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KPMG reports: Missouri (sales tax exemption); Texas (franchise tax nexus); Utah (arm’s length transactions)

KPMG reports: Missouri, Texas, Utah

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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  • Missouri: The Department of Revenue ruled that an online marketplace used by a farmer to sell beef raised on a farm did not qualify as a “marketplace” for purposes of the “farmer’s market” exemption from the sales and use tax.
  • Texas: The Comptroller determined that the taxpayer (a California company operating an online platform that allowed software developers to sell digital products to consumers and allowed third-party marketers to advertise a software developer’s products) did not have franchise tax nexus with Texas because it lacked a physical presence in the state.
  • Utah: The state’s Supreme Court affirmed a lower court’s decision that Utah’s discretionary authority statute (measures allowing the taxing authority to allocate income, deductions, etc., among affiliated entities to clearly reflect income) is substantially similar to IRC section 482 and thus is to be interpreted by applying the federal regulations under IRC section 482. The Utah Tax Commission had invoked its discretionary authority statute to disallow royalty deductions made by the taxpayer to a related entity. The high court affirmed that the tax authority was prevented from exercising its discretionary authority because the transactions were at arm’s length (as defined pursuant to IRC section 482).

 

Read more at KPMG's This Week in State Tax

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