All Rights Reserved. This communication is for general informational purposes only and is not intended to constitute legal advice or a recommended course of action in any given situation. This communication is not intended to be, and should not be, relied upon by the recipient in making decisions of a legal nature with respect to the issues discussed herein. The recipient is encouraged to consult independent counsel before making any decisions or taking any action concerning the matters in this communication. This communication does not create an attorney-client relationship.

COST Pacific Northwest Regional State Tax Seminar

Discussion of National State Tax Cases and Issues

December 7, 2017Michele BorensPartner, Eversheds Sutherland (US) LLP

Nikki DobaySenior Tax Counsel, COST

Jeffrey FriedmanPartner, Eversheds Sutherland (US) LLP

Douglas LindholmPresident & Executive Director, COST

− Explanation of the Geek Quiz

− Business Tax Burdens

− State Tax Legislative Trends

− Assault on Quill

− Income Tax – Nexus

− Addback Exceptions

− Local Tax Expansion

− Sales and Use Tax Developments

− No Intervention on Retroactive Tax Legislation

Agenda

Win a Prize!

3

Runoff if tie at the end Prize (you choose) given at the end to

the person that gets the most points Points vary – unless noted, 100 points

per question Sorry, no corrections for incorrect

“correct” answers – just blame Fred!

Business Tax Burdens

Businesses paid more than $724 Billion in U.S. state and local taxes in FY2016, an increase of 0.9% from FY2015

How Much Do Businesses Contribute to State Revenues?U.S. Average for FY2016: 43.9% of all tax revenues

Remarkably, the business share of SALT nationally has been within 1% of 45% since 2000

Moreover, C Corporations on average pay about three-fifths more in income tax than pass through businesses

What Do Businesses Pay?

COST/EY Study, Total State and Local Business Taxes: State-By-State Estimates for Fiscal Year 2016, August 2017

5

5

0% 0% 0% 0% 0%

(200 pts.) Which tax type does business pay the greatest proportion of all business taxes?

A. Corporate Income Tax

B. Unemployment Tax

C. Property Tax

D. Sales Tax

E. Severance Tax

6

Tax Burden Comparison

7

COST/EY Study, Total State and Local Business Taxes: State-By-State Estimates for Fiscal Year 2016, August 2017

31%

36%

22%

38%

23%

38%

21%

20%

33%

34%

21%

13%

12%

16%

14%

14%

12%

10%

8%

10%

16%

9%

7%

4%

7%

14%

6%

6%

10%

8%

11%

6%

9%

8%

21%

15%

6%

8%

CA

ID

NV

OR

WA

US

Property Sales

Excise Corporate Income

Unemployment Insurance Individual Income Tax on Business Income

License and Other

Source: Total State and Local Business Taxes: State-By-State Estimates for Fiscal Year 2016 COST, STRI and Ernst & Young, August 2017 (COST.ORG)

High

Medium LowHigh

MD: 4.1%MA: 4.1%NH: 4.6%NJ: 5.3%RI: 5.2%VT: 7.5%

DE: 4.4%

DC: 5.0%

CT: 3.5%

Business Taxes As a Share of Private Sector Gross State Product—FY 2016

6.7%

TEBTRs provide a starting point for comparing burdens across states, but they do not provide sufficient information to evaluate a state’s competitiveness.The Total Effective Business Tax Rate (TEBTR) is measured as a ratio of state and local business taxes to private-sector Gross State Product (GSP), the total value of a state’s annual production of goods and services in the private sector. CT has the lowest TEBTR at 3.47% because it is home to several high-output industries generating a large amount of GSP. OR at 3.7% is also ranked low due to its lack of a sales tax and its lower-than-average business share of property taxes at 45%.

4.2%

4.6%5.3%

3.7%

5.5%5.1%

4.3%4.5%

4.3%

6.4%4.8%

3.7%

4.7%

4.7%

4.5%

4.4%

3.5%

4.6%

4.1%

4.2%

5%

4.8%

4.7%

7%

3.8%4.2%

3.6%4.7%

4%

4.4%

5.8%

3.7%4.8%

5.8%

4.7%4.4%

4.0%5.9%

4.7%

6.3%

3.5%

State Tax Legislative Trends

OverviewState Tax Legislative Trends

─ Gross Receipts Taxes • Louisiana, Missouri, Oklahoma, Oregon, West Virginia

─ Combined Reporting• Alabama, New Jersey, Pennsylvania, Maryland

─ CEO Pay Ratio Taxes• Portland, OR, Connecticut, Illinois, Massachusetts, Minnesota,

Rhode, San Francisco, CA

─ Daily Sales Tax Remittance• Connecticut, Massachusetts

10

Which is not a concern with gross receipts taxes (-100 pts if wrong)?

11

0% 0% 0% 0%

A. Rates are too lowB. Tax pyramidingC. Economic neutralityD. Fairness

WA

OR

MT

IDWY

CA

NV

UT

AZ NM

CO

AK

TX

OK

KS

NE

SD

ND

MN

IA

MO

AR

LAMS AL GA

FL

SC

NCTN

KY

IL

WIMI

IN OHWV

PA

NY

VTNH

ME

MACT

DE

VAMD

RI

HI

NJ

State-Level Gross Receipts Taxes

12

Has a Gross Receipts Tax

Gross Receipts Tax Proposed (2016/2017)

Notable Combined Reporting Legislative Proposals

In 2016 and 2017, no new states have adopted combined reporting, but there continues to be a handful of states that consider it.

─ Alabama – SB 202 attracted a lot of attention in 2015; reintroduced in 2017 (SB 67).

─ Louisiana – Tax Institute studying the issue.

─ New Jersey – SB 982, passed Senate Budget and Appropriations Committee on June 6, 2016.

─ New Mexico – Considered again with SB 1, which failed.

─ Pennsylvania – Considered again in Governor’s budget.

13

CEO Pay Ratio Taxes

─ Impose a surtax based on “CEO-to-median employee wage” ratio as determined for purposes of SEC filing requirements under Dodd-Frank (not implemented).

─ Enacted• Portland, OR (2016) – nation’s first

─ Proposed• Connecticut (H.B. 6373, H.B. 6101)• Illinois (H.B. 3335, S.B. 1563)• Massachusetts (S.B. 1555)• Minnesota (H.F. 65)• Rhode Island (H.B. 5141, S.B. 318)• San Francisco, CA (no language yet)

14

Daily Sales Tax Remittance

─ Concept to establish “real-time” sales tax collection; would require vendors and payment processors to remit sales tax from purchases on a daily basis.

─ Connecticut proposed in 2016 (HB 5636) and again in 2017 (SB 1057 and Substitute SB 1047). – failed• SB 1057/SB 1047 would allow the Commissioner of Revenue

Services to enter into agreements with payment processors to remit sales tax on behalf of retailers.

─ Massachusetts’ Governor Charlie Baker’s FY 2018 Budget Proposal (HB 1) would require third-party payment processors to remit sales tax on behalf of vendors with more than 50 employees.• Resulted in a study of the issue with Commissioner to make a

recommendation.• STRI Study submitted to Massachusetts in September showed

estimated cost of $1.2 billion.

15

Assault on Quill

Are the substantial nexus rules the same for both sales/use taxes and corporate income taxes? (best answer)

17

0% 0% 0% 0%

A. Yes – both have same requirements

B. No – one requires nexus over the activity of the taxpayer

C. Yes – except income tax clearly requires a physical presence

D. No – solicitation by salespersons not a factor for sales tax nexus

Which case changed Complete Auto’s “substantial nexus” test for sales/use taxes (i.e., indirect taxes) and how long after Complete Auto was decided was that case decided? (best answer)

18

A. B. C. D. E.

0% 0% 0% 0% 0%

A. National Geographic –one month

B. National Geographic –2 years

C. Quill – 15 years

D. Quill – 60 years

E. GM v. Tracy – 17 years

South Dakota v. Wayfair, Inc., et al., 901 N.W.2d 754 (S.D. Sept. 13, 2017)

Assault on Quill – Remote Sellers

─ On March 22, 2016, South Dakota enacted S.B. 106, which asserts nexus against remote sellers with $100,000 gross revenue from annual sales in the state or 200 separate transactions involving delivery into the state, effective May 1, 2016.

─ On September 13, 2017, the South Dakota Supreme Court upheld the lower court’s holding that S.B. 106 is unconstitutional under Quill and stated that “[h]owever persuasive the State’s arguments on the merits of revisiting the issue, Quill has not been overruled.”• The court saw “no distinction between the collection obligations

invalidated in Quill and those imposed by S.B. 106.”

─ Petition for a writ of certiorari filed on October 3, 2017 (No. 17-494).

19

Crutchfield, Corp. v. Harding, No. CL17001145-00 (Va. Cir. Ct., filed Oct. 24, 2017)

Assault on Quill – Remote Sellers

─ On September 22, 2017, the Massachusetts Department of Revenue adopted 830 CMR 64H.1.7.• Effective October 1, 2017, the regulation requires an Internet vendor with a

principal place of business outside of Massachusetts to register, collect, and remit sales and use tax if the vendor has more than $500,000 in Internet sales into the state and 100 or more sales into the state during the previous 12 months.

─ The regulation provides that the following activities constitute an in-state physical presence:1) Property interests in and/or the use of in-state software (e.g., apps) and ancillary

data (e.g., cookies) distributed to or stored on in-state customers’ computers or devices;

2) Contracts and/or relationships with content distribution networks resulting in use of in-state servers and other hardware and/or related in-state services; and/or

3) Contracts and/or relationships with marketplace facilitators, and/or delivery companies resulting in in-state services.

─ On October 24, 2017, Crutchfield filed suit in Albemarle County Circuit Court in Virginia, where it is headquartered, against the Massachusetts Department of Revenue challenging the validity of the regulation.

20

Other Statutory and Regulatory Challenges Assault on Quill – Remote Sellers

─ Alabama: Rule 810-6-2-.90.03 (pending litigation)

─ Vermont: Enacted H.B. 873 on May 25, 2016

─ Tennessee: Tenn. Comp. Regs. 1320-05-010.129 (pending litigation)

─ Wyoming: Enacted H.B. 19 on March 6, 2017 (pending litigation)

─ North Dakota: Enacted S.B. 2298 on April 10, 2017

─ Indiana: Enacted H.B 1129 on April 28, 2017 (pending litigation)

─ Maine: Enacted S.P. 483 on June 21, 2017

─ Ohio: Enacted H.B. 49 on June 30, 2017

─ Washington: Enacted H.B. 2163 on July 7, 2017

─ Rhode Island: Enacted H.B. 5175 on August 3, 2017

─ Mississippi: Miss. Admin. Code 35.4.03.09

21

OverviewAssault on Quill – Marketplace Providers

─ Marketplace collection provisions aim to require online and other marketplaces to collect and remit sales and use tax if a retailer sells products on the marketplace.

─ Types of Marketplaces:• “Standard” or “traditional” marketplaces where multiple sellers

sell products, sometimes the same products, on a single platform.

• “Referral” marketplaces is where customers may search for products and are then referred to a place to purchase those products.

22

Legislation Assault on Quill – Marketplace Providers

─ Minnesota: H.F. 1 passed on May 30, 2017, which requires sales/use tax collection obligation on “marketplace providers” that have more than $10,000 in sales into the state unless the retailer selling on the marketplace is already registered to collect Minnesota sales tax.• Effective on July 1, 2019, or sooner if Quill is overturned.

─ Washington: H.B. 2163 passed on July 7, 2017, which on January 1, 2018, requires “marketplace facilitators” whose sales to Washington consumers are $10,000 or more to either: (1)Collect sales/use tax on sales to Washington consumers; or (2)Comply with specific use tax notice and reporting requirements.

─ Rhode Island: H.B. 5175 passed on August 3, 2017, which on January 15, 2018, requires “retail sale facilitators” who have over 200 separate transactions per year into Rhode Island or have more than $100,000 in in-state annual sales to provide informational reporting.

─ Pennsylvania: H.B. 542 passed on October 30, 2017, which on February 1, 2018, requires “marketplace facilitators” with aggregate taxable retail sales in Pennsylvania of at least $10,000 or more to either:(1)Collect sales/use tax on Pennsylvania sales; or (2)Comply with specific use tax notice and reporting requirements.

23

State Remote Seller Collection Authority

─ Since 2005, the following legislation has been proposed:• Main Street Fairness Acts• Marketplace Equity Act• Marketplace Fairness Acts • Remote Transactions Parity Act• Online Sales Simplification Act • No Regulation Without Representation Act

─ Current Legislation in the Congress:• Remote Transactions Parity Act (H.R. 2193)

• Introduced by Rep. Kristi Noem (R-SD) on April 27, 2017 • 49 Cosponsors

• Marketplace Fairness Act of 2017 (S. 976)• Introduced by Sen. Mike Enzi (R-WY) and Dick Durbin (D-IL) on April 27,

2017 • 27 Cosponsors

• No Regulation Without Representation Act (H.R. 2887)• Introduced by Rep. Sensenbrenner (R-WI) on June 12, 2017 • 11 Cosponsors

24

Since the 10th Circuit upheld the constitutionality of Colorado’s use tax reporting and notification law in DMA, no additional states have adopted such provisions—true or false?

25

A. B. C. D. E.

0% 0% 0% 0% 0%

A. True

B. False

Income Tax – Nexus

Romantix Holdings Inc. v. Iowa Dep’t of Revenue, 901 N.W.2d 838 (Iowa Ct. App. May 3, 2017)

Iowa – Intangible Holding Companies ≠ Nexus

─ The Iowa Court of Appeals upheld the Department’s determination excluding an out-of-state holding company from an Iowa consolidated return due to lack of nexus even though it held intangible property used in Iowa by its subsidiaries.

─ Citing Myria Holdings Inc., the court reasoned that it was clear the Iowa subsidiaries and their intangible property were not enough to establish a taxable nexus with Iowa sufficient to remove the parent from the Iowa safe harbor provisions.• In Myria Holdings Inc. v. Iowa Dep’t of Revenue, 892 N.W.2d 343,

2017 WL 1103175 (Iowa March 24, 2017), the Iowa Supreme Court determined that: (1) the parent company’s management and administration activities performed on behalf of the subsidiaries doing business in Iowa did not create nexus; and (2) ownership of subsidiary stock and money from reimbursements fell within the ownership and control safe harbor.

27

Target Brands, Inc. v. Dep’t of Revenue, No. 2015CV33831 (Colo. 2nd Dist. Ct. Jan. 20, 2017)

Colorado - Intangible Holding Companies = Nexus

─ A Colorado district court found that despite lacking any physical presence in Colorado, Target’s wholly-owned subsidiary, TBI, that managed Target’s brands had substantial nexus in Colorado because its IP licenses were used there.

─ The court determined that TBI was “doing business” in the state by: • Choosing to license its IP for use by Target in Colorado; • Relying on Target to present TBI’s IP in the best possible light in

the state; and • Receiving hundreds of millions of dollars in income related to the

use of its IP in Colorado.

─ The court found that Colorado’s assertion of authority over TBI did not violate the Commerce Clause.

28

Swart Enterprises, Inc. v. Franchise Tax Bd., 7 Cal.App.5th 497 (Cal. Ct. App. Jan. 12, 2017)

California – Passive Interest ≠ Doing Business

─ The California Court of Appeal held that a taxpayer passively holding a 0.2% interest in a California-based limited liability company (CA LLC) was not “doing business” in the state for purposes of being subject to California’s franchise tax.

─ Contrasting the statutory term “actively” with the opposite terms “passively” and “inactively,” the court found that the taxpayer did not “actively” engage in any transaction because it had held its investment in the CA LLC for several years prior to the tax year in issue and had no role in its operations.

29

Addback Exceptions

Kohl’s Dep’t Stores, Inc. v. Virginia Dep’t of Taxation, No. 160681 (Va. Aug. 31, 2017)

Virginia – “Subject to Tax” Addback

─ The Virginia Supreme Court found that only the portion of royalties that are actually taxed by another state falls within its “subject to tax” exception to Virginia’s addback statute for corporate income tax purposes. • The Court acknowledged that the plain language of the statute is

ambiguous and that both parties’ respective positions could be supported by the statute. The Court deferred to the Department’s interpretation.

─ The case has been remanded to the Circuit Court to determine the portion of the royalty payments actually taxed by another state.

31

BMC Software, Inc. v. Dir., Div. of Taxation, 30 N.J.Tax 92 (N.J. Tax Court May 24, 2017)

New Jersey – Satisfying the Unreasonable Exception

─ The New Jersey Tax Court found that a subsidiary’s intangible expenses paid to its parent qualified for the state’s “unreasonable” addback exception because the payments were substantively equivalent to an unrelated party transaction.

─ The court held that:1) The “unreasonable” exception does not require showing that the

related-party recipient paid Corporation Business Tax on the income.

2) Showing that the related-party transaction was “substantively equivalent” to an unrelated third party transaction is sufficient evidence for the addback is unreasonable.

32

Local Tax Expansion

Kentucky CATV Association, Inc. v. City of Florence, 520 S.W.3d 355 (Ky. June 15, 2017)

Kentucky – Lifts Ban on Local Taxation of Telecom

─ The Supreme Court of Kentucky held that the state's legislature did not have the power under the state constitution to prohibit municipalities from collecting franchise fees from multichannel video programming (MVP) and communications service providers.

─ As a result, the provision prohibiting local taxation of MVP services was severed from the state's 2005 Telecom Tax and localities are likely to begin taxing TV and Internet providers this year.

34

Streaming Tax Relief of Entertainment And Movies Act of 2017California – No State Legislative Relief For Streaming

─ On January 31, 2017 A.B. 252 was introduced, which would have blocked taxes on streaming video services in California until 2023.

─ A.B. 252 would have prohibited the imposition of Utility User Tax on video streaming services that dozens of localities in California were contemplating over the last year.

─ On April 25, 2017, the bill was retained by committee for study.

35

Upper Moreland Twp. v. 7 Eleven Inc., No. 11 C.D. 2016, 2017 WL 1365591 (Pa. Commw. Ct Apr. 13, 2017)

Pennsylvania – Franchise Tax Struck Down

─ A Pennsylvania township’s application of its local privilege tax on 100% of 7-Eleven’s receipts from franchise stores in Pennsylvania is found to violate the fair apportionment prong (externally inconsistent) of the Complete Auto test because the activities that generated those receipts resulted from interstate economic activities.

─ The court found that the receipts were at least partially from interstate commerce – e.g., receipts from support services that came from 7-Eleven’s corporate headquarters in Texas.

36

Hertz Corporation v. City of Chicago, 2017 IL 119945 (Ill. January 20, 2017)

Illinois – Limitations on Local Extraterritorial Taxes

─ The Illinois Supreme Court held that the extension of Chicago's personal property tax to cars rented from suburban agencies violated the home rule article of the state constitution.

─ The fact that the car rental agencies had locations within in the City of Chicago did not authorize Chicago to require the agencies to collect tax for extraterritorial transactions involving Chicago residents.

─ The court found it immaterial whether the taxed commodity involved services or use of personal property.

37

Dulles Duty Free, LLC v. County, 803 S.E.2d 54 (Va. Aug. 24, 2017)

Virginia – Limitations on Duty-Free Store Taxes

─ The Supreme Court of Virginia found that a county's imposition of a Business, Professional, and Occupational License (BPOL) tax on the gross receipts of an airport duty-free store violated the Import–Export Clause of the U.S. Constitution.

─ The store made 90% of its sales to international customers, and the imposition of the BPOL tax on its gross receipts was in its “operation and effect” a direct tax on the export goods in transit.

─ The BPOL tax could however be applied to the duty-free store's domestic sales.

38

Sales and Use Tax Developments

Wegmans Food Markets, Inc. v. Tax App. Trib. of the State of New York, 2017 WL 5615916 (N.Y. App. Div. Nov. 22, 2017)

New York – Information Services Meet Exclusion

─ New York subjects information services to sales tax, but excludes “the furnishing of information which is personal or individual in nature and which is not or may not be substantially incorporated in reports furnished to other persons.” N.Y. Tax Law § 1105(c)(1).

─ The Appellate Division overturned the Tax Appeals Tribunal’s decision and held that purchased competitive pricing audits are personal and individual in nature and therefore, meet the exclusion and are not subject to sales tax.• Although the information collected for Wegmans is publicly

available, the information was not derived from a singular, widely accessible common source or database and the information furnished to Wegmans was uniquely tailored.

─ The decision cannot be appealed by the Department of Taxation and Finance.

40

D & H Distributing Company v. Comm’r of Revenue, 79 N.E.3d 409 (Mass. 2017)

Massachusetts – Drop Shipment Rule

─ The Massachusetts Supreme Judicial Court held that in-state wholesalers are obligated to collect and remit sales tax on products sold to out-of-state retailers and then delivered to in-state customers (drop shipment sales).

─ The court also held that the state’s drop shipment rule does not violate the dormant Commerce Clause because the same sales tax will be applied if the transaction occurs entirely within the state.

─ Transactions subject to sales tax under the drop shipment rule (as retail sales) are exempt from use tax.

41

Shared Imaging, LLC v. Hamer, No. 1-15-2817 (Ill. App. Ct. June 28, 2017).

Illinois – Use Tax on Property Used Out-of-State

─ The Appellate Court of Illinois held that Illinois use tax was fairly apportioned under Complete Auto Transit, Inc. even though the taxpayer’s property was stored in Illinois and used outside the state.

─ The taxpayer was engaged in the business of leasing trailers and other mobile equipment outfitted with medical devices and instruments. The taxpayer leased its equipment to customers both within and outside of Illinois.

─ The court concluded that the existence of a credit provision, which allows a tax credit for sales and use tax paid to another state, satisfied the fair apportionment requirement of the Complete Auto test because “the danger of multistate taxation is averted.”

42

S. California Edison v. Nev. Dep't of Taxation, No. 67497 (Nev. July 20, 2017)

Nevada – No Remedy for Unconstitutional Exemption

─ The Nevada Supreme Court held that although a state statute exempting only minerals mined in-state from use tax was unconstitutional for violating the dormant Commerce Clause, the utility company was not entitled to a refund because it did not demonstrate the existence of substantially similar competitors that were advantaged by the unconstitutional tax.

─ The court found that all coal-fired power companies in Nevada are subject to use tax for out-of-state coal purchases because Nevada mines do not produce commercially viable coal.

─ The court declined to consider other energy producers to be similarly situated competitors.

43

Books-A-Million Inc. v. S.C. Dep't of Revenue, No. 16-ALJ-17-0113-CC (S.C. Admin. Law Ct. June 6, 2017)

South Carolina – Membership Fees Included in Gross Proceeds

─ The South Carolina Administrative Law Court held that the proceeds from a book retailer’s sales of discount-club memberships to customers in South Carolina are includible in the retailer’s “gross proceeds of sales” and therefore, are subject to sales tax.

─ The court reasoned that, but for the retailer’s sale of books and other tangible personal property, the retailer would not be able to sell discount-club memberships that allow for discounts on books and free shipping on purchases, and concluded that the membership sales constitute “value proceeding or accruing from the sale of tangible personal property.”

44

Det. No. 16-0403, Wash. Dep’t of Revenue, 36 WTD 435 (Dec. 21, 2016, released Aug. 31, 2017)

Washington – Tax Inclusive Pricing

─ The taxpayer, a computer sales and service store, challenged an assessment amount, arguing that it had correctly collected and remitted the sales tax on the net sales price of items and that the pricing was inclusive of sales tax. • Under Washington law, sales tax is generally presumed to not be

included in the sales price unless the seller advertises that the price is tax inclusive.

─ Based on the evidence presented, the Review and Hearings Division found that the taxpayer had been advertising tax-included prices. • Evidence included statements by customers, advertisements, and

invoices.

45

No Intervention on Retroactive Tax Legislation

Which state(s) has passed a retroactive tax law?

47

0% 0% 0% 0% 0% 0%

A. MichiganB. VirginiaC. WashingtonD. KentuckyE. All the aboveF. None of the above

The Erosion of the Carlton Precedent

─ Since Carlton, there have been over 40 retroactive tax legislation cases.• 85 percent of the cases uphold the constitutionality.• At least 20 states have enacted retroactive legislation.

─ One-third of the cases were previously adjudicated on the merits. • Is the power of judicial review being ceded to the Legislative

branch in violation of Separation of Powers?

─ One-half of the decisions have approved retroactive periods of 4 years or more.

48

States with Retroactive Tax Legislation that Reversed Judicial Determinations Post-Carlton

Source: COST amicus brief in Michigan cases

AK

HI

MA

ME

RI

VTNH

NYCT

PANJ

MDDE

VAWV

NC

SC

GA

FL

ILOHIN

MIWI

KY

TN

ALMS

AR

LATX

OK

MOKS

IA

MN ND

SD

NE

NMAZ

CO

UT

WY

MT

WA

OR

ID

NV

CA

DC

49

U.S. Supreme Court Denies Review

─ Denied Petitions• Dot Foods Inc. v. Wash. Dep't of Revenue, 185 Wash.2d 239

(Wash. 2016)• The Washington Supreme Court upheld a retroactive amendment to the

B&O direct seller tax exemption, which was originally enacted in 1983.

• Gillette Comm. Ops. N. Am. v. Mich. Dep’t of Revenue, 312 Mich. App. 394 (Mich. Ct. App. 2015), denying appeal, 499 Mich. 960 (Mich. 2016)

• The Michigan Court of Appeals upheld the enactment of Public Act 282 of 2014, which retroactively rescinding Michigan’s membership in the Multistate Tax Compact effective January 1, 2008.

• In re Estate of Hambleton, 335 P.3d 398 (Wash. 2014)• The Washington Supreme Court upheld a retroactive amendment that

occurred 37 years after the statute was originally enacted.

50

Bonus Questions

Bonus 1: Complete Auto, the case in which the Court proffered the four-prongs Commerce Clause test that state taxes are required to meet to pass muster, dealt with which type of tax? (250 pts)?

52

0% 0% 0% 0% 0%

A. Sales/Use Tax

B. Income Tax

C. Property Tax

D. Severance Tax

E. None of the above

Bonus 2: UDITPA, MTC and COST – what years were those created/formed (500 pts)?

53

0% 0% 0% 0% 0%

A. 1946, 1957, 1959B. All 1959C. 1957, 1967,1969D. 1967, 1970, 1972E. All 1983

Questions?

54

This communication cannot be used for the purpose of avoiding any penalties that may be imposed under federal, state or local tax law.

Contact us

Jeffrey Friedman Partner Eversheds Sutherland (US) LLP202.383.0718JeffFriedman@eversheds-sutherland.com

Douglas LindholmPresident & Executive DirectorCouncil On State Taxation (COST) 202.484.5212dlindholm@cost.org

Nikki DobaySenior Tax CounselCouncil On State Taxation (COST) 202.484.5221 ndobay@cost.org

Michele BorensPartner Eversheds Sutherland (US) LLP202.383.0936MicheleBorens@eversheds-sutherland.com