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.

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.

Texas Upholds Assessment on VIP Athletic Memberships

Membership fees to athletic clubs are typically subject to sales tax as amusement services. However, separately stated charges for workout classes are generally exempt as an instructional service. Recently, a Texas athletic club sold “VIP” memberships that provided access to workout classes as part of the membership but did not separately state the value of the classes. On audit, the athletic club bifurcated the portion of the membership fees attributable to classes, but the Comptroller’s office disallowed the taxpayer’s method because such bifurcation could only be applied on a prospective basis and not on a retrospective basis.

If you have any questions about how this development may impact sales tax in your state, contact your state and local tax professional for more information.

Tax Reform: Impact on Businesses

The recently enacted tax reform legislation represents the most significant overhaul of our tax laws in over 30 years. The act contains substantial changes to the taxation of businesses, individuals, multi-national companies, tax-exempt organizations and others. For more information on how this legislation will affect your business, check out our recent article, where we break down hot topics such as the corporate tax rate, pass-through income, and how you can move forward with an informed approach.

 

Tax Trends Webinar Series 2018

It’s back! The Tax Trends Webinar Series is designed to offer free education and provide information on innovative strategies to save you time and money. Our webinars this year include topics such as state income tax compliance, sales tax considerations, economic nexus, and more. Click here to view all of our Tax Trends sessions and to register.