TWIST - June 7, 2021

Welcome to TWIST for the week of June 7th, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

First up this week is a summary of corporate income tax rate reductions recently enacted in Idaho, Nebraska, and Oklahoma. Furthermore, legislation is pending in North Carolina and New Hampshire that would also reduce corporate income taxes and other business taxes.  

In Tennessee, recently enacted legislation adopts a new sales tax holiday that will take place from July 30 to August 5 of this year. During this period, all purchases of food, food ingredients, and prepared food products will be exempt from sales tax.

In Maryland, Senate Bill 787 became law without the Governor’s signature. This bill moves the effective date of the tax on digital advertising services to tax years beginning after December 31, 2021, provides that it cannot be passed on to customers, and excludes advertisement services on digital interfaces owned or operated by television or radio broadcast entities or news media entities from the definition of digital advertising. The bill also makes changes to the taxation of digital products and codes by providing that a “digital product” does not include certain types of educational or instructive products and services.

Finally, there were two interesting Corporation Business Tax (CBT) cases that were recently decided by the New Jersey Tax Court.  In one, the tax court held that a taxpayer’s activity of picking up rejected produce orders after they had been accepted by customers was not ancillary to the sale of produce and was not protected under P.L. 86-272. However, for most of the tax years at issue, the court concluded that this activity was de minimis and therefore did not cause the taxpayer to lose protection under Public Law 86-272. For one of the tax years, the taxpayer had additional unprotected activities that, when combined with the de minimis activities, caused the loss of 86-272 protection. In the second case, the tax court held that the Division of Taxation was not permitted to adjust the taxpayer’s NOLs carried forward from closed years that were applied to open years. In the court’s view, this would be tantamount to adjusting income reported in those closed years, which was barred by New Jersey’s statute of limitations.. 

Thank you for listening to TWIST and stay well.