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KPMG reports: Arkansas, Colorado, District of Columbia

KPMG reports: Arkansas, Colorado, District of Columbia

KPMG’s This Week in State Tax—produced weekly by KPMG’s State and Local Tax practice—focuses on recent state and local tax developments.

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  • Arkansas: The Revenue Legal Counsel issued a legal opinion concerning the sales and use tax collection obligations of an online travel company. With respect to transactions under the “merchant model” for accommodations and rental cars, the legal opinion concludes that the online travel company was a marketplace facilitator that is required to collect and remit tax on the gross proceeds derived from these transactions. Read a September 2020 report

  • Colorado: The Department of Revenue issued a private letter ruling confirming that electronically delivered software and “software as a service” (SaaS) are not subject to sales and use tax. Also, the taxpayer’s backup service provided, in part, through the use of servers owned by the taxpayer, was not taxable because the “true object” of the transaction was not the use of tangible personal property, but was the provision of non-taxable software products and related services. Read a September 2020 report

  • Colorado: The Department of Revenue proposed rules to implement legislation enacted in 2019. Under the proposed rules, domestic corporations having no or de minimis property and payroll can be included in a Colorado combined group. The proposed rules include a measure clarifying that the 2019 law applies with regard to tax periods beginning on and after September 1, 2019.  The Department on September 30, 2020, is conducting a virtual hearing on the proposed rules. Read a September 2020 report

  • District of Columbia: The “Fiscal Year 2021 Emergency Budget Support Act” limits the tax benefits provided to qualified high technology companies (QHTCs). The reduced 6% rate of corporate franchise applicable to these companies is repealed, and QHTCs are subject to the normal corporate franchise rate of 8.75%. Other changes concern the special credits allowed to QHTCs, and the repeal of a personal property tax exemption specific to QHTCs. The Budget Support Act is currently pending congressional review. Read a September 2020 report

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