employers subject to withholding for the new income tax.

Finally, several states are considering tax legislation addressing executive compensation. Certain of the proposals seek to reduce the disparity between the amount paid to an organization’s CEO and the amounts earned by average workers. Other proposals simply limit deductions companies taken related to compensation. We’ve summarized the legislation that is currently pending. 

Thank you for listening to TWIST and stay well!