With more and more companies providing mixtures of services and tangible personal property in recent years, states have responded with taking aggressive positions on taxes. Many states have attempted to find an entire transaction taxable even though the sale of tangible personal property is just a small part of a transaction that otherwise involves providing non-taxable services. In Catalina Marketing Sales Corp. v. Dept. of Treasury, the Michigan Supreme Court threw out the state’s “real object” test and replaced it after finding the Treasury Dept. was going too far in its use. The case has been sent back to the Tax Tribunal to apply the new test, so the final result remains in the balance on how the new test will be applied.
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This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.
Read this article from CCH’s Journal of Taxation of Financial Products.