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Cara Griffith

Editor in Chief of Tax Analysts' state publications


All Posts by Cara Griffith

May 19, 2016 - 5:29 PM EDT
Will There Be a Rise of State Entity-Level Taxes?
The number of passthrough entities (which includes partnerships, limited liability companies, and S corporations) has been on the rise for the last 30 years. And along with the increase in the number of passthrough entities has been a decrease in the number of C corporations. According to the Tax F... [Read More]
May 10, 2016 - 9:52 AM EDT
The Potential Tax Implications of Uber’s Worker Misclassification Suits
Just days after Uber tentatively settled a lawsuit in California and Massachusetts for $100 million, another lawsuit was filed in Illinois. This suit, filed on May 2, once again raises the age-old (or at least year-old) question whether Uber could survive if its drivers were classified as employees... [Read More]
April 28, 2016 - 11:31 AM EDT
The Question of Apportionability Has No Easy Answer
Few terms in state and local tax are more of a misnomer than “nonbusiness income.” It's as if nonbusiness income would have no relationship to a business. In reality, though, nonbusiness income is part of a business's total income; it is simply not apportionable income. Thankfully, many states... [Read More]
April 20, 2016 - 1:28 PM EDT
Scoreboards Are Fun…Even If They Are About Taxes
It's always enlightening to reduce information to a scoreboard. The state and local tax (SALT) team at Sutherland Asbill & Brennan LLP apparently knows that as well. On April 6 Sutherland released its SALT Scoreboard, a quarterly feature tracking significant state tax litigation across the country... [Read More]
April 13, 2016 - 12:02 PM EDT
Should a News Company Accept Tax Credits?
An April 6 news article out of Sacramento caught the eye of an editor in my office. The story provides details about companies that are applying for tax credits in California. The first company mentioned was Faraday Futures, and the second was Snapchat, but it was the third company that made the st... [Read More]
March 9, 2016 - 11:55 AM EST
Should Tax Settlement Agreements Be Publicly Available?
Many, if not most, lawsuit settlement agreements contain a confidentiality provision requiring that the terms of the agreement not be made publicly available and that those involved in the lawsuit not disclose the terms of the agreement. Both sides want confidentiality, at times because they don't... [Read More]
January 19, 2016 - 8:30 AM EST
Why the Minnesota Tax Court Is Making Me Paranoid
Sometimes it really feels like something untoward is going on, but the suspicion is difficult to confirm. I'm having one of those moments regarding the Minnesota Tax Court. Here's my concern: In doing regular research, staff at Tax Analysts realized that the Minnesota Tax Court hadn't published... [Read More]
January 13, 2016 - 11:56 AM EST
Waiting on the Court to Figure Out How to Tax Remote Sales
State officials have been struggling to tax remote sales for more than a decade. Congress and the U.S. Supreme Court have been called upon to act, but seem unable or unwilling to address the issue. State officials' patience is waning, though, and that could lead to more uncertainty and complexity... [Read More]
October 30, 2015 - 8:48 AM EDT
Why Do We Still Have Unpublished Opinions?
Newsflash…it's 2015, and it might be time to reexamine the idea of unpublished opinions. For many years, having an opinion go unpublished meant that it was literally hidden from lawyers because it was not published in an official reporter. Now unpublished opinions readily appear in online databa... [Read More]
October 8, 2015 - 7:46 AM EDT
Why Is It So Hard to Fund Schools?
Education funding is complicated. In the past year, New York, Kansas, Texas, Colorado, and very recently, Washington state have struggled with paying for education. On August 13 the Washington Supreme Court ordered the state to pay $100,000 per day in sanctions for its failure to produce a plan to... [Read More]
October 1, 2015 - 8:36 AM EDT
Idaho Legislators Shamed Into Good Behavior
In Idaho, an “ad hoc working group” of legislators came under fire for meeting behind closed doors to discuss tax policy. According to a September 27 news story, the group has been meeting all summer, but is not listed as one of the official legislative interim committees or task forces. Those gr... [Read More]
September 4, 2015 - 3:53 PM EDT
Why Is It So Hard to Find Information on the Sharing of Taxpayer Information?
In the last month, I've spent more time than I'd like to admit trying to figure out how, when, and with whom state tax authorities share confidential taxpayer information and what safeguards are in place to avoid its misuse. What I've learned is that very little information is publicly available... [Read More]
August 7, 2015 - 9:20 AM EDT
A Look at Information Sharing Agreements Between the IRS and States
In September 2014 Tax Analysts sent a Freedom of Information Act request to the IRS for a list of all states and localities currently participating in IRS taxpayer information sharing programs, and all taxpayer information sharing agreements entered into between any state or territory of the United... [Read More]
July 31, 2015 - 2:53 PM EDT
New York Attempts to Tax Income From Nonresident Lawyer Based on Bar License
It's long been acknowledged that the New York Division of Taxation aggressively enforces its residency rules. People who move from New York to states without an income tax are frequently subject to a residency audit to ensure that they have legally changed their domicile. Taxpayers may not appreci... [Read More]
July 8, 2015 - 12:19 PM EDT
Should Tax Officials Speak at Closed Events?
Working for a media organization that covers taxes certainly has its perks. It's a fast-paced environment in which every day is different. We are constantly looking for breaking news and take our job to report on important tax-related events seriously. And whether or not anyone else agrees, tax... [Read More]
July 1, 2015 - 11:37 AM EDT
Texas Comptroller Improves Transparency of Administrative Decisions
I often feel as though I'm constantly complaining about poor transparency practices in the administration of our tax systems at both the federal and state levels. In my defense, there are a lot of nontransparent practices to complain about. But finally, here is some good news to report. On June 1,... [Read More]
June 11, 2015 - 8:19 AM EDT
Are REITs Paying Their Fair Share to States?
Two measures (SB 118 and HB 82) proposed in Hawaii in January would have eliminated the dividends paid deduction (DPD) for real estate investment trusts. The measures have been deferred pending further study. Supporters of the bills contend that dividends paid by REITs should be taxed before distr... [Read More]
June 4, 2015 - 2:14 PM EDT
Is the IRS Protecting Taxpayer Information or State Tax Authorities?
Data breaches involving taxpayer information have made headlines lately. To combat this, the IRS and state tax authorities are working together to change the way taxpayer identities and accounts are verified. The goal of the project is to improve the security of taxpayer identities and detect patte... [Read More]
May 20, 2015 - 12:33 PM EDT
Tax Reform Laboratories
Inaction may be the right word to describe what's going on with tax reform at the federal level, but not so with the states. In preparing for a presentation, I did some research on tax reform at the state level. At Tax Analysts, we cover events as they happen and we've covered a lot, but putting... [Read More]
May 13, 2015 - 2:44 PM EDT
Could There Finally Be Transparency About Tax Abatements?
Goldman Sachs recently reported that state and local governments will spend at a slower pace than they have in the last few years. One of the reasons for this is slow growth in tax collections. Given that tax collections are slowing, it would seem that state and local governments might want to rei... [Read More]
May 6, 2015 - 2:49 PM EDT
Learn to Love the Property Tax -- It’s Not So Bad
States are generally protective of their revenue sources and will go to great lengths to ensure that revenue remains as stable as possible. For that reason, states rarely get rid of a major tax. In fact, in the past 32 years, no state has done so. In the past 50 years, only Alaska has successfully... [Read More]
March 11, 2015 - 12:24 PM EDT
Will There Be an Increase in State Transfer Pricing Audits?
Transactions between related entities are common and engaged in for both business and tax purposes. Management fees, factoring fees, loans, and other intercompany transactions can be beneficial from a tax planning standpoint, provided the transactions are properly structured and supported by adequa... [Read More]
March 5, 2015 - 5:04 PM EST
The Use of Big Data in Auditing
I've been hearing the term “big data” a lot lately. Not being an IT professional, I assumed rather naively that big data was, well, data that was big. As it turns out, my simplistic definition isn't all that far off. According to Webopedia, big data is a term used to describe a massive volume o... [Read More]
February 25, 2015 - 12:29 PM EST
The Pinnacle of Secret Law
On February 24 Tax Analysts did the unthinkable: It published an unpublished opinion from the Colorado Court of Appeals. This may seem uneventful. Unpublished opinions are routinely available from courts across the country, but not from the Colorado Court of Appeals. Although the court may issue 2,... [Read More]
February 12, 2015 - 8:33 AM EST
Series LLCs: The Next Generation of Passthrough Entities?
Passthrough entities have received a lot of attention lately -- partially because 90 percent of businesses are structured this way. Most of these businesses are S corporations, limited liability partnerships, or sole proprietorships. Given that so many businesses are being formed outside the C cor... [Read More]
February 4, 2015 - 6:06 PM EST
Texas Comptroller to Look to Legislature for Guidance on Taxing Aircraft
In January, Glenn Hegar was sworn in as the Texas comptroller of public accounts. In his inauguration speech, he pledged to help keep the Texas economy on track, but it may be a difficult task. Plummeting oil prices have many in Texas concerned about the future. Nonetheless, Hegar has predicted mod... [Read More]
January 28, 2015 - 2:29 PM EST
Tax Appeal Reform May Be a Possibility in Washington State
I've written before about the benefits of having an independent tax tribunal at the state level. Generally, an independent tax tribunal (one that is independent of the state's tax authority) is staffed by judges or administrative law judges who are knowledgeable on tax issues and write impartial... [Read More]
January 14, 2015 - 1:03 PM EST
Illinois Lawsuit Challenges Tax Credit Program for Encouraging Job Retention
The Illinois Policy Institute recently filed a lawsuit to challenge a common practice at the state and local level: tying tax credits to the retention of jobs. The suit alleges that businesses should receive tax credits under the Edge Development for a Growing Economy (EDGE) program only if they cr... [Read More]
January 7, 2015 - 1:27 PM EST
Mississippi Needs a Dose of Transparency
A recent article in State Tax Notes details some transparency concerns at the Mississippi Department of Revenue that are (unfortunately) somewhat commonplace. For example, the department does not publish letter rulings, which can be useful in helping taxpayers understand the risk associated with a... [Read More]
December 29, 2014 - 8:38 AM EST
Crowdfunding and State Taxation
Online crowdfunding has turned into a mainstream concept. It has enabled people to raise millions of dollars to start businesses or fund projects. For business entrepreneurs, it is a revolutionary solution to a big problem. That is, they need money, but private equity and venture capital firms won... [Read More]
December 17, 2014 - 11:44 AM EST
A Champion for Tax Reform
On December 15 State Tax Notes released its annual Person of the Year issue. It's a fun issue for the magazine staff. We get to take a break from the news of the day to think back about what happened during the year. Of course, that often leads to a discussion of what might happen in the coming ye... [Read More]
December 3, 2014 - 12:16 PM EST
Transparency Concerns Linger in Washington State
The Washington State Wire recently published several articles addressing concerns about the internal appeals process at the Washington Department of Revenue. The articles provide an interesting look at how the process works – or doesn't work. One of the articles, published on November 24, raises... [Read More]
November 26, 2014 - 1:48 PM EST
Nonresident Income Taxes Likely to Remain a Focus for State Tax Authorities
There has been an uptick in the enforcement of nonresident income taxes and employers and employees should expect this trend to continue. Historically, there has always been a significant amount of noncompliance regarding nonresident income taxes, both in terms of payroll withholding by employers a... [Read More]
November 19, 2014 - 3:15 PM EST
Bad News for State Public Pension Plans
On November 12 State Budget Solutions issued new research showing the level at which state public pension plans are underfunded, and it's not good news. In 2013 state pension plans were underfunded by a staggering $4.1 trillion. In 2014 that number has risen to $4.7 trillion. Even though the econo... [Read More]
October 29, 2014 - 1:52 PM EDT
Benefit Corporations: The Corporate Entity of the Future?
Those who shop at Patagonia or Etsy are likely aware of a new type of business entity that is growing in popularity. These companies and a thousand more have chosen to organize as either B corporations or benefit corporations. While there are differences between B corporations and benefit corporati... [Read More]
October 22, 2014 - 12:27 PM EDT
Drop Shipping Is Popular With Retailers, but Can Create Tax Challenges
Drop shipping is a commonly used retail method in which the retailer doesn't hold the inventory it sells to the end customer. After a retailer accepts an order for a product, it places an order for that product with a third party, typically the manufacturer or wholesaler (shipper) who ships the pr... [Read More]
October 8, 2014 - 12:33 PM EDT
Is the Maryland Tax Court Hiding Its Opinions?
States have increasingly turned to independent tax tribunals as a means of providing taxpayers with a dedicated forum to adjudicate tax appeals before entering the court system. Independent tax tribunals have been lauded because they are separate from the state tax authority and the judges have tax... [Read More]
October 1, 2014 - 1:52 PM EDT
Managing the Tax Consequences of Equity Compensation Awards
Many public corporations and even some closely held businesses use equity-based compensation awards to attract, motivate, and reward employees. Equity-based compensation includes nonqualified and incentive stock options, restricted stock units, stock appreciation rights, performance shares and unit... [Read More]
September 24, 2014 - 1:19 PM EDT
Taxing the Cloud
Cloud computing is all the rage, and likely to remain that way. Businesses aren't just implementing cloud computing as an add-on to their current business technology strategy, they're changing their technology strategies to use cloud computing. Because of this, it's unlikely that there will be a... [Read More]
September 17, 2014 - 3:52 PM EDT
Single Sales Factor May Be Inevitable, but Is It Fair?
Fair apportionment is a constitutional requirement. According to Complete Auto Transit Inc. v. Brady, 430 U.S. 274 (1977), to be fairly apportioned, a state tax on corporate income must be limited to the portion of a multistate business's net income that is "fairly attributable" to the business's a... [Read More]
September 10, 2014 - 12:51 PM EDT
A Win for Transparency
The judgment is in, and it's a win for transparency. We've been waiting for a decision from a Kentucky court in a suit Tax Analysts joined to require the Department of Revenue to release redacted copies of its final letter rulings. The suit was brought by Mark Sommer of Frost Brown Todd, who soug... [Read More]
August 28, 2014 - 8:27 AM EDT
Is the Dormant Commerce Clause in Jeopardy?
A case pending before the U.S. Supreme Court that has yet to grab the attention of the mainstream media is Maryland State Comptroller of Treasury v. Wynne. It's a state tax case that is interesting because it could significantly change the scope of the dormant commerce clause. The dormant commerce... [Read More]
August 20, 2014 - 1:44 PM EDT
Was Oregon’s Tax Incentive Deal With Intel Unnecessary?
The tax incentive deal reached between Oregon and Intel Corp. has made headlines for the past week. It was a highly anticipated deal, as Intel had used nearly all of the benefit of its previous package of tax breaks. Under the terms of the agreement, Intel will make various payments to Washington C... [Read More]
August 6, 2014 - 12:53 PM EDT
Doing Business in California
The California Franchise Tax Board recently issued Legal Ruling 2014-01, which addresses when a business entity with a membership interest in a limited liability company is required to file a California return and pay applicable taxes. The ruling comes while a case is pending on that very issue. Th... [Read More]
July 30, 2014 - 11:53 AM EDT
Access to Public Records Isn’t a Fundamental Right – But It Should Be
Tax Analysts recently requested, under the Arkansas Freedom of Information Act, “copies of all field audit manuals and audit training manuals.” The Arkansas Department of Finance and Administration sent back a misguided response. Revenue Legal Counsel Joel DiPippa, who wrote the letter denying Ta... [Read More]
July 23, 2014 - 1:51 PM EDT
Is New York Properly Auditing Partnerships?
In 2012 I wrote an article for State Tax Notes discussing whether states are adequately auditing real estate partnerships. A key source in that story was Jerry Curnutt, a former partnership industry specialist for the IRS. Curnutt told me the problem was that some real estate partnerships improperl... [Read More]
July 16, 2014 - 12:00 PM EDT
Sales Tax Compliance Concerns Loom Large, but Does Automation Help?
Many businesses think they have taken the steps necessary to be ready for a sales and use tax audit. They believe they are adequately organized, fully documented, and well prepared overall. That is, until the audit notice arrives in the mail and they realize that perhaps they should have done more... [Read More]
July 9, 2014 - 1:27 PM EDT
The Criminal Side of Sales Tax Compliance
Imagine this scenario: In the middle of an acquisition deal, the due diligence review of a company being acquired reveals that the company has underremitted its sales tax liability. The deal is never finalized because of the problem. The company approaches its tax adviser with the news that it fail... [Read More]
July 2, 2014 - 12:49 PM EDT
Censorship in New Hampshire?
In this week's edition of State Tax Notes, I wrote about a disturbing situation in New Hampshire. In January 2014 William Hoke, the editor of a subscription-based website that provides news and information about taxes administered by the New Hampshire Department of Revenue Administration (DRA), re... [Read More]
June 25, 2014 - 12:26 PM EDT
Ohio Enacts Legislation Allowing Creation of Captive Insurance Companies
On June 17 Ohio Gov. John Kasich (R) signed legislation (HB 117) allowing for the creation of captive insurance companies. Ohio now joins 30 other states that permit captive companies, which are popular risk management tools for large corporations. A captive insurance company generally is an insura... [Read More]
June 18, 2014 - 3:45 PM EDT
Worker Misclassification Can Be Costly
A drywall contractor in Nashville, Tennessee, is facing a fine for misclassifying workers. At $300,000, the fine is the largest ever imposed by the Tennessee Department of Labor. Contractors in the Tennessee construction industry should take note. The department will likely be looking for others th... [Read More]
June 12, 2014 - 9:20 AM EDT
Tax Analysts Files Suit to Demand Transparency in California
Two little-known California Franchise Tax Board forms could be among the deciding factors when auditors determine whether a company will be subject to a unitary audit, yet taxpayers and practitioners have heard only rumors about the forms' existence, and the FTB isn't forthcoming with information a... [Read More]
June 4, 2014 - 2:42 PM EDT
Protecting Confidentiality When Information Is Exchanged Between Tax Authorities
Tax authorities receive a lot of confidential information from individuals and businesses. While the information is confidential, that doesn't mean it can't be disclosed. Tax agencies in the U.S. routinely exchange taxpayer information with each other at the federal and state levels. Information... [Read More]
May 28, 2014 - 1:23 PM EDT
How Much Knowledge Is in an Audit Manual?
As part of an ongoing effort to improve transparency in state tax administration, Tax Analysts has obtained copies of the Louisiana Department of Revenue's training manuals for auditors. These manuals set forth the procedures used by auditors when conducting an audit. Tax Analysts obtained the aud... [Read More]
May 21, 2014 - 12:05 PM EDT
Should Taxpayers Challenge States if They Fail to Enact Rules?
Alternative apportionment provides state tax authorities and taxpayers the ability to obtain ad hoc relief if the standard apportionment formula fails to fairly reflect the extent of the taxpayer's activity in the taxing state. A model alternative apportionment provision is provided for in section... [Read More]
May 14, 2014 - 1:55 PM EDT
In Search of a Little Guidance
I had the pleasure of speaking at the most recent District of Columbia Bar State and Local Taxes Tax Series luncheon as part of a panel entitled “Meet the SALT Press.” The discussion largely revolved around the transparency of both informal and formal guidance. Transparency is obviously one of m... [Read More]
May 7, 2014 - 12:50 PM EDT
Transparency Versus Disclosure of Taxpayer Information
Tax Analysts is obsessed with transparency. We really are, but in a good way, of course. For more than 40 years, Tax Analysts has worked to bring into the open the working law of tax administrators. But while Tax Analysts has been instrumental in shaping Freedom of Information Act law in this count... [Read More]
April 30, 2014 - 12:40 PM EDT
The Problem With Outcome-Based Jurisprudence
State court systems are created by state governments to enforce state law. It's a relatively simple concept. Like the federal court system, state judicial branches are separate entities from the executive and legislative branches. Judges are charged with the difficult task of interpreting and impl... [Read More]
April 23, 2014 - 11:32 AM EDT
Solving the ‘Problem’ of Remote Sales
Movement on the Marketplace Fairness Act (MFA), which would enable states to require remote sellers to collect sales tax, has been the source of much speculation. The bill is pending in the House Judiciary Committee, but interest in the topic remains high, even among members of the committee. Thirt... [Read More]
April 9, 2014 - 12:51 PM EDT
Guidance Today, Gone Tomorrow
A recent Arkansas court opinion points out what might be a troubling trend in state taxation: the inability of taxpayers to rely on administrative guidance because the state can retract or supersede it on a moment's notice. The underlying Arkansas case is not particularly exciting. It addresses wh... [Read More]
April 2, 2014 - 3:08 PM EDT
Proceeding Cautiously With a Taxpayer Bill of Rights
Last week Tax Analysts hosted a panel discussion that addressed the idea of a taxpayer bill of rights (TBOR). The panelists, which included National Taxpayer Advocate Nina Olson, Christopher S. Rizek of Caplin & Drysdale, and Alan J. Wilensky, former acting Treasury assistant secretary for tax poli... [Read More]
March 26, 2014 - 12:11 PM EDT
Taxing Streaming Video
State governments are often slow to adapt their tax codes to technology. Most states are just now getting a handle on the taxation of digital products, but technology doesn't stand still. States are now struggling with how streaming video services fit into the sales and use tax structure. Streamin... [Read More]
March 19, 2014 - 12:25 PM EDT
City of Tacoma Considers Contingent-Fee Auditors
The city of Tacoma, Wash., has put out a request for proposals for third-party contractors to perform tax audits. Payment for the work would be based on a percentage “paid as a contingency of the additional revenue received by the City as a result of the services provided by” the contractors. In... [Read More]
March 12, 2014 - 12:20 PM EDT
States' Perspectives on Federal Tax Reform
The staff at Tax Analysts has spent the past two weeks poring over House Ways and Means Committee Chair Dave Camp's tax reform proposal – all 979 pages of it. It has been an arduous task (and for many at Tax Analysts, a labor of love), but in the end, the proposals in the Camp draft will remain j... [Read More]
March 5, 2014 - 1:40 PM EST
California Needs a Dose of Sunshine
Should a state tax authority be required to disclose forms used by its auditors to determine whether a company will be subject to audit? While the California Franchise Tax Board says no, I would strongly argue -- and recently wrote an article about this for State Tax Notes -- that the state is stre... [Read More]
February 26, 2014 - 10:20 AM EST
Is It Time for BATSA?
With all the focus on the Marketplace Fairness Act, another state-tax-related federal bill seems to be flying under the radar. Late last week, the U.S. House Judiciary Subcommittee announced it would hold a hearing on the Business Activity Simplification Act of 2013 (BATSA, H.R. 2992) on February 2... [Read More]
February 19, 2014 - 12:59 PM EST
What Triggers a Sales and Use Tax Audit?
Being the subject of a sales and use tax audit is a fact of life for many large corporate taxpayers. For other taxpayers, an audit comes as an unwelcome surprise. Predicting what makes a company more vulnerable to a sales and use tax audit can prove to be a valuable exercise. Knowing what triggers... [Read More]
February 12, 2014 - 1:48 PM EST
Maintaining a Business-Friendly Reputation
To states, being labeled business friendly matters. So it should be no surprise that the Mississippi Legislature is advancing legislation (HB 799) to undo the effect of a court opinion that may have damaged the state's business-friendly reputation. The opinion in Equifax Inc. et al. v. Department... [Read More]
February 5, 2014 - 12:02 PM EST
The Myth of the Budget Surplus
There seems to be a lot of good news about state budgets lately. Newspaper headlines have changed from doom and gloom over budget crises during the recession to questions about how states will manage budget surpluses. Unfortunately, there are financial problems lurking beneath the surface, and one... [Read More]
January 29, 2014 - 1:11 PM EST
Are State Tax Authorities Hiding the Ball?
I've noticed an emerging trend in some state departments of revenue – a move toward secret law. In a time when transparency has become a buzzword, some revenue departments are doing what they can to avoid transparency. In fact, some seem to be offering less guidance than ever before. Almost two y... [Read More]
January 22, 2014 - 1:16 PM EST
When State Taxes and Interstate Compacts Collide
Even those outside the state tax community should take note of some ongoing state tax litigation. I know that's a lofty statement, but the reason is that it involves interstate compact law. With more than 200 interstate compacts that administer a variety of programs, such as ports and public trans... [Read More]
January 15, 2014 - 1:44 PM EST
Is Connecticut Ignoring Supreme Court Precedent?
At the end of 2013, the Connecticut Department of Revenue Services (DRS) issued an announcement that on its face seemed relatively benign. AN 2013(19) says simply that a previously issued special notice, SN 92(19), “may no longer be relied upon.” But the announcement may have broad implications.... [Read More]
January 8, 2014 - 1:39 PM EST
The Recurring Question of Corporate Disclosure
A movement is afoot in Illinois (and across the nation) to require more public disclosure of corporate taxpayer information. A bill is pending before the Chicago City Council that would require publicly traded corporations to disclose the amount they pay in state income taxes and the amount they re... [Read More]
January 2, 2014 - 3:35 PM EST
Cyclists: The Next Great Source of Tax Revenue?
I like to ride my bike. I used to race. At some point I was avid, but now I just enjoy riding my bike. Anytime I can, I ride my bike to work. It's blissful. Admittedly, I'm lucky to be in Northern Virginia so nearly all of my ride to work is on a bike trail. There's no traffic and no cars. I'm... [Read More]
December 26, 2013 - 9:13 AM EST
Enabling an Informed Debate
The topic of transparency is a recurring theme when I blog. In fact, this will be my third consecutive blog that addresses the issue. In my mind, that's because it's important and it's something we live and breathe at Tax Analysts. The company was founded with the mission that an open and inform... [Read More]
December 18, 2013 - 12:21 PM EST
The Tax Reform Debate...for a Limited Few in Wisconsin
Wisconsin Lt. Gov. Rebecca Kleefisch (R) and Revenue Secretary Rick Chandler, at the request of Gov. Scott Walker (R), announced a series of roundtable discussions around the state “to start a conversation with Wisconsinites and gather information and input from taxpayers on the real impact of Wis... [Read More]
December 11, 2013 - 2:32 PM EST
Improving the Transparency of New York’s Tax Collection Process
On November 26 the New York State Bar Association Tax Section submitted a report to the Department of Taxation suggesting improvements to the collections process. The report specifically addresses installment payment agreements (IPAs). Currently, taxpayers can request an IPA if they are “financial... [Read More]
December 4, 2013 - 12:46 PM EST
It’s a Bird, It’s a Plane…It’s Amazon Prime Air?
It's all over the news now -- Amazon is flirting with the idea of delivery by unmanned drones. The service, which the company is calling Prime Air, would take the two day shipping guaranteed on Amazon Prime purchases and up the ante. The goal of Prime Air would be to get packages to customers in a... [Read More]
November 27, 2013 - 11:41 AM EST
A Change of Culture
A few years back, a case came before the North Carolina Supreme Court that provided the state tax world with an extreme example of a tax agency's resistance to transparency in exercising its discretionary authority. In the case, Delhaize America Inc. v. Hinton, Secretary of Revenue of the State of... [Read More]
November 20, 2013 - 12:11 PM EST
Hitting the Jackpot
It's being called a jackpot for Connecticut and the most successful tax amnesty in state history. By all accounts, it's true. During its most recent tax amnesty, which ended on November 15, Connecticut collected more than $175 million in back taxes from more than 10,000 taxpayers. The final dolla... [Read More]
November 13, 2013 - 1:29 PM EST
Should Independent Contractors Be Used to Avoid Creating Nexus?
A recent blog post from Nixon Peabody LLP points out that a single teleworking employee in a state can subject the employer (who otherwise doesn't have a presence in the state) to corporate income tax in that state. The post cites to a recent Virginia Department of Taxation ruling (P.D. 13-172) st... [Read More]
November 6, 2013 - 1:21 PM EST
Is There One ‘Right’ Apportionment Formula?
On November 1 Tax Analysts sponsored a conference addressing the Multistate Tax Commission's rewrite of Article IV of the Multistate Tax Compact, which incorporates, nearly verbatim, the Uniform Division of Income for Tax Purposes Act (UDITPA). This is a topic of interest to state and local tax pr... [Read More]
October 30, 2013 - 1:35 PM EDT
The Benefits of Independent Tax Tribunals
States are increasingly turning to independent tax tribunals. Most states now have either a judicial-branch tax court or an administrative-level tax tribunal that is independent of the state's tax authority. Taxpayers and practitioners have pressed states for independent decision-making bodies for... [Read More]
October 23, 2013 - 1:00 PM EDT
In Defense of State Treasurers
An interesting article in the October edition of Governing notes that state treasurers' offices are increasingly coming under fire. The underlying reason, it says, is that state finances are tight and there is a growing concern over state pension liabilities. In response, some states, notably Delaw... [Read More]
October 16, 2013 - 12:23 PM EDT
Are States Addicted to Revenue from Unclaimed Property?
The Council On State Taxation, recently issued a scorecard on the best and worst of state unclaimed property laws. Unclaimed property is an interesting area of the law. Although taxation is not involved, unclaimed property statutes operate, in many ways, like tax statutes. As a result, it is typica... [Read More]
October 9, 2013 - 12:14 PM EDT
The Takeaway From Take-and-Bake
Earlier this spring, I wrote about the sales and use taxation of candy. As it turns out, 16 states do not treat candy as a grocery. Groceries are generally exempt from sales tax, so if candy is not considered a grocery, it will generally be subject to tax. Of course, what differentiates candy from... [Read More]
October 2, 2013 - 3:05 PM EDT
Floating on a State Tax Revenue Bubble
According to a report issued by the U.S. Census Bureau on September 24, state and local tax revenues for the second quarter of 2013 were up 7.2 percent compared with the second quarter of 2012. A Reuters article reports that this is the “largest intake on records going back to 1988 and the 15th st... [Read More]
September 25, 2013 - 12:57 PM EDT
The Rush Is on to Obtain Forgiveness
On Monday, September 23, Louisiana and Connecticut launched tax amnesty programs. State and local tax amnesty programs are a politically palatable way to raise revenue without raising taxes. Although arguably flawed from a tax policy standpoint, amnesties can be beneficial to taxpayers and state of... [Read More]
September 18, 2013 - 1:32 PM EDT
The 'Tech Tax' That Wasn’t
In late July, the Massachusetts legislature enacted a $500 million transportation financing bill (H 3535) over the governor's veto. Included in the bill was a broadening of the state's 6.25 percent sales tax to include computer system design services and the modification, integration, enhancement... [Read More]
September 11, 2013 - 2:40 PM EDT
The Survival of the Multistate Tax Commission
In the past year and a half, the Multistate Tax Commission has come under fire. Its relevancy – even its purpose for existence – has been the subject of speculation. That speculation is still ongoing, but eventually will blow over. The MTC isn't going anywhere. Perhaps it will take a different s... [Read More]
September 4, 2013 - 1:10 PM EDT
Income Migration: What Does It Really Mean for States?
There's an old political adage that citizens can “vote with their feet.” In the past few years, there have been numerous reports of residents voting with their feet by moving out of high tax states. Pro golfer Phil Mickelson made headlines when he announced early this year that high taxes could... [Read More]
August 28, 2013 - 1:31 PM EDT
Philadelphia’s Use of Contingent Fee Auditors
States' use of third-party auditors is nothing new. While frequently used to conduct unclaimed property audits, states have also used third-party auditors for a variety of compliance enforcement tasks including determining nexus, performing audits, assessing tax, and of course, collecting tax, int... [Read More]
August 21, 2013 - 11:15 AM EDT
Textbooks with Borders
Most of us have heard of doctors without borders, but has anyone heard of textbooks with borders? It's a reality for those using Amazon's textbook rental service, Warehouse Deals. According to Amazon's website, textbooks rented through their service may not be moved outside the state in which the... [Read More]
August 14, 2013 - 1:44 PM EDT
California’s Aggressive Position on Passive Income
It's not hard for taxpayers to find themselves subject to California's franchise tax. Take for example Swart Enterprises Inc., which operates a farm in Kansas. According to a Dunn & Bradshaw report, Swart Enterprises was established in 2003 and provides farm labor contractors. The company is inco... [Read More]
August 7, 2013 - 1:29 PM EDT
Fighting the Fight Against a Local Use Tax in Illinois
In March 2013, Cook County, Illinois enacted a 1.25 percent use tax on the “value” of non-titled personal property purchased outside the county. The idea is to impose a tax on property that is not subject to Cook County's .75 percent sales tax because it was purchased outside the county, but wil... [Read More]
July 31, 2013 - 12:13 PM EDT
Back-to-School! Time for a Holiday
It's back-to-school season, which for many parents means purchasing new kids' clothes and school supplies for the upcoming school year. It's also the time of year that some states announce sales tax holidays for the stated purpose of easing the financial pain of back-to-school shopping. Sales tax... [Read More]
July 24, 2013 - 1:11 PM EDT
Improving Transparency in Pennsylvania
An omnibus tax bill passed by legislators in Pennsylvania on July 3 would make significant changes to a variety of tax provisions. But while the move to market-based sourcing may have gotten more press, HB 465 would also make changes to the state's Board of Finance and Review (board) that could im... [Read More]
July 17, 2013 - 12:11 PM EDT
Break Out the Champagne
In the past two weeks, the Tax Foundation has released two maps that provide detail on states' rainy day funds. The first, released on July 8, showed rainy day fund balances as of 2007, before the economy began its downturn. The foundation calculated each state's rainy day fund as a percentage of... [Read More]
July 10, 2013 - 12:25 PM EDT
Are We Getting Anywhere?
Often, when people speak of getting back to where they started, it is said with a bit of nostalgia – as if where they were was somehow better than where they are. I'm sure it is true in certain circumstances. Or it is just human nature to look at the past with rose colored glasses. But when it co... [Read More]
July 3, 2013 - 11:59 AM EDT
Taxes and Whistleblower Suits
Sprint-Nextel Corp. recently received some bad news from a New York supreme court. In a ruling dated June 27, New York Supreme Court Judge O. Peter Sherwood denied Sprint's motion to dismiss a case that alleges the company deliberately failed to collect and remit sales tax. Sprint will now have to... [Read More]
June 26, 2013 - 11:57 AM EDT
The Joys (and Burdens) of Too Much Revenue
The forecast for most state budgets has been steadily improving for the past several years. In fact, the Nelson A. Rockefeller Institute of Government reported that state tax receipts for the fourth quarter of 2012 were up 5.7 percent from the fourth quarter of 2011. It is welcome news. The news ha... [Read More]
June 19, 2013 - 12:00 PM EDT
The Public’s Right to Know
Disclosure of corporate tax liabilities by states has been the subject of debate for over a decade. In general, opponents allege that publishing a list of corporations' tax liability is an unnecessary breach of taxpayer confidentiality that will not provide a state with additional insight about spe... [Read More]
June 12, 2013 - 12:28 PM EDT
What To Do With the Gas Tax?
There is little doubt that many of the bridges, roads, and highways in this great nation are in disrepair. There is also little doubt that despite improvement in the fiscal situation of most states, it is still difficult for state and local governments to earmark enough revenue to significantly imp... [Read More]
June 5, 2013 - 12:06 PM EDT
States' Misuse of Unclaimed Property Laws
Delaware has long been the state in which many businesses choose to incorporate because of its favorable laws for the incorporation and taxation of businesses. Yet Delaware has been termed a “bully” when it comes to unclaimed property. That is quite a disconnect. But as it turns out, Delaware is... [Read More]
May 29, 2013 - 3:08 PM EDT
A Transparency Win in Philadelphia
The City of Philadelphia has long been criticized for having an unfair and antiquated property tax system. Taxpayers frequently questioned whether property tax assessments had any relation to the actual value of the property and whether similarly situated property received a similar assessment. To... [Read More]
May 22, 2013 - 1:25 PM EDT
A Missed Opportunity in Texas
The importance of an independent tax tribunal is well documented in the pages of tax journals and even mainstream media outlets. My colleague, David Brunori, recently wrote an article urging the Alabama legislature to vote in favor of a bill that would create an independent tax tribunal. Independen... [Read More]
May 15, 2013 - 1:26 PM EDT
Are We Beating a Dead Horse?
I've had the opportunity on several occasions to speak publicly about transparency in state taxation. Most recently, on May 10 at the American Bar Association Section of Taxation Meeting in Washington DC, I spoke on a panel that addressed transparency and states' use of alternative apportionment... [Read More]
May 8, 2013 - 12:30 PM EDT
Pot Calling Kettle Black?
Good Jobs First recently published the second edition of a report entitled “Grading Places: What Do the Business Climate Rankings Really Tell Us?” The purpose of the report is to examine various business climate indexes, and prove that they are “corporate-sponsored, pseudo-social science” studi... [Read More]
May 1, 2013 - 12:52 PM EDT
Feeling the Impact of Impact Fees
I have a running joke with another editor at Tax Analysts that when news gets slow in the state tax department, we can always cover impact fees. The topic often comes up during July and August, which are notoriously slow months for state tax news. I distinctly remember writing about impact fees in... [Read More]
April 24, 2013 - 12:06 PM EDT
Things That Make You Nuts
Avalara is a company that designs software to help companies automate their sales tax compliance. Perhaps it is fitting, then, that an Avalara blog post addressed the taxation of candy. It's one of the areas of state sales tax laws that can (pun intended) make you go nuts, but it also highlights t... [Read More]
April 17, 2013 - 12:48 PM EDT
The Problems with Jindal's Tax Reform Plan
Louisiana Gov. Bobby Jindal has backed away from his plan to repeal the state's individual and corporate income taxes and replace revenues through an expansion of the sales tax. Gov. Jindal has assured supporters that he is not abandoning the plan, but has asked the Legislature to come up with a w... [Read More]
April 10, 2013 - 12:49 PM EDT
Crafting a Better Mainstreet Fairness Act?
The Mainstreet Fairness Act (MFA) is continuing to gain steam. On March 27, the U.S. Senate voted 75 – 24 in favor of an amendment to support the act. The amendment was included as part of an overall debate of the Senate's 2014 budget plan, which passed as a non-binding resolution. Despite the sh... [Read More]
April 3, 2013 - 12:43 PM EDT
Rendering the U.S. Supreme Court Irrelevant
On March 28, the New York Court of Appeals, in a 4-1 decision, upheld a state law that requires certain out-of-state companies to collect and remit sales tax on sales to in-state customers despite the fact that the companies lack a physical presence in the state. The state successfully argued that... [Read More]
March 27, 2013 - 12:51 PM EDT
The Meaning of a Symbolic Vote
The days of tax-free shopping may be numbered. Well, if we were honest, there never were any tax-free shopping days (unless we're talking about a sales tax holiday, which is horrible tax policy, but I digress). On March 22, the Senate took a symbolic vote on the Marketplace Fairness Act (MFA). The... [Read More]
March 20, 2013 - 12:45 PM EDT
A Culture of Mistrust
I recently spoke at a conference about transparency in state tax administration. Among other issues that were discussed, I suggested that there is a culture of mistrust between taxpayers and practitioners and state tax officials. When I suggested that the feeling was one of “us” vs. “them,” hea... [Read More]
March 13, 2013 - 12:16 PM EDT
Will Tax Free Shopping Be a Way of the Past in Oregon?
Could it be? Will Oregon, a historically sales tax free state, begin to impose a sales tax? That is the question on the table. On February 20, the state Legislature proposed legislation that would enact a 5 percent sales and use tax on sales of tangible personal property and services. The legislati... [Read More]
March 6, 2013 - 2:01 PM EST
The Sequester: 'Designed to be Stupid'
The sequester has occurred and the sky hasn't fallen…yet. Still, there has been a seemingly endless stream of reports on how states will be impacted by the budget cuts. But actual data on those impacts is lacking, so it is unclear whether any of the reports reflect reality. Still, despite the lac... [Read More]
February 26, 2013 - 1:32 PM EST
Stealth Lobbying
The National Conference of State Legislatures (NCSL) is a bipartisan organization that “serves the legislators and staffs of the nation's 50 states” by providing “research, technical assistance and opportunities for policy makers to exchange ideas on the most pressing state issues.” In additio... [Read More]
February 20, 2013 - 12:05 PM EST
Leveling the Playing Field
A bi-partisan group of U.S. Senators and Representatives introduced on February 14 a bill that reportedly resolves the differences between bills introduced in the last Congress that would require an online retailer to collect and remit sales tax regardless of whether the online retailer has a physi... [Read More]
February 13, 2013 - 12:54 PM EST
Income Redistribution Has No Place in State Tax Systems
Although 2013 is yet young, tax reform has been a hot topic. States have been particularly active in discussing a variety of tax reforms. The proposed reforms have included decreased reliance on income taxes and increased reliance on consumption taxes (i.e. the sales tax). But with that proposal co... [Read More]
February 6, 2013 - 1:36 PM EST
There Is Nothing Perplexing About Quill
A recent post on a Florida tax lawyer blog questioned whether online retailers that pay shoppers to “advertise” on their personal web pages creates nexus for those retailers. The blog recalls an October 2012 New York Times article, which addressed the issue. According to that article, a Manhattan... [Read More]
January 30, 2013 - 1:24 PM EST
Kentucky DOR's Disregard of Transparency
Transparency has become a topic that is near and dear to my heart. After all, I work for Tax Analysts, where transparency is paramount to the company's mission. For the past year, Tax Analysts has been exploring transparency in state tax administration. Some states do a pretty good job of ensuring... [Read More]
January 23, 2013 - 1:11 PM EST
Have State Income Taxes Run Their Course?
Both the corporate and individual federal income taxes turn 100 this year, and many in the tax community are taking this momentous occasion to question whether either tax still works in the modern economy. (Tax Analysts is having a conference on a similar topic in the coming months. Details will be... [Read More]
January 16, 2013 - 1:57 PM EST
Should States Just Enforce Use Tax Collection?
As the 113th Congress is being sworn in, I can't help but wonder whether they will take a fresh look at remote seller legislation. Undoubtedly, federal legislation will be introduced in this Congress that requires remote sellers to collect sales tax despite a lack of physical presence in the taxin... [Read More]
January 9, 2013 - 6:04 PM EST
What Is It About Hollywood?
The fiscal cliff debate is finally past us…at least for the moment, and there are very few winners. In fact, nearly every American will see a tax hike. So while there may be a general bemoaning of the “deal,” the film industry is among those celebrating. Despite a red letter year at the box offi... [Read More]
December 31, 2012 - 8:31 AM EST
What Will Become of Physical Presence?
Amazon will begin collecting tax in Massachusetts in the fall of 2013. Gov. Deval Patrick announced in a press release that in addition to collecting sales tax, Amazon and the governor will “work together toward enactment of federal legislation to resolve the sales tax issue by creating an equitab... [Read More]
December 26, 2012 - 10:31 AM EST
The Promise of Tax Stability
An interesting fight went on in Oregon this month. It was over a tax incentive of a different variety with no direct tax breaks, just the promise of a fixed tax code. The governor wanted to be able to assure Nike, which was considering a major expansion in the state, that the state wouldn't change... [Read More]
December 19, 2012 - 12:13 PM EST
Just Do It
The recent fight between Nike and Oregon was well-document in the press. Nike was looking to expand and said it was prepared to expand in Oregon if state lawmakers would guarantee that the state’s tax rules wouldn’t change following the investment. In other words, Nike wanted Oregon to agree that... [Read More]
December 12, 2012 - 1:19 PM EST
Despite Revenue Growth, States Must Plan for the Fiscal Cliff
The Rockefeller Institute recently released a state revenue report for the second quarter of 2012. The report indicates that although overall state tax revenues increased by 3.2 percent from the same quarter last year, total state tax revenues in the second quarter of 2012 are still 2 percent lower... [Read More]
December 5, 2012 - 11:45 AM EST
New York Times Article Misses the Mark on San Francisco Tax Exemption
On the front page of the December 2nd edition of the The New York Times were two articles in a three-part series on tax incentives. The first of the articles by Louise Story, "As Companies Seek Tax Deals, Governments Pay High Price" lays out the familiar scenario where a corporation is given a t... [Read More]
November 28, 2012 - 1:11 PM EST
Can California Democrats Capitalize on a Legislative Supermajority?
November 6 was an historic day by any account. One of the more interesting results, from a state tax perspective, is the supermajority that was achieved in the California Legislature. In a somewhat unexpected result, Democrats picked up a supermajority in both houses of the state legislature. Obtai... [Read More]