Recent State and Local Tax Developments

February 1, 2021
State and Local Tax

The following outlines significant state income and sales tax developments from around the country to help you make sense of the ever-changing world of state and local tax compliance.

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State Perspective on Federal Tax Provisions

State Decoupling from COVID Second Stimulus Act
The federal Consolidated Appropriations Act (“COVID Second Stimulus Act”) was signed into law on December 27, 2020.  Of particular state interest is the deductibility of expenses paid with proceeds of the Paycheck Protection Program (“PPP”) loans that are subsequently forgiven and excluded from taxable income.  The IRS had previously taken the position that expenses funded by forgiven PPP loans are not deductible, thereby preventing the receipt of a double benefit of funding deductions with tax exempt income.  

The COVID Second Stimulus Act overturns the IRS position and specifically allows the deduction retroactively to the adoption of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).  This will result in the double federal tax benefit of having: (1) the loan forgiveness excluded from taxable income, and (2) expenses paid with PPP loan proceeds deductible for federal tax purposes.  

Currently, the states (depending on whether or not they conform to the CARES Act), only allow a single benefit.  They either: (1) follow federal exemption of the forgiven loan, but then disallow the expenses; or (2) do not adopt the fed CARES Act exemption for the loan, and will, therefore, subject the loan forgiveness to tax and allow the deduction for expenses.  

States with automatic federal conformity will automatically “sign on” to the double benefit allowed in this bill.  However, since states are facing challenges to balancing their budgets due to the COVID pandemic, it is anticipated that states may seek to decouple from this provision in this year’s upcoming legislative sessions.

On February 1, Representative Les Eaves introduced HB 1361 proposing Arkansas conformity to the COVID Second Stimulus Act measures which exclude PPP loan forgiveness from taxable income and allows the deduction of related business expenses.

Alabama and New York have issued guidance allowing businesses to take the double federal tax benefit of excluding loan forgiveness from taxable income and deducting expenses funded with PPP loan proceeds.

On February 5, Pennsylvania Governor Tom Wolf signed SB 109 stating that PPP loan forgiveness excluded from federal gross income under the COVID Second Stimulus Act is not taxable and no deduction may be disallowed for related business expenses.

Learn more about how COVID relief efforts will affect your state and local tax burden.



Partnerships Not Subject to the SALT Deduction Limit May Embolden More States to Enact Entity-Level Taxes
The IRS recently issued Notice 2020-75, indicating the intent to release regulations clarifying that neither partnerships nor S corporations are  subject to the $10,000 SALT deduction limitation imposed by the 2017 federal Tax Cuts and Jobs Act (“TCJA”).  The IRS proposed regulations state that “Specified Income Tax Payments” which include mandatory and elective state and local income taxes imposed on and paid by a partnership or an S corporation on its income are allowed as a deduction by the partnership or S corporation.  

The IRS Notice effectively “blesses” a taxing regime adopted by several states as a “SALT Cap Workaround.”  Connecticut, Louisiana, Maryland, New Jersey, Oklahoma, Rhode Island and Wisconsin currently have entity-level tax structures.  

Michigan and Minnesota have introduced proposals in prior sessions, and bill sponsors in each state announced they intend to re-introduce proposals in 2021.  The clarification in the proposed regulations eliminates the uncertainty and may cause more “high tax” states to bring forth entity-level tax proposals.  

On January 5, 2021, California governor Gavin Newsom released a 2021-2022 budget proposal, which includes an elective S-corporation tax on which shareholders may receive a credit against personal income tax equal to 13.3% of their S-corporation income.  On the same day, the California Senate separately introduced SB 104, which provides for an entity level tax on all pass-through entities.  

New York Governor Cuomo’s 2022 fiscal budget proposal creates a voluntary pass-through entity tax deductible on the federal return with a credit to individual partners of partnerships and shareholders of S corporations to offset state income tax.

On January 19, 2020, Arkansas Representative Joe Neff introduced HB 1209, which establishes the Elective Pass-Through Entity Tax Act.

Learn more about how this will affect your state and local tax burden.



State Adoption of Federal Partnership Audit Adjustment Reporting
The Centralized Partnership Audit Regime, enacted as part of the Bipartisan Budget Act of 2015 (P.L. No. 114-74), is generally effective for tax years beginning January 2018 under which any understatement of tax is assessed and collected at the partnership level.  With respect to the states, the Multistate Tax Commission (“MTC”) has drafted a model statute for reporting federal partnership audit adjustments which to date has been incorporated into newly adopted partnership audit legislation or rules in only a minority of states.  

In 2020, Iowa (House File 2641 signed June 29), Kentucky (HB 351, April 15), Massachusetts (HB 5164 signed Dec. 11), Missouri (SB 676 signed July 14) and Virginia (HB 1417 enacted April 10) adopted partnership audit rules that generally follow the Multistate Tax Commission Model Uniform Statute for Reporting Adjustment to Federal Taxable Income and Federal Partnership Audit Adjustments.  In total, 15 states have enacted laws similar to the MTC model, including (in addition to the five states listed above) Arizona, California, Georgia, Hawaii, Indiana, Maine, Ohio, Oregon, Rhode Island and West Virginia.  

States with mandatory entity taxes on partnerships, which include Connecticut, New Hampshire, New Jersey and Texas, may only need to elect specific provisions of the MTC model statute to establish reporting compliance with the federal rules.  

Learn more about how this will affect your state and local tax burden.


Approved Ballot Measures

Arizona voters approved Proposition 208 establishing a 3.5% surtax on individuals earning taxable income in excess of $250,000 a year or more, or couples earning $500,000 per year. The rate increase is effective for tax years beginning on January 1, 2021. This new law increases the Arizona individual income tax rate from 4.5% to 8%, which would make it higher than the individual income tax rates in the neighboring states of Utah (4.95%) and Colorado (4.63%).

Two lawsuits before the Maricopa County Superior Court to overturn Proposition 208claim it violates the state constitution by restricting the Legislature’s ability to appropriate funds and more than a simple majority is required for voters to pass a tax hike. Republican lawmakers have discussed cutting taxes to offset the Proposition 208 tax increase. Their efforts may be supported by the governor who pledged on January 11 in his State of the State address to continue to attract business and new Arizonans with lower taxes.  

Proposition 19 limits tax assessment transfers on family property for inherited properties used as primary homes or farms.  The measure eliminates the parent-child and grandparent-to-grandchild exemption from the increase in property tax assessment to market value for inherited properties that are not used as a principal residence such as a rental house or second home.  The measure also increases the number of times a persons over 55 years old and persons with disabilities and victims of natural disasters and hazardous waste contamination can transfer their tax assessments to a different home of the same or lesser market value.

Proposition 22 provides an exception for Delivery Network Company (DNC) couriers, app-based drivers, to continue to be classified as independent contractors, not as employees.  The measure was brought forth in direct response to Assembly Bill 5 which codified the more stringent ABC test for categorizing employees based on the 2018 California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court.

San Francisco
City voters approved tax-related Propositions F, I, J and L.

Proposition F increases the gross-receipts tax (“GRT”) and phases out the payroll expense tax in the city. This measure increases the complex GRT rate structure across different industries, revises the computation of the annual business registration fee and permanently increases the small business exemption to $2 million in gross receipts which is inflation adjusted annually.

Proposition I doubles the transfer tax on real property value at over $10 million, making it one of the highest real property transfer tax rates in the nation.  Tax rates for the transfer of real property valued below $10 million does not change.

Proposition J repeals the annual parcel tax in the Living Wage for Educators Act of 2018 ($320 as of July 1, 2021) and replaces it with an annual $288 parcel tax under the Fair Wages for Educators Parcel Tax Ordinance which applies to real property located in the city and will expire after June 30, 2038.

Proposition L imposes a compensation-ratio tax entitled the “Overpaid Executive Gross Receipts Tax.” Businesses operating in the city are subject to the additional GRT, which is determined based a compensation ratio of the highest paid executive to the median compensation of employees based in San Francisco.

Proposition 116 decreases the state income tax rate for individuals, estates, trusts and corporations from 4.63% to 4.55% for tax years commencing on or after January 1, 2020.

Amendment B repeals the Gallagher Amendment which constitutionally mandated a 45%-residential-to-55%-non-residential property tax assessment split in favor of establishing statutory assessment rates.  The Gallagher Amendment was adopted in 1982 to protect homeowners against rising property taxes by cutting taxes on residents and shifting the property tax burden to businesses.  The Amendment forces a balancing act where residential property can make up no more than 45% of the overall tax base, so that, when home values rise faster than business property values, the state constitution forces a cut to the residential assessment rate.  As the growth of residential property values has continued to outpace non-residential property assessment rates, the Amendment has since 1982 eroded the property tax base funding all local public services and resulted in almost a 300% increase in the shift of the property tax burden from homeowners to business owners.  

Colorado - Denver
Denver voters approved ballot measure 2A and 2B, which increased the city’s sales tax rate from 4.31% to 4.81% starting on January 1, 2021. This increase funds assistance with the city’s homeless population and addressing climate change.

Oregon - Multnomah County
Multnomah County (including Portland) voters approved Measure 26-214, which increases the
county individual income tax rate with an additional tax of 1.5% for taxpayers with income over $125,000 for single filers and $200,000 for joint filers, effective January 1, 2021. This tax rate will increase to 2.3% on January 1, 2026. Taxpayers with income over $250,000 for single filers and $400,000 for joint filers will have an additional 1.5% tax, making the additional tax rate 3% in total, which will increase to 3.8% in 2026.  Nonresidents will be subject to tax on income derived from sources within the county.  The tax revenue generated will fund a universal tuition-free preschool for all 3- and 4-year old children  in Multnomah County.  

This passed measure is in addition to the Metro (regional government authority for greater Portland including Clackamas, Multnomah and Washington counties) voters’ approval of Ballot Measure 26-210 on May 19, 2020, which imposes a 1% personal income tax on taxable income over $200,000 for joint filers and over $125,000 for single taxpayers.  The measure also imposes a new 1% business profits tax on the entire net income of businesses with total gross receipts over $5 million.  Both measures are effective on January 1, 2021.  At a total individual income tax rate nearing 14%, Portland has the highest personal income tax rate in the nation, surpassing both San Francisco and New York.

However, in the fiscal 2022 budget, New York Governor Andrew Cuomo proposed a temporary income tax surcharge of up to 2% to increase the current top income tax rate of 8.82% to 11.82%. Separately, on January 12,2021, Senator James Sanders Jr. (D) introduced S. 1513 to increase the top state income tax rate to 11.82% from 8.82%. Currently, New York City’s highest tax rate is 3.88%. If either measurewere to pass, New York City would top Portland.

Learn more about how this will affect your state and local tax burden.


Recently Defeated Ballot Measures

Proposition 15, which was not approved by voters, would have significantly raised property taxes on commercial and industrial properties by requiring assessments to be based on market value instead of the purchase price starting in fiscal year 2022-2023.  This measure would have resulted in a split roll where residential properties would continue to be assessed based on purchase price.

Illinois voters failed to pass a constitutional amendment that would have lifted the prohibition on a graduated income tax.  S.B. 687 which was passed in June of 2019 established that the graduated tax rates would have taken effect on January 1, 2021, should the voters approve the constitutional amendment on Election Day.  The current flat income tax rate of 4.95% would have changed to rates ranging from 4.75 to 7.99%.  The base corporate tax rate would have increased from 7 to 7.99%.  Added to the current 2.5% personal property replacement tax, a total corporate tax rate of 10.49% would have been among the highest corporate income tax rates in the nation.

Oregon - Multnomah County
Measure 26-218, which would have imposed a .75% payroll tax on employers with more than 25 workers was defeated.

Learn more about how this will affect your state and local tax burden.


Currents on 2020 Legislation

Income Tax

Colorado Turns Back Decoupling from the CARES Act: This year, Governor Jared Polis signed HB 1002 to offset the loss of benefits from the Coronavirus Aid, Relief and Economic Security Act (“CARES Act” enacted on March 27) after passing HB 20-1420 (enacted 7/11/2020), which decoupled Colorado from the CARES Act provisions on net operating loss carryforwards, limitations on excess business losses, IRC section 163(j) interest expense deductions and qualified investment property (“QIP”) full expensing.

HB 1002 provides a new subtraction to offset the loss of tax benefits related to decoupling from the CARES Act provisions in the prior years, which can first be claimed on returns filed for income tax years beginning on or after January 1, 2021 but before January 1, 2022. The maximum subtraction is capped at $300,000 for tax years beginning before January 1, 2022, $150,000 for years 2022-2025, and then no cap applies with subtractions limited to Colorado taxable income for subsequent tax years.  

Qualified Improvement Property
To correct a legislative drafting error in the TCJA, which intended to classify qualified improvement property (QIP) as 15-year property, the CARES Act makes a technical amendment of IRC Sec. 168(e) to assign QIP a recovery period of 15 years and also allows 100% bonus depreciation. Colorado decouples from bonus depreciation on QIP for the 2017 through 2019 tax years. Since these assets are fully expensed in the year placed in service for federal purposes, taxpayers will not be allowed future basis recovery for these assets on their Colorado tax returns. CARES Act Tax Law Changes & Colorado Impact, Colorado Department of Revenue Taxation Division, Revised September 2020. However, with the passing of HB 1002, Colorado allows a subtraction, as discussed above, on the CARES Act QIP full expensing adjustments for tax years ending before March 27, 2020. Colorado does adopt the QIP full expensing CARES Act provisions for tax years ending after March 27, 2020.

IRC Section 163(j)
Conformity to the CARES Act amendments to IRC Section 163(j) for tax years ending before or beginning on or after March 27, 2020, but before January 1, 2021, has been restored under HB 1002.

Net Operating Losses
With the passing of HB 1002, Colorado allows for individuals, estates and trusts a subtraction, as discussed above, for the difference between the 80% NOL limitation claimed in the 2020 calendar year and the unlimited NOL deduction allowed under the CARES Act temporary suspension of the 80% NOL limitation. Section 39-22-104(4)(z)(l). Under HB 1420, Colorado Statute Sec. 39-22-504 was amended to provide that loss carryforwards from the 2018 and 2019 tax years are subject to the 80% limitation with an unlimited carryforward period. Net operating loss carryforwards generated in tax periods ending after March 27, 2020, are subject to the 80% NOL limitation which the state has permanently adopted. Furthermore, Colorado enacted H.B. 1024 (signed 6/26/2020), decoupling from the federal unlimited carryforward, and imposes a 20-year carryforward period for losses generated in tax years commencing on or after January 1, 2021. Net operating loss carrybacks are not permitted.

District of Columbia False Claims Act Extends to Tax Fraud: On January 13, 2021, Mayor Muriel Bowser signed the False Claims Amendment of 2020 (B23-0035), previously approved by DC Council on December 1, 2020, which will become effective after a 30-day period of congressional review.  Under this amendment, whistleblowers will be able to bring a qui tam (private party action brought on government’s behalf) suit for tax fraud on District taxable income, sales or revenue of $1 million or more with pleaded damages totaling $350,000 or more.  Under the amended False Claims Act, the maximum plaintiff award increases from 10% to 30% of proceeds collected where the information provided leads to a successful enforcement action.

Maryland Governor Veto’s Digital Advertising Tax Bill: The Maryland Legislature could override Governor Larry Hogan’s veto of HB 732 that would impose a constitutionally suspect gross receipt tax on digital advertising. The gross receipts tax is determined by the gross revenues of businesses with at least $1 million in gross advertising revenue attributable to Maryland and $100 million or more in global gross revenue. The gross revenue rates range from 2.5% to 10%.

Nevada Tax Amnesty Program: To address a $1.2 billion shortfall, Nevada enacted SB 3 on July 20, 2020, which requires the Department of Taxation to establish a tax amnesty program for taxpayers to receive a waiver of penalties and interest with tax debts paid in full under certain circumstances. The amnesty program will apply to outstanding tax delinquencies due and payable on or before June 30, 2020. Taxpayers have from February 1, 2021 through May 1, 2021, to come forward.

New York State and New York City CARES Act Decoupling: New York is a rolling conformity state that was the first to pass decoupling legislation from the CARES Act measures. New York budget bill AB 9508B/SB 7508, enacted April 3, 2020, and SB 8411, enacted June 17, 2020, provides that, for tax years beginning before January 1, 2022, any amendments made to the IRC after March 1, 2020, shall not apply in either New York State or New York City. In decoupling from IRC section 163(j) (“section 163(j)”) interest limitation relief provided under the CARES Act, New York State and New York City’s deductions for business interest expenses will continue to be limited to 30% of ATI, consistent with the TCJA. As a result, taxpayers will need to separately calculate section 163(j) for New York state and New York City purposes.

New York state and New York City also do not conform to the CARES Act net operating loss provision, which temporarily eliminates the TCJA’s 80% limitation on NOLs and allow federal taxpayers to carry back NOLs from 2018, 2019 and 2020 for five years. However, this should not have a significant impact for New York Corporate Franchise Tax purposes which computes a state-specific NOL carryforward for tax years beginning on or after January 1, 2015 and permits a 3-year carryback. However, taxpayers may not carryback a loss to a tax year beginning before January 1, 2015.

On January 13, 2021, the New York Department of Taxation and Finance issued personal income tax guidance on its website following the COVID Second Stimulus Act tax changes where forgiven Payroll Protection Program (PPP) loans and related expenses excluded from federal adjusted gross income are also excluded from New York adjusted gross income.


2020 Legislative Highlights

Income Tax

California Main Street Hiring Credit
Enacted on September 9, 2020, Senate Bill 1447 established a small business hiring credit to be applied to either income tax or sales tax remittance. Taxpayers employing 100 or less employees that have experienced a 50% or greater drop in gross receipts as a result of the COVID pandemic shutdown orders may receive a $1,000 tax credit for each qualifying employee.  

Taxpayers were required to make a credit reservation by January 15, 2021, in order to qualify.    The possibility exists that another program of this type may be offered in the new fiscal year. On January 8, 2021, Governor Gavin Newsom submitted a 2021-22 State Budget proposal including an allocation of $100M to create a similar hiring credit program within the year.

Connecticut Enacts Tax Relief for Disaster- or Emergency-Related Work Presence
Connecticut Governor Lamont signed House Bill 7006 on October 2, 2020, which establishes that out-of-state businesses and qualifying employees who perform certain emergency-related work during a disaster response in Connecticut is not sufficient presence to be subject to tax in the state.

District of Columbia Limits Net Operating Loss Carryovers
On May 27, 2020, Mayor Muriel Bowser signed the Coronavirus Support Emergency Act (CSEA), D.C. Act 23-326, which applies an 80% limitation on apportioned net operating loss carryovers effective retroactively to tax years beginning after December 31, 2017.  On October 9, 2020, the Mayor signed identical long-term legislation, D.C. Act 23-334,which will expire on May 22, 2021, 225 days after the effective date.

Louisiana Governor Edwards Signed Various Tax Bills in November
Senate Bill 1 signed on November 5, 2020, extends the Inventory Tax Credit Carryover Period from five to 10 years for certain businesses.

Senate Bill 72, also signed on November 5, allows a one-time refundable credit against state income tax for a portion of state license or permit fees imposed on owners and operators of restaurants and establishments that sell or serve alcoholic beverages for consumption on the premises.  

Minnesota Eliminates State Addback of IRC Section 179 Deduction
During the October special session in 2020, the Minnesota Legislature passed limited tax bill HF 1 which eliminates the state addback for the full expensing IRC section 179 (“section 179”) deduction for tax years beginning in 2020. On October 23, the Department followed up with a notice to explain the impact of the provisions.  Prior to the enactment of this bill, Minnesota taxpayers were required to addback the section 179 deduction without the ability to benefit from the increased section 179 limit or 100% bonus depreciation from which the state decoupled.  To address the inequity, the bill retroactively creates an exception to the 80% addback for qualifying depreciable property, which is property acquired in a like-kind exchange that did not qualify for a gain deferral due to the elimination of the deferral under the TCJA for tax years beginning January 1, 2018.  As a result, taxpayers may file amended 2018 and 2019 tax returns to not addback the section 179 deduction taken on qualifying depreciable property.  

New Jersey Extends Corporation Business Tax (CBT) Surtax
Assembly bill 4721 signed on September 29, 2020, extends through December 31, 2023, (unless the federal corporate income tax rate increases to 35%) the CBT Surtax imposed at a rate of 2.5% for taxpayers with allocated taxable New Jersey net income in excess of $1 million.

New Jersey Technical Reporting Correction Bill on Combined Reporting
On November 4, the Governor signed technical corrections bill AB 4809 related to the Corporation Business Tax (CBT) combined reporting regime enacted in 2018 that became effective for privilege periods ending on or after July 31, 2019.  The amendments include extending the CBT return deadline by 30 days after the federal corporate income tax return filing deadline, applying the minimum tax to only taxable members of a combined group, and clarification of the dividends received exclusion, and NOL carryover utilization among combined group members.  Shortly after the bill’s adoption, the New Jersey Division of Taxation issued Notice: CBT-100U Schedule R on 2019 return adjustments or amendments to the Allocated Dividend Exclusion calculation in a “trapped dividend exclusion” scenario.  

On January 13, 2021, the Division released bulletin TB-89(R) stating that although the law stipulates that a combined group’s filing method election is generally binding for the subsequent five privilege periods in addition to the current tax year, a one-time exception to prospectively change the combined group’s election may be allowed.  The election may also be revoked by a written request for reasonable cause, including but not limited to a substantial change in ownership, members of the combined group or principal business, or changes in tax law, regulation or policy.

New York Corporate Franchise Tax MTA Surcharge Rate Increase
The metropolitan transportation business tax (MTA) surcharge rate increases from 29.4% to 30% for tax years beginning on or after January 1, 2021, and before January 1, 2022.  Based on current law and regulations, the MTA surcharge rate is required to be annually adjusted to meet the financial projections as reflected in the enacted budget for the fiscal year commencing on the previous April 1.  NY Reg, Sec. 9-1.2(g) (Dec. 9, 2020).

Sales and Use Tax

No State Tax on Internet Access Fees
Although the Internet Tax Freedom Act (ITFA), passed in 1998, imposed a moratorium preventing state and local governments from taxing internet access, certain grandfathered states were still allowed to tax internet access fees on internet service providers.  On July 1, 2020, the Permanent Internet Tax Freedom Act (PITFA) became fully implemented nationwide, requiring the last few grandfathered states (Hawaii, New Mexico, Ohio, South Dakota, Texas and Wisconsin) to stop charging those taxes.

Alaska Remote Sellers Sales Tax Commission Approves a Uniform Code Adopted by 33 Jurisdictions
Alaska does not impose on the state level sales and use tax. Instead, many Alaskan cities have historically imposed local sales taxes. On January 6, 2020, the Commission approved a uniform Remote Seller Sales Tax Code providing individual tax rates and exemptions, common definitions and centralized administration. Local governments can opt in and pass a model resolution adopting the remote seller sales tax code and begin collection within 30 days. To date, 33 local jurisdictions have adopted the code and eight more adoptions are pending. The code provides that remote sellers and marketplace facilitators with at least $100,000 in annual gross receipts or 200 or more sales into the state are required to register, file and remit.

Chicago Personal Property Lease Transaction Tax Rate Increase
The City Council increased the Personal Property Lease Transaction Tax from 7.25% to 9% on non-possessory computer leases of cloud software and cloud infrastructure to boost the city’s 2021 pandemic budget. Committee on Budget and Government Operations, 2021 Budget Overview, City of Chicago, 10/21/2020.

Colorado Sales Tax Deduction for the Restaurant and Mobile Food Services Industries
Colorado passed HB 20B-1004 on December 7, 2020, during a special session that provides a temporary deduction from state net taxable sales for qualifying Colorado retailers in the food establishment and mobile food services industries that have lost revenues due to the COVID pandemic shutdown orders. Taxpayers can deduct up to $70,000 in net taxable sales from their monthly state sales tax returns for the tax periods from November 2020 through February 2021.

Louisiana Imposes Marketplace Facilitator Collection Rules
SB 138 enacted on June 11 requires marketplace facilitators with $100,000 or more in sales into Louisiana or 200 or more separate transactions are required to register, collect and remit on taxable remote sales for delivery into the state.

Massachusetts Accelerates Sales Tax Remittance
Massachusetts Governor Charlie Baker, on December 11, 2020, signed the Fiscal Year 2021 budget into law which, effective April 1, 2021, requires businesses with sales tax liabilities that exceeded $150,000 in the prior calendar year and file monthly returns to remit taxes due in the first three weeks of the month by the 25th day of the month, or face a 5% underpayment penalty. The tax collected in the remainder of the month will be due the 30th of the month (currently due on the 20th day). The 5% underpayment penalty will not apply if payment is made on at least 70% of the total tax collected within the filing period. The acceleration in collections is focused on the largest companies in the Commonwealth.

Tennessee Imposes Marketplace Facilitator Collection Duties
On April 1, SB 2182 was enacted to impose collection and remittance duties on marketplace facilitators with at least $500,000 in sales within a 12-month period.

Learn more about how this will affect your state and local tax burden.


Recent Administrative Guidance

Income Tax

Colorado Redefines IRC Adoption: Colorado deviates from rolling conformity by redefining the term “Internal Revenue Code” to not incorporate, for any taxable year,  federal statutory changes that are enacted after the last day of that taxable year.  Therefore, federal statutory changes enacted after the end of a taxable year do not impact a taxpayer’s Colorado tax liability for that taxable year. Permanent Rule CRS 39-221-3(5.3) (Colo. Dep’t of Rev. eff. Sept. 30, 2020).  

Florida Corporate Income Tax Rate: The corporate income tax rate will remain at 4.458% for taxable years beginning on or after January 1, 2020 but before January 1, 2022.  Further reductions in the tax rate are possible for taxable years beginning on or after January 1, 2021.  Tax Information Publication No. 20C01-02 (Fla. Dep’t of Rev. Sept. 23, 2020).

Hawaii States P.L. 86-272 Protection is Lost When Factor Presence Thresholds are Exceeded: For corporate income tax purposes, businesses that exceeds factor presence thresholds for tax years beginning after December 31, 2020, with more than $100,000 of income from the state or who engage in more than 200 transactions with persons in Hawaii are subject to tax on their income.  It is widely understood that the federal protection enacted under P.L. 86-272 that businesses receive from selling tangible personal property and merely soliciting sales in the state applies regardless of whether the factor presence thresholds are exceeded.  Hawaii is the first state to issue guidance, Tax Information Release No. 2020-05, which negates and overrides the protections provided by the federal statute by construing unprotected activities to include substantial economic activity of making $100,000 in sales or more or engaging in 200 or more transactions in the state.  The Department also provides that whether unprotected activities are de minimis under P.L. 86-272 will be determined by applying both qualitative and quantitative tests.

Nebraska Updates Guidance on GILTI and FDII Provisions: GIL 24-20-1 revised on November 19, 2020, states that Nebraska continues to conform to the provisions under IRC sections 951A global intangible low-taxed income (GILTI) and 250(a) foreign-derived intangible income (FDII).  GILTI is not a foreign dividend except for IRC Sec. 78 dividends that are attributable to GILTI pursuant to IRC Sec. 250(a)(1)(B)(ii).  Therefore, with the exception of IRC section 78 dividends attributed to GILTI, there is no exclusion for GILTI income as a foreign or deemed dividend.  The entire amount of GILTI is included in the denominator of the sales factor.  Part or all of the GILTI amount should be included in the numerator of the sales factor to the extent that it is connected with and fairly attributable to developing and maintaining intangible property in Nebraska.

New Hampshire Adopts Market-Based Sourcing: New Hampshire has issued proposed rules pursuant to HB 4 enacted in 2019 which adopted a market-based sourcing method of apportioning sales of services and intangibles for the purposes of Business Profit Tax and Business Enterprise Tax. The new rule is effective January 1, 2021, for the taxable periods ending on or after December 31, 2021. Historically, New Hampshire has used the cost of performance methods for sourcing such sales.  New Hampshire Rulemaking Register notice No. 2020-95.

New Mexico Gross Receipts Destination-Based Sourcing: New Mexico reminds taxpayers in a news release dated December 4, 2020, that the state has adopted destination-based sourcing for items sold in the state starting on July 1, 2021 (based on H.B. 326 enacted on March 9, 2020). Therefore, instead of sourcing sales and determining the tax rate of the sale based on where the sale occurred, the new destination-based sourcing will require retailers to collect tax based on the location the item was delivered to or the service was performed. N.M. Taxation & Rev. Dept. news release,12/04/2020.

Pennsylvania Bulletin Addresses Factor Presence Economic Nexus Standard of Corporate Partners: Corporation Tax Bulletin 2019-04 was revised to add interest and other intangible receipts to the types of receipts that count toward the $500,000 threshold.  Receipts from all pass-through entities held by a corporate entity will be combined in determining whether the corporate entity has exceeded the $500,000 rebuttable presumption of nexus for Corporate Net Income Tax (CNIT) purposes.  Pass-through entities will include not only the receipts of the pass-through entity itself, but also any receipts from owned lower tier pass-through entities in determining whether the $500,000 threshold has been exceeded.

South Carolina Conforms to the CARES Act: For income tax purposes, neither the proceeds nor the forgiveness of the PPP (Paycheck Protection Program) loan is taxable in the 2020 tax year.  In conformity with the provisions of the CARES Act, expenses related to a forgiven PPP loan are not deductible.

Texas Adopts Market-Based Sourcing Amendments to the Franchise Tax Apportionment Rules: The Texas Comptroller of Public Accounts (Comptroller) adopted on January 24, 2021, amendments to the franchise tax sourcing rules under 34 Tex. Admin. Code Sec. 3.591, as published in the November 13, 2020, issue of the Texas Register (45 Texas Reg 8104) and republished with changes in 46 Texas Reg 472 (January 15, 2021).  The rules will be retroactively effective as of January 1, 2008, except as noted.

Whether the comptroller has the authority to make amendments to the rule is questionable. Texas has historically applied a cost of performance sourcing methodology; however, the amendments provide that service is performed at the location where the receipts-producing, end-product act occurs where one exists. The comptroller indicates that this is the current interpretation of the sourcing statutes. However, COST and other interested parties have pointed out that this is an express law change to “market-based sourcing that is not supported by any legislative change, and that any changes should be applied prospectively.” The Texas Taxpayers and Research Association (TTARA) noted that revising the sourcing rule is premature since the Sirius XM Radio case, in which the court of appeals held that the transmission and receipt of radio programming by the satellite-enabled radio is sourced to the customer location, is pending before the Texas Supreme Court. See Court Cases for a briefing. Below is a summary of certain provisions.

  • Sourcing of services: Proposed revisions to Section 3.591(e)(26)(A) specify that a service is performed at the location of the receipts-producing, end-product act or acts.  If there is a receipts-producing, end-product act, the location of other acts will not be considered even if they are essential to the performance of the receipts-producing acts.  If there is not a receipts-producing, end-product act, then the locations of all essential acts may be considered.
  • Internet hosting receipts: The rule for sourcing internet access fees will be replaced with a new rule for sourcing “internet hosting” receipts to the location of the customer.  The new definition of “internet hosting service” broadly construes the existing definition in the Texas sales tax law  and includes real-time, nearly real-time, and on-demand access to data storage and retrieval, video gaming, database search services, streaming services, data processing, and marketplace provider services.  The physical location of the customer is determined by where the service is consumed by the customer.
  • Sourcing of Computer Software Determined by Transfer Method:
    • Sales or leases of digital property transferred by fixed physical media are sourced as tangible personal property.
    • Sales or leases of digital property not transferred by fixed physical media are sourced as the sale of intangible property (i.e., the location of the payor).
    • Delivery of digital property as a service is sourced to where the services are performed (Sec. 3.591(e)(26)) unless otherwise provided in this subsection.
    • Delivery of digital property as part of internet hosting services is sourced as internet hosting receipts (i.e., the location of the customer).
    • Use (as opposed to the sale or licensing) of digital property is sourced under the rule of sourcing gross receipts from the use of intangible assets pursuant to Sec. 3.591(e)(21)(A).
  • Advertising services: Gross receipts from advertising services are sourced to the audience location.  If the location cannot be reasonably determined, 8.7% of the gross receipts would be sourced to Texas.
  • Capital assets and investments: For reports due after January 1, 2021, only net gains from the sale of a capital asset or investment is included in gross receipts.  A net loss from the sale of a capital asset or investment is not included in gross receipts. For reports due prior to January 1, 2021, a taxable entity must add the net gains or losses from sales of investments and capital assets to determine the total receipts from such transactions. Net gain from the sale of a capital asset or investment is sourced based on the type of asset or investment sold.  Net gain from the sale of an intangible asset including patents, copyrights, licenses, trademarks, franchises, goodwill, and general receivable rights is sourced to the location of the payor.  Net gain from the sale of real property is sourced to the location of the property.  Net gain from the sale of tangible personal property is sourced  as provided in subsection 3.591(e)(29).
  • Loans and securities as inventory of the seller: Gross receipts from the sale of loans and securities treated as inventory of the seller is sourced to the location of the payor.  
  • Sale of membership interest in a SMLLC: The sale of a membership interest in an SMLLC by its sole owner as an intangible asset is sourced to the location of the payor .

Learn more about how this will affect your state and local tax burden.



Sales and Use Tax

Alabama Requires Annual Renewal of Tax Business Licenses and Resale Exemption Certificates: Alabama is requiring taxpayers to renew their Alabama Tax Licenses annually starting in 2021. However, businesses must renew their license for the 2021 tax year before December 31, 2020. The business licenses that are included in this order are: sales tax; rental tax; sellers use tax; lodgings tax; utility gross receipts tax; and simplified sellers use tax. This order will also affect the validity of resale exemption certificates if the renewal is not submitted before January 1, 2021.

California Sales Tax Filing and Payment Extensions: In December 2020, the California Department of Tax and Fee Administration (CDTFA) announced that businesses owing less than $1 million in sales tax on a single return will receive an automatic three-month extension from filing sales tax returns and remitting sales tax payment to the state. This extension allows businesses to use the money they collect for business purposes and allows the business to pay the tax back within the three-month of the original due date. Interest and penalties will not be accrued if sales tax is remitted within three months of the due date. This extension applies to payments and returns originally due between December 1, 2020 through April 30, 2021. CDTFA online, COVID-19 State of Emergency, 12/01/20.

Business that have revenue up to $5 million in annual taxable sales or certain industries that have been disproportionately impacted by the pandemic with over $5 million in sales can apply to have up to $50,000 worth of sales and use tax deferred for the 4th quarter of 2020 and 1st quarter 2021 sales tax payments. This deferral allows businesses to pay the state the amount approved to be deferred in 12 monthly, interest-free payments with the first payment due in April 2021.

Colorado Advances Sales and Use Tax Simplification: In June 2020, Colorado launched the Sales and Use Tax System (“SUTS”) portal that provides businesses with over $100,000 in retail sales one avenue in which to register, file, and remit sales taxes for the state and multiple home rule jurisdictions. This measure was prompted by the enactment of Senate Bill 19-006 on April 12, 2019, which required the development of a tax simplification system for the state’s 71 self-collected home rule municipalities. The SUTS allows businesses to use Geographical Information Systems (“GIS”) to look up sales tax rates based on customer address in order to charge the correct tax rate. Furthermore, the GIS can be integrated into a business’ already established sales tax software to automatically generate the rates when a product or services is sold at retail.  

To date, 33 of the 71 jurisdictions have opted to participate in the SUTS and have chosen to adopt the economic nexus standards and marketplace facilitator laws.  Denver and Boulder are not among the participating jurisdictions.  Home rule jurisdictions are not required to follow the state tax economic nexus policy of a $100,000 sales threshold for state sales and use tax nexus.

Illinois Levels Playing Field between Illinois-based and Remote Sellers: Pursuant to the Illinois Public Acts (P.A.) 101-0031 and 101-0604 enacted in 2019, remote retailers and marketplace facilitators that meet certain thresholds are required to register to collect and remit Illinois Retailers’ Occupation Tax (ROT) for sales of tangible personal property made on or after January 1, 2021.  Sales made by remote retailers and marketplace facilitators on behalf of marketplace sellers incur ROT based on the rate in effect at the location to which the tangible personal property is shipped or delivered and possession is taken by the purchaser, otherwise known as destination sourcing.  Tax on a marketplace facilitator’s own marketplace sales will be incurred either at the rate in effect at the location of the Illinois inventory from which a sale is fulfilled or the location where selling activities otherwise occur (origin sourcing) or, for sales not fulfilled in Illinois, at the rate in effect at the purchaser’s location (destination sourcing).  Retailers’ Occupation Tax Guidance for Remote Retailers as set forth by the Leveling the Playing Field for Illinois Retail Act, Ill. Dept. of Rev. Informational Bulletin, FY 2021-2, September 2020.

Illinois Considers Auctioneers to be Marketplace Facilitators: The Illinois Department of Revenue has provided guidance that auctioneers are considered marketplace facilitators and, therefore, they must collect and pay sales tax on items sold by them on behalf of their vendors/clients.  Illinois Dept. of Rev. Info. Bulletin No. FY2021-5, 11/01/2020.

South Carolina Taxes COVID Surcharges: South Carolina has determined that COVID-19 surcharges imposed by some retailers to help cover pandemic-related costs are subject to sales tax. South Carolina Information Letter #20-23.

Learn more about how this will affect your state and local tax burden.


COVID Pandemic Tax Relief for Businesses and Remote Workers

Idaho COVID Pandemic Relief Subject to Idaho Personal Income Tax: The Idaho State Tax Commission has put out guidance clarifying what pandemic related funds are subject to Idaho personal income tax. These items include: (1) Idaho unemployment insurance benefits; (2) Pandemic Unemployment Assistance (PUA) for self-employed workers, independent contractors, and gig workers; (3)Rebound Idaho grants for small businesses and the self-employed; and (4) Idaho's Return-to-Work bonuses for employees idled as a result of the pandemic who returned to work from April 20 to July 15.  Press Release: Heads-Up: Jobless benefits, pandemic grants and bonuses are taxable, Idaho State Tax Comm'n., 12/02/2020.

Massachusetts Finalizes Permanent Adoption of Telecommuting Rule: From March 10, 2020, through 90 days after the date on which the Governor gives notice that the COVID pandemic state of emergency is no longer in effect, compensation received for services performed by a non-resident who, prior to the COVID pandemic, worked in state and is now performing services outside of Massachusetts due to the COVID pandemic, will continue to be treated as Massachusetts source income.  Regulation 830 CMR 62.5A.3 (Adopted April 21, 2020 and effective on March 10, 2020, finalized on October 16, 2020, and, on Dec. 8, 2020, was extended through 90 days after the state of emergency is no longer in effect).  

30 Day Presence Rule Applies to Illinois Income Tax Withholding: Informational Bulletin FY2020-29 (May 2020) provides that compensation earned by employees teleworking in Illinois is subject to income tax withholding when the employee has worked in the state for more than 30 working days.  

The following is a short list of states and local jurisdictions that have indicated no nexus and/or withholding tax requirements would be imposed on businesses solely due to employees temporarily working in the state as a result of the COVID pandemic.  Refer to each state’s rules for the different parameters on which tax relief will be granted.

  • Alabama
  • California
  • District of Columbia
  • Georgia
  • Iowa
  • Indiana
  • Kentucky
  • Maine
  • Massachusetts
  • Maryland
  • Minnesota
  • Mississippi
  • North Dakota
  • Nebraska
  • New Jersey
  • Oregon
  • Philadelphia
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Wisconsin

Learn more about how this will affect your state and local tax burden.


Court Cases

California Seeks to Collect Back Taxes from Amazon’s Independent Remote Sellers: A complaint, Rubinas v. Maduros, was filed on January 7, 2020, in the U.S. District Court for the Northern District of Illinois against the Director of the California Department of Tax and Fee Administration (“CDTFA”) for seeking from a remote seller sales tax payments back to 2017 for sales to California made through Amazon’s Fulfillment By Amazon (FBA) program where the independent seller’s inventory was stored in the state.  The plaintiff business owner, Ms. Rubinas, did not having the funds to pay the more than $10,000 in back taxes, and received a notice on December 19, 2020, stating that her bank account was frozen on orders from the CDTFA which may destroy her business.  On January 18, a federal judge denied Ms. Rubinas’s motion for a temporary restraining order against the CDTFA and held that the court lacks jurisdiction under the federal Tax Injunction Act to require the state to return money seized from her bank account. The court may dismiss the remaining motion for preliminary injunction against the CDTFA for lack of subject matter jurisdiction to facilitate an expeditious appeal to the Seventh Circuit.  

Nexus created through physical presence was the pre-Wayfair sales tax nexus standard.  California did not alternatively pursue Amazon to collect tax until 2019 when the marketplace facilitator law went into effect.  The CDTFA received from Amazon in late 2018 or early 2019 the names of many remote sellers with inventory held at Amazon’s fulfillment centers in California.  With this information, the CDFTA has issued to remote sellers demands for unpaid sales tax for transactions as far back as 2012.  This is only one case in a collective effort by the Online Merchants Guild to challenge the state’s pursuit of pre-Wayfair back taxes. Another suit, Online Merchants Guild v. Maduros (Case No. 2:20-cv-01952-MCE-DB) was filed in the U.S. District Court for the Eastern District of California in September 2020.

Idaho Supreme Court Affirms Gain is Nonbusiness Income: In a taxpayer-favorable decision, the Idaho Supreme Court in Noell Industries, Inc. v. Idaho State Tax Commission, No. 46941, 2020 Ida. LEXIS 102, May 22, 2020, affirms the District Court’s ruling that gain from the sale of goodwill recognized by a corporate partner’s sale of a 78.34% member interest in a limited liability company (“LLC”) did not qualify as business income. The corporate partner, Noell Industries, Inc. (“Noell”) was formed by Mike Noell who served as the President and CEO of LLC.  Both Noell and LLC are based in Virginia.  The LLC established a West Coast operations center in Idaho by leasing a factory to produce its products and hiring employees in Idaho.  

The District Court concluded that the sale of the LLC did not meet either the transactional or functional tests as business income.  Under the transactional test, Noell was an investment holding company that was not in the business of buying and selling subsidiaries.  Based on the functional test, Noell lost a primary source of income by selling its interest in LLC which did not advance the taxpayer’s trade or business, but resulted, instead, in the discontinuation of its investment.  Noell and LLC were not unitary absent centralized management, oversight or joint headquarters with the LLC, or intercompany transactions.  Noell Industries as a holding company “showcases substantial independence rather than the level of interdependence required to manifest unity.” Mike Noell was the bridge between the two companies, however, he was only one voice in a six-member management team who had no involvement in the day-to-day operations.  Since the sale did not meet either the transactional or functional tests, the supreme court affirmed the district court’s conclusion that the gain from the sale of a majority partnership interest is nonbusiness income.  On January 11, the commission appealed the decision to the U.S. Supreme Court by filing a petition for a writ of certiorari. Idaho State Tax Commission v. Noell Industries, Inc., U.S. Supreme Court, Dkt. 20-947.

Louisiana Violates Due Process on Taxing Royalty Income: The Court of Appeal of Louisiana in Robinson v. Jeopardy Productions, Inc., __ So.3d ___ (La. App. 1st Cir.  Oct. 21, 2020). affirmed the trial court dismissal of the Louisiana Department of Revenue’s (“LDR”) petition to tax an out-of-state company’s royalties based upon insufficient minimal connections under the Due Process Clause.  Jeopardy Productions (“Jeopardy”) based in California received royalties from the licensing and distribution of its intellectual property by independent third parties, not agents, which in turn contracted with television stations in Louisiana to broadcast the game show. The trial court held that Jeopardy did not transact any business in Louisiana or purposefully direct business on its behalf.  The LDR will likely appeal this case to the Louisiana Supreme Court.  A taxpayer win may curtail the LDR’s aggressive campaign of issuing assessments to out-of-state businesses that own an interest in an affiliate doing business in Louisiana.

Contrast this case with other intangible nexus state court cases which held for the states on due process and commerce clause grounds.  See, e.g., Geoffrey v. South Carolina Tax Commission, 437 S.E.2d 13 (1993) (nexus established by licensing the Toys R Us trade name and trademarks to affiliated companies operating in the state) and  KFC Corporation v. Iowa Department of Revenue, 792 N.W.2d 308 (Iowa 2010) (taxation on the licensing of the KFC brand to independent franchisees operating in the state did not violate the dormant Commerce Clause).  

New Hampshire Sues Massachusetts For Taxing Income Earned Beyond State Borders: On October 19, 2020, New Hampshire filed a lawsuit in the U.S. Supreme Court against Massachusetts over the adoption of a temporary rule which taxes the wages of telecommuters who immediately prior to the pandemic were engaged in performing services in Massachusetts and are now working in New Hampshire due to the COVID state of emergency. This rule was adopted as a temporary measure by Massachusetts on April 21, 2020 and effective as of March 10, 2020, finalized on October 16, 2020, and, on Dec. 8, 2020, was extended through 90 days after the state of emergency is no longer in effect.

With telecommuting quickly turning into a permanent arrangement for many employees beyond the COVID pandemic of 2020, the taxation of nonresidents based on their workplace prior to the pandemic to which they no longer commute or physically work could be viewed as placing an undue burden on interstate commerce.  Other states and cities, including, for example, New York, certain Ohio cities, St. Louis, Missouri and Wilmington, Delaware, have attempted to tax non-residents who were commuting to offices in their jurisdiction prior to the pandemic.  

A U.S. Supreme Court decision striking down the extraterritorial taxation of nonresidents could have far reaching consequences.  But not so fast…the first hurdle is for this case to be heard.  About a year ago, the U.S. Supreme Court decided not to hear a tax case between two other states, Arizona and California, over the constitutionality of California’s $800 minimum franchise tax on commercial activity.  Since less than 2% of the more than 7,000 cases that petition the U.S. Supreme Court for review each year are heard, the chances are slim despite the weighty tax consequences

Oklahoma Tax Commission Estimates Potential Impact of the U.S. Supreme Court McGirt Decision: Redefining jurisdictional boundaries of the Creek (Muscogee) reservation within eastern Oklahoma including a significant portion of Tulsa, the Court’s decision has potentially far reaching state tax implications.  

The U.S. Supreme Court decision in McGirt v. Oklahoma, 140 S. Ct. 2452 (2020) addressed the jurisdiction of the Major Crimes Act (“MCA”) where the defendant, convicted in Oklahoma state court (“State”), argued that the State lacked jurisdiction to prosecute him because he is an enrolled member of the Seminole Nation and his crimes took place on the Creek Reservation.  The defendant sought a new trial in federal court.  Oklahoma claimed that congress ended the Creek Reservation and that historical practice and demographics proved disestablishment.  Alternatively, Oklahoma contends that Congress never established a reservation but instead created a dependent Indian community that did not create tribal sovereignty.   The Court held in a 5-4 decision, for MCA purposes, that land reserved for the Creek Nation since the 19th century remains Indian country.  

On September 30, 2020, the Oklahoma Tax Commission (“OTC”) issued a “Report of Potential Impact of McGirt v. Oklahoma.” If the McGirt ruling were extended to include tax matters, the expansion of Indian Country as established in the 19th century would also potentially expand the jurisdictional boundaries within which the Creek Nation tribal members may live and work to qualify for state income tax exclusion pursuant to Oklahoma Administrative Code Sec. 710:50-15-2.  With regard to sales tax, the area would expand in which businesses and tribes may make tax-exempt sales to Creek Nation tribal members.  Tribal businesses are required to collect and remit sales tax from non-tribal members.  Under a claim of sovereign immunity by tribal businesses, the Oklahoma Tax Commission may be prevented from enforcing the appropriate collection and remittance of sales taxes from non-tribal members.  If the McGirt decision were to expand the boundaries of Indian County, the OTC in its report estimates a potential per-year impact of more than $60 million in revenue loss and a per-year impact of over $200 million in revenue loss if the McGirt decision is expanded to apply to all Five Civilized Tribes in Oklahoma.  To address these concerns, on July 20, 2020, Governor Kevin Stitt issued Executive Order 2020-24, to create the Oklahoma Commission on Cooperative Sovereignty (the “Commission”), to address the fallout from the McGirt decision.   

The Oklahoma Society of CPAs (“OSCPA”) submitted a letter to the OTC requesting answers to a number of tax questions raised by the report.  The OTC responded to the OSCPA in a letter dated December 7, 2020, that the report “merely outlines the potential impact on administration and revenue; however, until a court of competent jurisdiction expands McGirt to apply to the administration of taxes, the expansion of the boundaries of the Muscogee (Creek) Nation under McGirt does not impact OTC’s administration or enforcement of the tax laws of the State.”  Governor Stitt is separately appealing to the state’s federal delegation to pursue legislation clarifying the impact of this decision.

Texas Court of Appeals Upholds Sourcing of Services to the Customer Location: In Hegar v. Sirius XM Radio, Inc., 604 S.W.3d 125 (Tex. App. Austin 2020), the Court of Appeals held, for franchise tax purposes, revenues earned by Sirius XM are for the transmission and receipt of radio programming by the satellite-enabled radio at the customer location (destination sourcing), not for the production and distribution of programming which occurred outside of Texas (origin sourcing).  The customers were not paying for the substance of the radio programs but, instead, the satellite transmission of the programming because it was available to any person with a satellite-enabled radio that contracted with Sirius XM.  There was no indication that Sirius XM contracted with subscribers to develop or produce specific programming.  This case is on appeal to the Texas Supreme Court.  Shortly after this decision, the Comptroller finalized expansive revisions to the 34 Tex. Admin. Code Section 3.591 sourcing rules for franchise tax receipts which includes amendments in line with this decision.  See 2020 Administrative Guidance for a brief summary.

Learn more about how this will affect your state and local tax burden.


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