State Tax Headlines

Payments a Vermont insurance company received from an Oklahoma taxpayer for intellectual property consisting of trademarks and operating practices did not create sufficient nexus to subject it to the Oregon corporation excise (income) tax, the Oklahoma Supreme Court has held. The insurance company was established under the laws of Vermont by an international restaurant corporation, to insure various risks of the corporation and its affiliates. In establishing the insurance company, the corporation transferred the intellectual property to the insurance company to meet the capitalization requirements of Vermont for an insurance business.

The Vermont Senate has approved a modified version of the House’s bill that, if enacted, would update the state’s conformity with federal income tax laws for Vermont personal and corporate income tax purposes and increase the corporate income minimum tax for corporations with gross receipts in excess of $2 million (TAXDAY, 2012/04/02, S.14).

A Mississippi trial court applied an incorrect arbitrary and capricious standard of review and improperly gave the Department of Revenue the benefit of a rebuttable presumption when reviewing a taxpayer’s challenge to the imposition of corporate income tax and the application of an alternative apportionment method.

An out-of-state company that employed merchandisers in Minnesota was subject to state corporate franchise tax because the activities of the taxpayer went beyond the mere solicitation of orders within the meaning of P.L. 86-272. Merchandisers employed by the taxpayer, a company that distributed and sold wristwatches and jewelry to retail stores, generated and submitted weekly reports to their managers; completed and maintained detailed floor maps of each retailer’s watch department; and conducted training presentations and informational seminars for the retailers’ sales associates.

The denial of an 85-year-old disabled taxpayer’s application for a New Jersey homestead property tax reimbursement for tax year 2010 was upheld because she did not pay her property taxes in full by June 1, 2011, as mandated by statute. The taxpayer acknowledged that the taxes on her property were not paid in full by the deadline but testified that due to a knee injury and rehabilitation, she was physically unable to pay her bills. According to the Director of the New Jersey Division of Taxation’s interpretation of the law, a taxpayer is not eligible for a homestead property tax reimbursement unless all taxes due for the relevant year are paid by June 1.

The Kentucky Supreme Court ruled that a 100-acre parcel owned by Prestonsburg Industrial Corporation (PIC) did not qualify for exemption from property taxes as property belonging to a purely public charity within the meaning of Kentucky Constitution §170. PIC was founded by a group of local businessmen, as a private nonprofit corporation, to attract business and industry to Prestonsburg for economic development.

Online retailer Amazon.Com will begin to collect and remit Texas sales tax on July 1, 2012, pursuant to an agreement reached between the company and Texas Comptroller of Public Accounts Susan Combs. Under the agreement, Amazon also plans to create at least 2,500 jobs over the next four years and make at least $200 million in capital investments in the state.

The Idaho Supreme Court ruled that Section 7 of the Idaho Constitution (Immunity Clause) did not grant an Idaho legislator privilege from the limitations period to timely file an appeal of a personal income tax deficiency assessment. Consequently, because the taxpayer legislator failed to timely file his appeal, the lower court did not have subject matter jurisdiction to hear the appeal.

A bidder’s appeal in a Delaware property tax foreclosure sale was denied because the owner had properly redeemed the subject property. The owner paid the appropriate amount for redemption and a 20% premium of $5,000 to the sheriff, who subsequently refunded to the bidder its purchase price and premium.