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California: Senate Bill 972 has been presented to the governor, and if signed, would require the Franchise Tax Board to compile certain tax information on “large taxpayers” and provide that information on an annual basis to two tax committees in the California legislature. An earlier version of this bill would have required the Franchise Tax Board to publish this information on its website. Read a September 2020 report
District of Columbia: The Office of the D.C. Attorney General filed a consumer protection and sales tax enforcement action against an online grocery delivery platform that allows customers to purchase groceries from local stores through an app or website and have the groceries delivered by personal shoppers. The complaint alleges that the platform did not collect the sales tax owed on the platform’s delivery and service fees. In addition, the complaint alleges that a service fee charged to customers caused confusion because it appeared to be a tip for the personal shopper, but was instead retained by the platform to cover its operating costs. The platform’s alleged misrepresentations and omissions regarding the nature of the service fee are detailed in the complaint and form the basis of a claim that the platform violated the D.C. Consumer Protection and Procedures Act. Read a September 2020 report
New Jersey: The state Superior Court, Appellate Division affirmed a New Jersey tax court decision holding that a foreign corporate limited partner (taxpayer) had New Jersey nexus by virtue of owning limited partnership interests in two partnerships operating in the state. On appeal, the corporate limited partner argued that the tax court erred by holding that it had “automatic economic nexus” based on the receipt of partnership income from New Jersey sources. In the taxpayer’s view, the legislature did not intend the “deriving revenue from New Jersey sources” language in the corporation business tax imposition statute to apply broadly to a foreign limited partner whose taxability was governed by separate statutory provisions addressing limited partnerships (enacted at the same time). The taxpayer asserted that these partnership-specific statutes would be rendered superfluous if a corporation automatically became subject to corporation business tax by virtue of deriving receipts from New Jersey sources. The appellate court rejected this argument and determined that the taxpayer had mischaracterized the tax court’s ruling with regard to automatic economic nexus. In the appellate court’s view, the tax court had performed an extensive analysis of whether the taxpayer had constitutional nexus with New Jersey and found that the taxpayer was not a mere passive investor in the partnership, but was part of an integrated enterprise engaged in building homes in New Jersey and was therefore subject to corporation business tax. Read a September 2020 report
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