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    State & Local Tax

    State & Local Tax


    August 2015
    State & Local Tax Practice Brochure
    Pillsbury's State & Local Tax (SALT) team is your company’s single source for advice and representation on any type of tax or fee in any jurisdiction in the United States. We are the state and local tax planning and litigation advisors to Fortune 50 companies, midcaps, start-ups and high-net-worth individuals.
    New York State Department of Taxation and Finance To Disregard Single-Member LLC Interests for New York Estate Tax
    Authors: Michael J. Cataldo, Paul T. Casas
    In a recent New York State Advisory Opinion1, the New York State Department of Taxation and Finance advised that a federal income tax entity classification election could impact whether property held by a nonresident through a wholly owned limited liability company would be subject to the New York estate tax.
    Hyatt to Make Second Trip to the United States Supreme Court in Continuing Battle with the Franchise Tax Board
    Authors: Annie H. Huang, Michael J. Cataldo, Paul T. Casas

    This alert was also published as a bylined article by Law360 on July 31, 2015.

    Over five years into a personal income tax residency audit by the California Franchise Tax Board (“FTB”), Gilbert Hyatt filed a civil suit in Nevada state court against FTB alleging tortious conduct by FTB auditors. After more than 17 years of litigation, including a previous trip to the United States Supreme Court, the High Court has again agreed to weigh in, this time to decide the extent the United States Constitution requires Nevada to provide the FTB immunity from such a civil suit.
    Five Things You Should Know About the United States Supreme Court decision in Maryland v. Wynne
    Author: Michael J. Cataldo
    On May 18, 2015, the United States Supreme Court ruled in a 5-4 decision that Maryland’s personal income tax scheme violates the Commerce Clause of the United States Constitution by denying residents a full credit for personal income taxes paid to other states while subjecting nonresidents to personal income tax on all income derived from Maryland sources.
    Five Things to Know about New Jersey’s Taxation of Convertible Virtual Currency
    Authors: Richard E. Nielsen, Michael J. Cataldo, Paul T. Casas
    On March 10, 2015, the New Jersey Division of Taxation issued Technical Advisory Memorandum TAM-2015-1, explaining its policy regarding convertible virtual currency.1
    Franchise Tax Board California Competes Tax Credit Review Procedures
    Authors: Michael J. Cataldo, Paul T. Casas

    As mentioned in: Law 360
    The Franchise Tax Board will begin reviewing California Competes Tax Credit agreements of most credit recipients in July of this year, and may recommend recapture of the credit if recipients fail to meet the conditions set forth in those agreements.

    Four Things You Should Know About the Supreme Court’s Decision in Direct Marketing
    Authors: Jeffrey M. Vesely, Kerne H. O. Matsubara, Michael J. Cataldo, Paul T. Casas
    On March 3, 2015, the United States Supreme Court overturned the Tenth Circuit Court of Appeals’ decision in Direct Marketing Association v. Brohl. The Supreme Court held that the Tax Injunction Act (“TIA”), which bars federal courts from restraining the assessment, levy, or collection of state taxes, did not divest the federal district court of jurisdiction to decide whether Colorado’s use tax reporting provisions violate the Commerce Clause of the United States Constitution.
    San Francisco Gross Receipts Tax Update: New Regulations Impact Returns Due Today
    Author: Michael J. Cataldo
    The San Francisco Office of the Treasurer and Tax Collector recently issued Gross Receipts Tax regulations, tax return filing instructions and other guidance addressing major changes to how owners of disregarded entities are taxed, combined reporting, and procedures for requesting a two-month extension of time to file returns that are otherwise due today.
    Court of Appeal Holds Transfer Tax Applies to Legal Entity Changes in Ownership
    Authors: Craig A. Becker, Kerne H. O. Matsubara, Matthew F. Burke
    In 926 North Ardmore Avenue, LLC v. County of Los Angeles,1 the 2nd District Court of Appeal held that Proposition 13 changes in ownership prompted by transfers of legal entity interests should also be characterized as “realty sold,” resulting in the imposition of realty transfer taxes under the California Documentary Transfer Tax Act in cases even where no real property interests are transferred at all.
    United States Supreme Court to Review Ruling in Direct Marketing
    Authors: Jeffrey M. Vesely, Michael J. Cataldo, Paul T. Casas
    On July 1, 2014, the United States Supreme Court agreed to review the 10th Circuit Court of Appeals decision in Direct Marketing Association v. Brohl.1 The Court of Appeals held that federal courts lack jurisdiction under the Tax Injunction Act (“TIA”) to address Direct Marketing Association’s (“DMA”) challenge to Colorado’s use tax notice and reporting provisions.

    Ocean Avenue LLC v. County of Los Angeles Affirmed; AB 2372 Passes Assembly
    Authors: Craig A. Becker, Matthew F. Burke
    On June 3, 2014, in a published decision, the California Court of Appeal for the Second Appellate District affirmed the Superior Court ruling in Ocean Avenue LLC v. County of Los Angeles, holding that even though 100 percent of an entity was sold, a reassessable change in ownership of the entity’s real property did not occur because no one person obtained more than 50 percent of the entity. Assembly Bill 2372 would change that result by requiring reassessment of an entity’s realty if 90 percent or more of its ownership interests were sold within a three year period, even if no one owner acquired more than 50 percent.
    Lingering Questions About the San Francisco Gross Receipts Tax
    Authors: Michael J. Cataldo, Paul T. Casas
    The first installment payment for the new San Francisco Gross Receipts Tax is due April 30, 2014. Many questions about the new tax remain as this deadline approaches. While the City has provided some relief from installment underpayment penalties, taxpayers need answers to these questions to accurately determine their tax liability.
    Federal Rule and Ninth Circuit Opinion Create Huge Opportunities on Indian Land
    Lessees of Indian land can pursue refunds of property taxes paid on their permanent improvements and should appeal future assessments.
    Authors: Blaine I. Green, Matthew F. Burke
    In a set of comprehensive regulations affecting non-agricultural leasing on Indian land, the Department of the Interior, Bureau of Indian Affairs made sweeping changes and largely exempted property taxes on permanent improvements, possessory interest taxes on leasehold interests held by non-tribal members, and other state and local taxes on activities conducted by non-members on leased Indian land. In addition, a recent Ninth Circuit Court of Appeals decision affirmed that the taxes on permanent improvements were never lawful. Taxpayers in California that lease tribal land should immediately consider filing suits for refund and assessment appeals after receiving their tax bills.
    Go-Biz Announces California Competes Tax Credit Application Period – And It Ends in Less Than One Month
    Author: Michael J. Cataldo
    On March 18, 2014, Go-Biz notified the public that it will only accept California Competes Credit applications for the current fiscal year between March 19, 2014 and April 14, 2014.
    70 Days and Counting: Clock Is Ticking to Claim Embedded Software Tax Exemption
    Authors: Lawrence L. Hoenig, Craig A. Becker, Richard E. Nielsen, Dianne L. Sweeney
    The amount of non-taxable embedded software being taxed in California is a staggering number. While companies own assets with millions of dollars of embedded software, few companies are maximizing their property tax savings through the embedded software exemption. The good news is that it is not too late to dig in and maximize your potential tax savings. Most businesses have until May 7, 20141 to file their annual Business Property Tax Statements (Form 571-L) with California counties.
    Deadline Approaching for California’s New Employment Credit
    Author: Michael J. Cataldo
    Beginning January 1, 2014, California has replaced the Enterprise Zone Hiring Credit with the New Employment Credit and the California Competes Credit1, each of which may be used to offset the Personal Income Tax and Corporation Tax.
    GO-Biz Finalizes Proposed California Competes Tax Credit Regulations
    Authors: Michael J. Cataldo
    The Governor’s Office of Business and Economic Development (“GO-Biz”) releases final proposed regulations on the California Competes Tax Credit.
    GO-Biz Releases California Competes Tax Credit Draft Proposed Regulations
    “This article was subsequently published in the Council on State Taxation’s email publication on December 20, 2013.”
    Author: Michael J. Cataldo
    On November 27, 2013, the Governor’s Office of Business and Economic Development (“GO-Biz”) released draft proposed regulations on the recently enacted California Competes Tax Credit, and has scheduled workshops throughout California for public comment.
    California Tax Board Provides Guidance on the Broadened Definition of ‘Retailer Engaged in Business in This State’
    Authors: Annie H. Huang, Jeffrey M. Vesely, Paul T. Casas
    On May 30, 2012, the State Board of Equalization (“SBE”), approved pro-posed amendments to the California Code of Regulations, Title 18, section 1684 (“Proposed Regulation”). The Proposed Regulation attempts to provide guidance as to the meaning of the broadened statutory definition of “retailers engaged in business in this state.” The statutory definition now includes retailers who are members of “commonly controlled groups,” as well as retailers who enter into agreements with “a person or persons in this state” who meet certain minimum thresholds.
    California’s Latest Tax Amnesty Program Begins August 1, 2011
    Author: Michael J. Cataldo
    The Franchise Tax Board (“FTB”) will begin implementing California’s recently-enacted Voluntary Compliance Initiative for reporting Abusive Tax Avoidance Transactions (“ATATs”) and certain offshore financial arrangements (“OFAs”) on August 1, 2011.1

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