Tax Developments
December 19, 2006
Ryan & Company Obtains Texas Administrative Decision Exempting Computers and Peripheral Equipment Used to Upload Wireless Telephone Network Software.
Ryan & Company’s Dispute Resolution Group (DRG) recently obtained a decision that a taxpayer
who uploaded computer software onto wireless handsets was engaged in manufacturing wireless
telephones for sale and that the computers and peripheral equipment used by the taxpayer to
upload the software was exempt manufacturing equipment.
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December 12, 2006
Puerto Rico Implements New Sales and Use Tax System.
The Commonwealth of Puerto Rico has implemented a sales and use tax (“sales tax”) to replace
the general excise tax system. On July 4, 2006, the Governor of Puerto Rico signed into law
the Taxpayer Justice Act (Act No.117, H.B. 2193). The new law imposes a
municipal sales tax at a rate of 1.5% (effective July 1, 2006) and the Commonwealth sales
tax at the rate of 5.5%, with an effective date of November 15, 2006.
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December 1, 2006
Nebraska Governor Appoints New State Tax Commissioner.
On November 27, 2006, Nebraska Governor Dave Heineman announced that he has appointed Mr.
Douglas Ewald to be Nebraska's next State Tax Commissioner, effective December 4, 2006.
Mr. Ewald joins the Department of Revenue with extensive private sector experience, having
most recently served as Director of State Taxes for Union Pacific Corporation (UP).
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November 30, 2006
West Virginia Supreme Court Finds “Significant Economic Presence” Constitutional Under Commerce Clause in MBNA America Bank.
On November 21, 2006, the West Virginia Supreme Court of Appeals (the “Court”), the state’s highest court,
issued an opinion in a
de novo review of a lower court decision that held that the Commerce Clause
“substantial presence” test did not require a physical presence for purposes of the state’s Corporation
Net Income Tax.
Tax Comm’r of the State of W. Va. v. MBNA America Bank, N.A., Docket No. 33049 (W.V.,
November 21, 2006).
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October 13, 2006
New Jersey Supreme Court Affirms “Economic Nexus” Under Commerce Clause.
On October 12, 2006, the New Jersey Supreme Court issued a per curiam opinion
affirming a lower court decision that held that the Commerce Clause “substantial
presence” test did not require a physical presence for purposes of the state’s
Corporation Business Tax (corporate income tax).
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September 5, 2006
Companies Urged to Participate in Streamlined Sales Tax Amnesty Program.
Companies that have not collected or remitted sales taxes in 13 states are advised to
participate in an amnesty program that will end September 30th. The program was created
under the Streamlined Sales and Use Tax Agreement; companies can avoid having to pay
sales tax, interest and penalties on uncollected sales taxes.
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August 18, 2006
Companies Doing Business in Ohio Face Major Decisions Regarding New Commercial Activity Tax.
Companies doing business in Ohio should carefully consider how they will approach complying with
the state’s new Commercial Activity Tax (CAT). The Ohio Legislature created the CAT as part of a
major tax reform package in 2005.
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August 10, 2006
New Jersey Adopts Significant Sales and Use Tax Changes.
In a compromise decision between the New Jersey Legislature and Governor Jon Corzine,
the state has enacted a variety of sales and use tax changes geared toward
raising additional sales tax through an increase in the tax rate and by
expanding the tax base to include more services.
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July 19, 2006
Georgia Tax Reform Study Commission Examines State Revenue Sources.
The second meeting of the Georgia Tax Reform Study Commission (Commission)
was held Thursday July 13,
2006 at the Joe B. Adams Conference Center in Camilla, Georgia, led by Representative
Richard Royal. With the goal of modernizing and revitalizing the Georgia revenue
structure, the Commission continued to seek solutions that could enhance and/or
create an equitable and flexible tax system for Georgia.
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June 21, 2006
Florida Enacts Significant Tax Legislation During 2006 Regular Session.
The Florida Legislature approved significant tax legislation during the 2006
regular session, and Governor Jeb Bush signed the tax legislation into law.
Most of this legislation was directed at stimulating business in the state,
particulary in the area of research and development, and is the most progressive
business incentives legislation that has been enacted by Florida in the last eight years.
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June 16, 2006
Georgia Tax Reform Study Commission Holds Inaugural Meeting.
The inaugural meeting of the Georgia Tax Reform Study Commission (Commission)
met on June 12, 2006 at
the Capital Building in Atlanta, Georgia. The meeting was the first in a series
that will be conducted by the Commission this summer and fall throughout the
State of Georgia.
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May 26, 2006
IRS Acquiesces on Application of Federal Excise Tax to Long-Distance Charges.
On May 25, 2006, the U.S. Treasury Department announced the end of the battle
over the taxability of long-distance services. The IRS decided to concede the
issue after several Federal Courts ruled in favor of the taxpayer in this matter.
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May 23, 2006
United States Supreme Court Denies Certiorari in Cuno v. DaimlerChrysler.
The U.S. Supreme Court has refused to hear the
Cuno plaintiffs’ challenge to the
validity of the City of Toledo, Ohio’s property tax abatement program.
Cuno v.
DaimlerChrysler, Inc., 386 F.3d 738 (6th Cir. 2004),
cert. denied.
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May 18, 2006
Texas Governor Signs House Bill 3.
Governor Rick Perry of Texas signed House Bill 3 into law today. House Bill 3 (“HB 3”)
will replace the current Texas franchise tax with an alternative margins tax,
beginning January 1, 2007.
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May 16, 2006
United States Supreme Court Rules in DaimlerChrysler v. Cuno.
The U.S. Supreme Court has unanimously ruled in
DaimlerChrysler Corp. v. Cuno
and
Wilkins v. Cuno that the
Cuno plaintiffs, who challenged the constitutionality
of Ohio's investment tax credit (“ITC”), lacked standing to bring their suit
in the federal courts.
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May 4, 2006
Texas Senate Approves House Bill 3.
On May 2, 2006, the Texas Senate gave final approval for House Bill 3, which is
the cornerstone of Governor Rick Perry’s efforts to lower property taxes by
replacing this revenue with revenue from new tax sources. The Senate’s
approval sends the bill to the Governor, who has twenty days to sign the
bill into law.
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March 29, 2006
Texas Tax Reform Commission Releases Tax Plan.
In a press conference held today, Governor Rick Perry and Chairman John Sharp presented
the Texas Tax Reform Commission’s draft legislation reforming the cap on property tax
rates as well as overhauling the Texas franchise tax with a net margin tax.
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March 2, 2006
United States Supreme Court Hears Oral Arguments in DaimlerChrysler v. Cuno.
The United States Supreme Court heard oral arguments on March 1, 2006 in the cases of
DaimlerChrysler Corp. v. Cuno and Wilkins v. Cuno, Nos. 04-1704 and 04-1724. The cases
concerned whether two incentives used to induce DaimlerChrysler to locate a new auto
plant in Toledo, Ohio, near an exiting plant violated the Commerce Clause of the United
States Constitution.
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February 14, 2006
Due Process Applies to the Enforcement of Texas Unclaimed Property Laws.
An Opinion in favor of a Ryan & Company client was issued in an unclaimed property
case by the Texas Third District Court of Appeals (the "Court") in
Metromedia Restaurant
Services v. Strayhorn, No. 03-05-00006-CV, 2006 Tex. App. LEXIS 1126 (Tex. App--Austin Feb. 10, 2006).
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