TWIST - August 16, 2021

Welcome to TWIST for the week of August 16th, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

First up this week, a federal district court dismissed a class action suit alleging that a multistate retailer’s erroneous sales tax collection violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. The law is concerned with unfair or deceptive activity "in the conduct of any trade or commerce."  The case was brought by an individual who alleged he was erroneously charged sales tax on purchases of energy drinks. The federal court concluded that when a retailer acted as a sales tax collection agent for the government, it was not acting in the conduct of any trade or business. The court also rejected the plaintiff’s common law claims because Pennsylvania law provides that the exclusive remedy for overpayment of sales tax is for a customer to request a refund from the Department of Revenue.

Next up, in New Hampshire, legislation was enacted that requires room and car rental facilitators to collect and remit the state’s meals and rooms tax effective October 1, 2021. In Virginia, guidance was issued on legislation that imposes a sales and use tax collection and remittance obligation on accommodations intermediaries beginning September 1, 2021. The legislation also imposes an obligation on accommodations intermediaries for purposes of local transient occupancy taxes.

In Hawaii, the Department of Taxation confirmed that both prewritten and custom software is subject to General Excise Tax, regardless of delivery method. The sale of prewritten or canned software is considered a sale of TPP, while the provision of custom software is a service.

Recently enacted Oregon Senate Bill 164 makes several changes to the Corporate Activity Tax Law, including adopting a new definition of “tax year.”  As newly defined, “tax year” means a taxpayer’s annual accounting period for federal income tax purposes. As such, under the legislation, taxpayers will use their federal tax year as the tax year for the CAT. Currently, all CAT taxpayers use the calendar year. To facilitate the change, fiscal year taxpayers will need to file a short-year return covering the period from January 1, 2021 to the last day of the taxpayer’s fiscal year that ends in 2021. This return will be due by April 15, 2022 and the Department of Revenue is working on issuing guidance on the law change.

Thank you for listening to TWIST and stay well.