About This Blog
Sales tax is one of the most interesting, and challenging, taxes. It’s interesting because it involves clients in every possible industry. Every active business has potential sales tax exposure, no exceptions! And unfortunately sales tax compliance is particularly difficult for two, specific reasons. First, the tax is perhaps the most fact-dependent – seemingly inconsequential changes in the underlying facts can transform a nontaxable sale into a taxable one. Second, these rules are constantly changing. It’s tough enough to keep up with these changes in just one state. But many vendors, especially those selling over the internet, have to keep abreast of these changes in multiple states. So it’s easy to fall behind on sales tax compliance.
With this blog, we hope to keep you up to date on impactful changes in the sales tax compliance, especially in New York State. We’ll review legislative and administrative changes in the sales tax; we’ll discuss new sales tax case law; and we’ll highlight the enforcement initiatives and tactics we’re seeing while defending businesses in sales tax audits. We hope you find this content as interesting as we do. Please contact us with any questions.
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Sales Tax Cases from the TiNY Blog for August 17, 2023
Here are the sales tax cases from the TiNY Blog for the week of August 17, 2023.
Comment
Matter of Objet LLC
In a decision with significant implications for the sales taxation of artwork, the New York Tax Appeals Tribunal ruled on February 28 that a $7 million painting (at least a one-half share in the painting) was validly acquired for resale resulting in a six-figure sales tax refund for a co-owner of the painting. Tribunal decisions on sales tax are significant in their own right, since they are somewhat rare and (as opposed to administrative law judge rulings) they become binding precedent. But the Objet LLC ruling should have particular relevance to the art industry since it tackles two issues that factor prominently in the high-stakes sales and related tax structuring that occur in the industry: one being the form-over-substance nature of sales tax, and the other being the proper analysis for determining when property is purchased “exclusively for resale”.
Local Sales Taxes on Solar-Generated Electricity
In 2015, the New York Tax Law was amended to provide exemptions from sales and use tax for certain sales of electricity generated by residential or commercial solar energy systems and sold under a written solar power purchase agreement (“PPA”) (See N.Y. Tax Law §§ 1115(ee)(2), 1115(ii)(2); see also TSB-M-15(5)S). These exemptions were in addition to the already existing sales tax exemptions for the sale and installation of residential and commercial solar energy systems equipment (See Tax Law §§ 1115(ee)(1), 1115(ii)(1); see also TSB-M-05(11)S and TSB-M-12(14)S).
Florida Finally Enacts Sales Tax Economic Nexus Legislation
After several years of failed bills, Florida has finally joined the other 43 states that have passed economic nexus threshold for sales and use tax purposes in the wake of the U.S. Supreme Court’s decision in South Dakota v. Wayfair Inc. On April 19, 2021, Governor Ron DeSantis signed S.B.50 that enacted legislation imposing a sales tax collection requirement on both remote sellers and marketplace providers.
Sales Tax Cases from the TiNY Blog for the Week of March 25, 2021
Here are the sales tax cases from the TiNY blog for the week of March 25, 2021.
Matter of M & Y Developers, Inc.; Division’s Rep.: Anita Luckina; Petitioner’s Reps.: Joshua Lawrence and Timothy Noonan; Articles 28 and 29
Because this was handled by Hodgson Russ, we’ll forego editorializing and provide just the facts.
You can read the TiNY recap of the ALJ determination here. By way of summary: Petitioner paid sales tax on purchases of concrete used in foundation work for building projects. Petitioner then sought a refund for the sales tax it paid, claiming that the concrete purchases qualified as nontaxable installations of capital improvements. The ALJ determined that the transactions constituted taxable purchases of tangible personal property because it was Petitioner, and not the concrete vendor, who was responsible for the installation of the concrete.
Matters of 608 Franklin, LLC and Evergreen Gardens, LLC; Division’s Rep.: Melanie Spaulding; Petitioners’ Rep.: Herschel Friedman; Articles 28 and 29
We lumped these two cases together because they present pretty much identical facts, legal issues, and outcomes. Indeed, the opinion sections of each decision contain virtually identical structure and language. You can read our full recaps of both ALJ Determinations here and here. The issue in these cases was whether security services provided at real property construction projects were taxable.
Matter of 44th Enterprises Corporation et. al.; Judge Russo; Division’s Rep.: Osborne Jack; Petitioners’ Reps.: Amit Shertzer and Kevin A. Fritz; Articles 28 and 29
The sales taxation of exotic dancing and transactions conducted in adult entertainment establishments has a long history before the Division of Tax Appeals and the New York courts. This case presents the most recent chapter.
Matter of Shawn McKee Enterprises, Inc.; Judge Gardiner; Division’s Rep.: Adam Roberts; Petitioner’s Rep.: Jennifer Koo; Articles 28 and 29
This case examines the operation of New York’s resale exemption and the limits of the protection conferred by resale exemption certificates.
Matter of TheStreet.com, Inc.; Judge Maloney; Division’s Rep.: Elizabeth Lyons; Petitioner’s Reps.: Nicolas Montorio and Janet Bernier; Articles 28 and 29
When it comes to sales tax, form matters. And in this case, the imprecise and somewhat contradictory evidence regarding the form of what should have been a nontaxable equity purchase caused the Judge to sustain a sizable sales tax bill.
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