Summary Judgment Granted to a Limited Partnership in New Jersey

A New Jersey Tax Court recently granted summary judgment to a nonresident limited partnership. One of the partners had originally consented to being taxed in New Jersey, and later amended the returns and requested a refund of taxes paid. This was based on an assertion of no nexus. The Division responded by denying the request and assessing additional tax for the partner that had not consented to be taxed in New Jersey. Contrary to the Division’s assertion, the court held that the refund claim does not constructively revoke the nonresident partner’s election to be exempt. The denial of the refund claim is still being litigated.

For more information on nexus and other similar matters, contact our State and Local Tax team.

 

Colorado Private Letter Ruling Apportions Gain on Sale of Business to Another State

Normally, the sale of a business interest commercially domiciled in Colorado is considered business income, and statutory apportionment rules apply. This would include the gain in the numerator of the apportionment ratio.  In a recent case, however, the business that was sold was a distinct operation with its own administration, manufacturing, and distribution departments outside the state. As such, the Dept. of Rev. determined that the gain on this sale should not be sourced to Colorado.

If you are looking to sell your business, contact an Eide Bailly SALT professional to make sure you remain in compliance throughout the transaction process.

Ignorance of the Law is Not a Defense Against a Sales Tax Assessment

A taxpayer that performed solid waste removal was recently assessed for sales tax not collected on that taxable service.  The assessment was upheld by an Arkansas Administrative Judge who opined that lack of constructive knowledge of the tax levy or that other similar entities were not collecting the tax was not an adequate defense. Additionally, the Department of Finance and Administration was not estopped from enforcing the tax law because there was no evidence that its employee’s had made statements that the service was not subject to sales tax.

Sales tax can be tricky to navigate, but we’re here to help. Contact an Eide Bailly SALT professional today.

Colorado is Closer to Revising its Record Keeping Requirement for Wholesale Transactions

The Colorado Department of Revenue is revising its sales tax rules for documenting wholesale transactions. The revised rules seeks to change the amount of due diligence required for accepting resale certificates in lieu of collecting sales tax. Under the old rule, the wholesale vendor was relieved of the liability to collect sales tax when the vendor accepted in “good faith” a resale exemption certificate. Under the proposed rule the vendor is required to either verify the sales tax license number of the purchaser with the Department or collect a physical copy of the license.

The Department has until June to adopt the new rule or terminate the proceeding. This gives Colorado vendors time to review the documentation they have on file for their retail customers and if needed start collecting the proper documentation.

For assistance with complying with Colorado law, contact your state and local tax professional.

 

 

Assessment Upheld Against Contractor Who Wrongfully Collected Sales Tax

An Arkansas Administrative Law Court recently upheld an assessment for sales tax that was collected and not remitted. The taxpayer collected the tax for a service that he later learned was exempt from tax. After accounting errors resulted in the under-billing of his customer, the taxpayer used the tax proceeds to offset his accounting error. In addition to the assessment, the penalty for failure-to-file was upheld.

If you run into sales tax confusion in any state, or if you are facing penalties, contact your Eide Bailly state and local tax professional. We’re here to help!

Arkansas Denies Credit for Taxes Paid to Another State

The Arkansas Department of Finance and Administration recently assessed additional income tax on an individual as a result of a denied credit of taxes paid to another state. The taxpayer paid property taxes to another state and claimed them on Form AR1000TC which is used to report income tax paid to another state. The purpose of the form is to avoid double taxing the same income. An administrative court determined that property tax is not an income based tax, so the credit was properly disallowed.

For more information on income tax credits, contact your state and local tax professional.

Sales Tax Compliance: Remote/Online Seller Resource

The emergence of ecommerce has compelled states to invent new ways to find their lost sales tax revenue. One novel solution states are implementing is identifying individual purchasers of goods who have not paid sales or use tax. This strategy forces remote sellers, who are not registered to collect sales tax, to turn over customer lists or face stiff penalties. Learn more in our recent article.