Weekly TWIST Podcast Overview
This Week's Developments
Welcome to TWIST for the week of April 19, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.
The first development I’m going to cover today is an appeals court case from Florida addressing whether a physical presence was required to subject an out-of-state corporation to Florida’s tax imposed on tobacco products other than cigars and cigarettes. The court, addressing the pre-Wayfair tax years at issue, concluded that because the tobacco tax was a regulatory measure and not a sales and use tax, the physical presence nexus standard was not applicable.
In Maryland, the Court of Special Appeals addressed a situation where the Tax Court had ruled in a taxpayer’s favor and held it was entitled to a refund of sales and use taxes. However, the Tax Court’s holding was not based on the taxpayer’s position that it made its purchases for resale but was based on the state’s preemptive argument that the taxpayer was not an agent of its customer. When the appeals court later overturned the Tax Court’s reasoning, the taxpayer sought to have the Court of Special Appeals address its original argument. The Court of Special Appeals could not affirm based on an grounds not appearing in the record, but it ordered the case back to the Tax Court with instructions to enter a new final decision denying the taxpayer’s refund claim based on the Tax Court’s prior rejection of the taxpayer’s reseller theory.
In legislative news, the Virginia budget bill requires corporations that are members of a unitary business to file a report disclosing the unitary combined net income of the combined group. The report will be based on the 2019 tax year computations and must include, at a minimum, the difference in tax owed as a result of filing a unitary combined report compared to the tax owed under the current filing requirements. The reports are required to be submitted to the Department of Taxation on or before July 1, 2021. Finally, in what is good news for corporate taxpayers. Arkansas and Arizona recently enacted legislation pushing the state corporate extended due date to one month after the federal corporate return is filed. Kansas, Alabama and Tennessee are considering similar bills.
Thank you for listening to TWIST and stay well.