Tag Archives: McDonald Hopkins

ILN Today Post

United States Supreme Court will hear South Dakota’s case addressing tax obligations of out-of-state retailers

To the delight of the state of South Dakota, the United States Supreme Court accepted its case, South Dakota v. Wayfair, on Jan. 12, 2017. The crux of this lawsuit is the legal permissibility of South Dakota’s spring 2016 law, SB 106, which has a purpose to “provide for the collection of sales taxes from certain remote sellers.” Ultimately, SB-106’s objective is to challenge the U.S. Supreme Court’s 1992 decision in Quill Corp. v. North DakotaQuillbanned states from requiring out-of-state retailers to collect sales taxes on products they ship into those jurisdictions, absent some minimal contact or physical presence.

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Tax revenues from marijuana legalization in jeopardy, but states continue to legalize

According to a Jan. 5, 2018 Pew Research Center survey, as of last October, 61 percent of Americans support the legalization of marijuana. This is up a bit from a year ago, when that figure was 57 percent, but almost double what it was in 2000, 31 percent.

The Pew survey found that support varies widely between different groups. For example, millennials (born between 1980-1994), Gen-Xers (born between 1965-1979), and baby boomers (born between 1946-1964) support legalization at rates of 70 percent, 66 percent and 56 percent respectively. In contrast, 58 percent of the silent generation, those born between mid- 1925 and 1945, oppose legalization, while only 35 percent favor it.

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Illinois: Population continues to decline, eroding tax base

At the end of December, Pew Charitable Trusts reported on new U.S. Census Bureau estimates revealing that between July 2016 and July 2017, eight states lost population; “[i]f the estimates hold up, it would be the first time in 30 years that so many states lost residents in a single year.” The states are Alaska, Hawaii, Illinois, Louisiana, Mississippi, North Dakota, West Virginia and Wyoming.

The December report follows a February 2017 piece pointing to population losses in Connecticut, Illinois, Mississippi, New York, Pennsylvania, Vermont, West Virginia and Wyoming between 2015 and 2016. This puts Illinois, Mississippi, West Virginia and Wyoming as the four states that have seen consistent population declines since 2015.

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South Carolina: Residents advised to start saving gas and vehicle maintenance receipts

On July 1, 2017, a number of states’ gas tax increases took effect, including:

  • Indiana: 9.9 cents per gallon
  • Montana: 4.5 cents per gallon
  • Tennessee: 4 cents per gallon
  • West Virginia: 3.5 cents per gallon
  • South Carolina: 2 cents per gallon
  • California: 1.9 cents per gallon
  • Maryland: .3 cents per gallon
  • New Jersey: 10.8 per gallon for diesel fuel only

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New York: State of the state speech rails against federal tax bill

Last Wednesday, New York’s Gov. Andrew Cuomo gave his 2018 state of the state speech, the first governor to do so in the new year. After acknowledging that “2017 was a tough year by any measure,” due to terrorism and Mother Nature, the governor celebrated “historic investments in education, health care and economic development.” He was pleased that “state government is back,” having done “more with less and it’s working,” touting the passage of “seven timely, responsible budgets,” the highest credit rating in 40 years, a drop in unemployment from 8.3 percent to 4.7 percent, and the highest number of private sector jobs ever, 8.1 million.

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Ohio: Lawsuit asserts that in-state software nexus standard is unconstitutional

The Ohio budget legislation, HB 49, that Gov. John Kasich signed into law last July contained an expanded statutory definition of “substantial nexus,” which governs the taxability of sales made by vendors that are located outside of the state. Quoting the legislation at the time, we explained that substantial nexus is presumed to exist when the seller has “gross receipts in excess of $500,000 in the current or preceding calendar year,” and the seller does at least one of the following:

  • Uses in-state software to sell or lease tangible personal property or services to consumers.
  • Provides or enters into an agreement with another to provide a content distribution network in Ohio to facilitate delivery of the retailer’s website to consumers,

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Texas: Supreme Court affirms single-factor apportionment formula for franchise tax purposes

In a Dec. 22, 2017 opinion in Graphic Packaging Corporation v. Glenn Hegar, et al., the Texas Supreme Court affirmed the lower court’s decision in favor of the state, costing Graphic Packaging close to $1 million in taxes.

The case centered on whether the taxpayer could apportion its business revenue using the Multistate Tax Compact’s three-factor apportionment formula, or whether, instead, the company was limited to the single factor calculation set forth in Texas law. The court held that the Texas Tax Code provided the only permissible apportionment method.

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South Carolina: State Supreme Court denies review in apportionment case

In one of this week’s articles, we described a Texas Supreme Court case in which that body determined that Graphic Packaging Corporation, a company doing business in multiple states, including Texas, could not use the Multistate Tax Compact’s three-factor apportionment formula for apportioning its business income. Instead, it was bound by the calculation contained in the Lone Star State’s franchise tax statute. The court did not identify the tax as either a franchise or income tax, though the lower court did, concluding that it was a franchise tax.

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Washington: Seattle seeks review of the court decision striking down its wealth tax

Just after Thanksgiving, Judge John Ruhl of the King County Superior Court in the state of Washington struck down Seattle’s ordinance imposing a 2.25 percent income tax on joint filers with incomes over $500,000, and single filers with incomes over $250,000. Seattle officials promised to take their case to the Washington Supreme Court, and so they have, with their Dec. 8, 2017 notice of appeal, which Bloomberg posted on-line.

Seattle’s mayor at the time signed the ordinance on July 14, 2017, and according to its terms, it was to take effect 30 days later. But also on July 14, 2017, a number of plaintiffs sued the Emerald City, asserting that the tax violated both Washington state law and its constitution. Judge Ruhl agreed in a Nov. 22, 2017 decision granting summary judgment to the plaintiffs, the highlights of which we summarized when it came out.

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Missouri: Unusual attempt to legalize marijuana cultivation fails at state Supreme Court

The number of states in which residents have the legal right to grow marijuana, under specific circumstances, is now up to 16. These states are the following, according to Ballotpedia:

For recreational use:

  1. Alaska
  2. California
  3. Colorado
  4. Maine
  5. Massachusetts
  6. Nevada
  7. Oregon
  8. Washington D.C.

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