Source: https://www.thetaxadviser.com/issues/2007/apr/currentcorporateincometaxdevelopments-partii.html
Timestamp: 2019-04-19 10:29:31+00:00

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Two California Supreme Court decisions address whether the entire gross proceeds of certain treasury activities should be included in the sales factor.
A lawsuit has been filed in New Jersey challenging the Constitutionality of the throw-out rule.
Texas legislation modified the state’s franchise tax to provide a margins tax.
During 2006, numerous state statutes were added, deleted or modified; court cases were decided; regulations were proposed, issued and modified; and bulletins and rulings were issued, released and withdrawn. Part I of this article, in the March 2007 issue, focused on nexus, Internal Revenue Code (IRC) Sec. 338(h)(10) transactions, allocable/apportionable income and tax base. Part II, below, covers some of the more important developments in apportionment formulas, unitary groups/filing methods, administration and other significant corporate state tax issues.
A multistate corporation’s business income is apportioned among the states using an apportionment percentage for each state having jurisdiction to tax the corporation. To determine the apportionment percentage, a ratio is established for each of the factors included in the state’s formula. Each ratio is calculated by comparing the corporation’s level of a specific activity in the state to the total corporation activity of that type everywhere; the ratios are then summed, weighted (if required) and averaged to determine the corporation’s apportionment percentage for the state. The apportionment percentage is then multiplied by total corporation business income.
While apportionment formulas vary, many states use a three-factor formula that includes sales, payroll and property. Because use of a higher-weighted sales factor generally provides tax relief for in-state corporations, most states accord more weight to the sales factor than to the other factors. Changes in the apportionment formula may also be used to provide relief or tax benefits to specific industries or to reflect properly the operations of a particular industry. Recent apportionment developments are summarized below.
Among other provisions, HB 1001, Laws 2006, provided for a transition to a single-factor formula for tax years beginning after 2010. The sales factor will be weighted at 60% for 2007; 70% for 2008; 80% for 2009; 90% for 2010; and 100% starting in 2011.
HB 859, Laws 2006, increased the corporate income tax sales-factor weighting from 60% to 70%.
For tax years beginning after 2006, HB 4874, Laws 2006, provided a single-sales-factor apportionment for taxpayers whose principal business in the state is manufacturing or any form of collecting, buying, assembling or processing goods and materials within the state, or selling, distributing or dealing in tangible personal property within the state. Qualifying taxpayers can take advantage of any resulting tax savings on a phased-in basis for tax years 2007–2010, relative to their tax liabilities owed under the previous standard four-factor double-weighted sales-factor apportionment formula.
An administrative law judge (ALJ) ruled 52 that an interstate pipeline company could include in its payroll factor compensation paid to a parent for personnel that performed operational and administrative functions for the company. The ALJ explained that the “payroll factor” statute does not require that compensation be paid to direct employees and can include amounts paid for “loaned” nonemployees that perform the same services as direct employees, because both contribute to income production.
In another ruling, an ALJ held 53 that a truck manufacturer had to source to Alabama (i.e., include in the numerator of the sales factor) sales from trucks/parts that were ultimately delivered to customers in the state, even though initial physical delivery and title passage occurred at its out-of-state facility, when third-party carriers retrieved the products on behalf of the Alabama customers.
The most significant apportionment developments during 2006 were the California Supreme Court’s decisions addressing whether the entire gross proceeds generated by certain treasury activities should be included in the sales factor. The state supreme court affirmed 54 the court of appeal to hold that the entire gross proceeds received by Microsoft Corp. on redemption of marketable securities at maturity constituted “gross receipts” under (1) the state’s definitional provisions, (2) the legislative history behind the Uniform Division of Income for Tax Purposes Act (UDITPA) and (3) prior decisions of the State Board of Equalization (SBE). However, the court held that “in this instance,” the Franchise Tax Board (FTB) met its burden of proving by “clear and convincing evidence” that the standard apportionment formula did not fairly represent the extent of Microsoft’s business activity in California. Under the facts, Microsoft’s income from marketable securities constituted 2% of total income and 73% of gross receipts.
Similarly, in General Motors Corp., 55 the state supreme court affirmed in part and reversed in part a court of appeal decision, remanding the case for further proceedings consistent with its Microsoft decision. Specifically, the state supreme court held that a repurchase agreement is more closely analogous to a secured loan than a sale for UDITPA purposes; thus, only the interest received under the agreement should be treated as a gross receipt. With regard to marketable securities held until maturity, the court stated that the conclusion in Microsoft applied equally to the marketable securities held to maturity by General Motors. Because neither the trial court nor the appeals court had occasion to address the FTB’s alternative apportionment- formula arguments, the state supreme court remanded the case for further proceedings, to allow the FTB to make this case. The court of appeal then remanded the case to the trial court for examination of the distortion issue. With respect to the application of the research credit issue in General Motors, the court held that only the taxpaying corporation that performed the research is entitled to the credit.
The state supreme court declined to review two other “gross versus net sales factor” cases (Toys “R” Us, Inc., 56 and The Limited Stores, Inc. 57) that it had previously accepted and put on hold, sending them back to the courts of appeal with instructions to vacate their prior decisions and reconsider in light of the court’s recent rulings in Microsoft and General Motors.
The FTB also proposed regulations section 25137-14, providing detailed rules on the apportionment of income earned by mutual fund service providers. In general, the proposed regulation addresses the types of services performed by these businesses and offers rules on the corresponding sales-factor assignment of receipts derived from these services. The proposed regulation adopts a shareholder-location sales factor, under which the sales factor is as-signed using a ratio of shares owned by shareholders in California to shares owned by shareholders located everywhere.
Amended Income Tax Rule 35.01.550 provides exceptions to the general rule that income-producing activity for purposes of the sales factor generally does not include transactions and activities performed on behalf of the taxpayer. The amendments provide that income-producing activity includes transactions and activities performed on behalf of a taxpayer when (1) the taxpayer sells its product exclusively through independent contractors; (2) the independent contractors can work only for the taxpayer; or (3) excluding the transactions and activities of the independent contractors would lead to an unreasonable result. The amendments also provide that only the direct costs paid by the taxpayer are considered.
The DOR issued amended rules 64 addressing activities that result in the assignment of gross receipts to the state for purposes of the apportionment-formula sales factor; how to calculate the payroll and property factors; and apportionment and allocation for financial organizations and loan companies.
The DOR clarified 65 that goods, merchandise or property imported from outside the U.S. and received in a Louisiana foreign-trade zone are deemed received outside of the state and are excluded from the numerator of the revenue ratio.
Amended Reg. Sec. 03.04.03.08(B) provides that the items in both the numerator and denominator of each factor must be adjusted by the applicable statutory addition and subtraction adjustments.
The Appellate Tax Board (ATB) held 66 that electricity is not tangible personal property for purposes of computing the sales factor. Based on this decision, the DOR explained 67 that receipts from the sale of electricity will be sourced as “other than sales of tangible personal property,” and that this apportionment method will be applied to all tax years within the statute of limitations (SOL) for assessment or abatement.
In another development, the DOR amended Reg. 830 CMR 63.38.7, regarding the sales-factor calculation for mutual fund sales corporations, to address the assignment of mutual fund sales to Massachusetts in related-party transactions.
The Department of Treasury (DOT) provided guidance and standardized its policy on the application of the “costs of performance” method as it pertains to the single-business-tax (SBT) sales factor. 68 This guidance applies to the provision of services, the sale of intangible and real property and the rental of property.
Amended rule NJAC 18:7-8.11 clarified that, if a trademark licensee is authorized to sell a trademarked product both in and outside the state, the licensor is considered to be using the product in New Jersey for apportionment purposes based on the same ratio as the licensee’s in-state revenue relative to revenue from all sources.
The state supreme court affirmed 72 that a subsidiary without employees could not impute a payroll factor based on the use of affiliated-company employees or independent contractors, for either corporate franchise or net income tax purposes. The subsidiary had paid for the imputed services using intercompany accounts, booking these costs as payroll expenses.
Amended Rules 34 TAC 3.549 and 34 TAC 3.557 provide that, for reports due after April 20, 2006, receipts from the servicing of loans secured by real property are apportioned to the location of the real property that secures the loan being serviced. Membership or enrollment fees paid for access to benefits are receipts from the sale of an intangible asset and are apportioned to the payer’s legal domicile.
The DOT explained 73 that, for corporate income tax purposes, capital gain from the sale of stock earned by an out-of-state-headquartered affiliate included in an in-state combined corporate income tax return should be sourced to Virginia for sales-factor purposes, because the affiliate’s income-producing activity resulting in the capital gain occurred in the state based on costs of performance.
In another development, the DOT ruled 74 that a perishable food-products manufacturer had to source sales ultimately shipped to out-of-state wholesaler distribution hubs or unrelated distribution centers to Virginia, because they were held at in-state refrigerated loading docks rented by the purchasers for two to three days prior to their ultimate transportation outside the state.
In another development, the state tax appeals commission held 76 that the sale of telephone directory advertising constitutes the sale of a service, rather than the sale of tangible personal property, because its purchasers are the advertising customers, not the directory recipients.
A DOR hearing officer ruled 78 that a taxpayer was required to include four subsidiaries (a holding company, financing company, trademark company and real estate investment trust (REIT)) in its combined corporate income tax return, because the group was under common ownership and common management; had reconciled accounting systems; and exhibited substantial interdependence, integration and ties at its basic operational levels. In addition, the company could not claim a deduction for dividends received from the REIT, because such intercompany transactions had to be eliminated on the state combined income tax return.
In another development, the SBE ruled 80 that a company filing state corporate franchise/income tax returns could not include insurance company subsidiaries in a state combined report, despite claims that their exclusion resulted in distortion of noninsurance-company income attributable to California sources.
The DOR adopted amended Rule 560-7-3-.13 on the filing of consolidated returns.
Although the taxpayers filed income tax returns on a water’s-edge basis, the state tax commission ruled 81 that the election was barred, because the taxpayer had not filed water’s-edge election Form 14, Idaho’s Water’s Edge and Consent Form.
The DOR ruled 83 that a retailer was required to file a combined adjusted-gross-income tax return with its two wholly owned royalty and management subsidiaries, to better reflect its Indiana-source income.
The DOR similarly ruled 84 that a group of affiliate banks and credit card companies that were deemed to be operating as one interdependent unitary business was required to file a combined financial institutions tax return.
The DOR also required 85 a company to file a combined return with various affiliates that sold similar products or operated as procurement companies, to more fairly reflect the overall income earned in the state by the unitary business.
In the legislative area, HB 1001, Laws 2006, required a corporation that files combined income tax returns to petition the DOR within 30 days after the end of the taxpayer’s tax year for permission to discontinue filing combined returns.
The court of appeals reversed the trial court to hold 86 that 2000 legislation retroactively prohibiting refund claims based on unitary return filings for years prior to 1996 exceeded Constitutional limits and violated the taxpayers’ due process rights. Accordingly, the previous summary judgment in the DOR’s favor was reversed, and the case was remanded to determine whether, on its merits, the taxpayers were entitled to their pending refund claims. Unitary filing was formally prohibited in the state in 1996.
quests to file a consolidated or combined return to be received prior to the date set for filing the SBT (or the extended due date) by the proposed consolidated or combined group’s parent.
The state supreme court reversed 89 a tax court decision to hold that a multinational firm did not have to include its 99% distributive share of net income and apportionment factors from its French-organized and operating partnership (MPF) in determining its in-state unitary taxable income. When the MPF’s shareholders subsequently invoked the Federal “check-the-box” regulations to treat the MPF as a partnership, it did not alter that entity’s foreign nationality.
A state chancery court held 9 0 that the state consolidated return provisions, requiring that each member of an affiliated group carry on all of its business activities solely in the state to be eligible to file on a combined basis, violated the Commerce Clause.
An ALJ found 91 that a distribution company successfully demonstrated arm’s-length intercompany pricing with its parent and, thus, was not required to file a combined report for Article 9-A state franchise tax purposes.
State rules were amended 92 to provide that taxpayers in a unitary group including both financial organizations and nonfinancial corporations must file a single unitary combined return.
The Department of Taxes adopted regulations section 1.5862(d), addressing unitary combined reporting requirements, effective for tax years beginning after 2005.
For tax years beginning after 2004, HB 31, Laws 2006, generally conformed state law to the Federal income tax rules for taxation of trusts, estates and their beneficiaries, and conformed state law to the Federal tax classification of business trusts.
Twice during 2006, the San Francisco county superior court held that the annual limited liability company (LLC) fee is unconstitutional. In Northwest Energetic, it held 94 that the fee was unconstitutional when applied to an LLC that had registered to do business in the state, but had never actually commenced any activities there. In Ventas Finance I, 95 the court went further, and held that the fee cannot be reformed to add an apportionment mechanism. Following the Northwest Energetic decision, the FTB provided guidance on filing related protective refund claims for the LLC fee. 96 Both cases have been appealed. In the meantime, the FTB is required to enforce the statute until the appellate court issues a final determination that it is unconstitutional. LLCs that have paid such fees may file protective refund claims for any years open under the SOL.
In another development, the FTB announced 97 that each series within a Delaware series LLC is a separate business entity for franchise tax purposes.
For tax years beginning after 2005, SB 638, Laws 2006, eliminated the optional group income tax returns that partnerships, S corporations, trusts or estates or other passthrough entities previously were allowed to file on behalf of their nonresident individual owners. The new law requires all such businesses to pay income taxes at the highest marginal rate (currently, 5%) on each nonresident member’s share of income from the business, if the income is at least $1,000. The new law also clarifies that S corporations, LLCs, limited liability partnerships and limited partnerships are subject to the $250 business entity tax, whether they are formed under the laws of Connecticut or another jurisdiction.
New Income Tax Rule 35.01.01.050 clarified that LLCs and members will be treated according to their Federal classification and that the income tax administrative rules apply in accordance with that classification, even though the LLC and member may not be specifically mentioned in a rule.
Effective for tax years beginning after 2005, HB 403, Laws 2006, provided that a disregarded entity doing business in the state can be included in its parent’s return; S corporations can be included in a state consolidated return; and Kentucky income tax credits from lower-tiered passthrough entities can flow through to the ultimate individual owners.
In another legislative development, HB 1, Laws 2006, replaced the alternative minimum calculation with a new limited liability entity tax that will be imposed on corporations and limited liability passthrough entities (except those entities specifically exempted), effective for tax years beginning after 2006.
In an August 22, 2006 letter to the Kentucky Society of Certified Public Accountants, 99 the DOR explained that withholding from nonresident individuals is allowed only for nonresident individual partners in a general partnership for calendar years ending Dec. 31, 2005 or Dec. 31, 2006. Additionally, recently enacted HB 1 eliminates entity-level income taxation on passthrough entities and restores provisions that require nonresident withholding from individual partners, members and shareholders for tax years beginning after 2006.
SB 319, Laws 2006, clarified that for tax years beginning after 2005, business trusts not taxed as corporations for state purposes are taxed as pass-through entities and subject to the passthrough entity (PTE) tax. The business trust will pay the PTE tax based on the share of income distributed to the beneficiary of the business trust that is a nonresident or nonresident entity.
Amended 20 NYCRR section 1-2.6 and Parts 3 and 4 provide guidance on the computation of tax under Article 9-A for corporations that are partners in partnerships or members of LLCs treated as partnerships under Article 9-A.
SB 1741, Laws 2006, provided that, for tax years beginning after 2006, the corporate franchise tax will be imposed on LLCs that elect to be taxed as C corporations for Federal income tax purposes.
SB 300, Laws 2006, generally granted automatic S corporation state tax treatment for corporations that elect S status for Federal income tax purposes beginning in 2006.
The DOR ruled 101 that, when computing a corporation’s excise tax base, the portion of income or loss that has been passed through to the taxpayer, but reported on the Tennessee excise tax return of a second-tier limited partnership, should be deducted from (or added to, in the case of a loss) the taxpayer’s Federal taxable income or loss before the net operating loss and special deductions.
The DOR explained 105 that, because the state’s income tax policy “piggybacks” that of the IRS, tax shelters that are listed and deemed abusive by the Service will be considered abusive for Louisiana income tax purposes.
The DOR explained 106 the enactment of new penalty provisions applicable to taxpayers, return preparers and promoters of abusive tax shelters and the manner of their enforcement.
The Department of Taxation and Finance adopted rule 20 NYCRR Part 2500.1, providing a definition of a New York reportable transaction and the disclosure requirements for participating in one.
During 2006, the DOR undertook a settlement initiative that ended Dec. 15, 2006 and was directed at certain transactions that created tax benefits, deductions or losses that the DOR considered eligible. The settlement agreement required taxpayers to (1) waive all rights to appeal or refund of any amounts paid pursuant to the initiative, except for refunds due as the result of Federal changes or mathematical or computational errors; and (2) unwind transactions or dissolve entities involved in “eligible transactions” and “ineligible transactions” (if any) or adjust methodology for filing as prescribed by the DOR for all future years.
SB 139, Laws 2006, required taxpayers and material advisers to disclose a reportable transaction, allowed the tax commission to identify state-specific listed transactions and, in addition to other penalties, imposed a 10% penalty on tax underpayments attributable to reportable transactions.
Further, taxpayers are required to attach a disclosure statement for any listed transactions from 2004, 2005 and 2006, to their 2007 Utah income tax returns.
HB 4630, Laws 2006, required disclosure of certain tax shelters; imposed penalties for participating in or promoting abusive tax-shelter transactions and failing to report listed transactions; and increased the SOL on assessments for failure to disclose a listed transaction. Emergency Rule 110 C.S.R. 10J provides guidance on the disclosure and regulation of tax shelters created to avoid paying state income taxes.
Amended rule 830 CMR 62C.30.1 explains how taxpayers must report and adjust state tax due after a change in Federal taxable income, tax credits or taxable estate.
The DOR explained 108 that, for purposes of tolling the state’s general three-year SOL for assessments and refunds, the extension due date is used, rather than the original due date.
In another development, HB 1892, Laws 2006, reduced from two years to six months the period within which a taxpayer is required to report its Federal taxable income changes determined by the Federal government.
The tax commissioner ruled 109 that when a taxpayer has a Federal change made to its taxable income as a result of a transfer-pricing adjustment, it may file an application for refund (and an amended state return) with the state generally no later than one year after the adjustment has been agreed to or finally determined for Federal income tax purposes, even if this timeframe is beyond the state’s general three-year SOL.
SB 583, Laws 2006, extended from 90 days to one year the period within which taxpayers must file an amended return when the IRS changes the taxpayer’s Federal taxable income or the taxpayer files an amended Federal return.
The state court of appeals ruled that a taxpayer that was ineligible for state corporate income tax refunds, due to filing the claims beyond the applicable three-year SOL, could not alternatively refile for the same refunds using a state extension statute reserved for amended Federal returns. 110 Specifically, the court explained that the state’s extension for filing an amended state corporate income tax return applies only to returns filed within 180 days of a final Federal determination; it does not apply to situations, as in this case, in which the amended Federal return was based on the company’s choice to amend, rather than as a result of an IRS review and examination process.
SB 484, Laws 2006, increased to seven months the period for which the comptroller may extend the time for a corporation to file an income tax return; it applies to tax years after 2005.
TIR 06-21 111 permits an automatic six-month extension to file a tax return, without the need for application, for certain taxpayers. This TIR does not apply to financial institutions, insurance companies, utility companies, urban redevelopment companies or any other corporation required to file Form 355-7004 Misc., Application for Extension of Time to File Certain Massachusetts or Foreign Corporate Excise Returns, to request an extension of time to file a tax return.
In another development, HB 4169, Laws 2006, contained numerous state tax law changes, including new penalties for taxpayers and preparers that fail to disclose “inconsistent positions” with respect to returns filed in other states, or positions resulting in understatements if there is no substantial authority for the treatment.
The DOT provided new administrative appeal guidelines 114 for tax assessments; the guidelines will be formally adopted by the DOT as a regulation.
In a case involving whether a company was engaged in a unitary business with a partnership in which it owned a 50% interest, the tax appeals commission held 115 that the DOR could obtain a copy of the company’s consolidated Federal income tax return for the tax year at issue as part of discovery.
Among other provisions, H 5845, Laws 2006, eliminated the 2007 15% corporate surcharge that otherwise would have applied to all corporations that pay more than the $250 minimum tax.
A 4706, Laws 2006, imposed a 4% surcharge on the corporate business tax for periods ending after June 30, 2006 and before July 1, 2009. Starting with calendar-year 2006, the new law also increased the minimum tax from $500 to $2,000, depending on New Jersey gross receipts.
SB 2005, Laws 2006, reduced the corporate tax rate from 9% to 8.75% for tax years beginning after 2006.
A state superior court dismissed 116 a suit challenging the validity of the additional 50% amnesty penalty imposed on taxpayers that failed or declined to participate in the state’s two-month 2005 amnesty program. The court agreed with the FTB that the case was not ripe for judicial decision, because the tax years at issue were still in protest status, and there is no amnesty penalty to contest until the protested assessment is sustained and a final deficiency assessment made.
The U.S. Supreme Court held 118 that state and municipal taxpayers lacked standing to challenge the validity of Ohio’s franchise tax investment credit. Subsequently, the Court let stand the decision of the U.S. Court of Appeals, Sixth Circuit, 119 holding that an Ohio personal property tax exemption was Constitutional.
For more information about this article, contact Ms. Boucher at kboucher@deloitte.com.
52 Plantation Pipe Line Co. v. AL Dep’t of Rev. (DOR), AL DOR, Admin. Law Div., Dkt. No. CORP. 05-948 (5/23/06).
53 Paccar, Inc. v. AL DOR, AL DOR, Admin. Law Div., Dkt. No. CORP. 04-715 (1/11/06).
54 Microsoft Corp. v. CA FTB, 39 Cal.4th 750 (2006).
55 General Motors Corp. v. CA FTB, 39 Cal.4th 773 (2006), rev’g and rem’g CA Ct. App., 2d Dis. (6/30/04).
56 Toys “R” Us, Inc. v. CA FTB, No. S143422 (transferred after hold 11/15/06).
57 The Limited Stores, Inc. v. CA FTB, No. S136922 (transferred after hold 11/15/06).
58 CA FTB, Notice No. 2006-3 (9/28/06).
59 CA FTB, Legal Ruling No. 2006-01 (4/28/06).
60 CA FTB, Legal Ruling No. 2006-02 (5/3/06).
61 IN DOR, Rev. Rul. No. 2006-02IT (2/22/06).
62 IN DOR, Ltr. of Finding No. 01-0358 (8/23/06).
63 Miller Brewing Co. v. IN DOR, 831 NE2d 859 (IN Tax Ct. 2005).
64 103 KAR 16:270, 16:090, 16:290 and 16:150 (effective 8/7/06).
65 LA DOR, Rev. Rul. No. 06-018 (11/3/06).
66 EUA Ocean State Corp. v. Comm’r, MA ATB, Dkt. Nos. C258405-406, C258424-425, C258882-883, C259158-159, C259653 and C262566-568 (4/24/06).
67 MA Taxpayer Info. Rel. (TIR) No. 06-9 (6/12/06).
68 Internal Policy Directive (IPD) 2006-8, MI DOT (9/29/06).
69 NH DOR, Amended Rev 301, 302, 303.01 and 303.02 (effective 8/25/06).
70 General Engines Co., Inc. v. Div. of Tax’n, NJ Tax Ct. (lawsuit filed 12/8/06).
71 Stonebridge Life Insurance Co. v. Dep’t, OR Tax Court, TC No. 4705 (2/22/06).
72 UPS Worldwide Forwarding, Inc. v. Comm’th, 890 A2d 368 (PA 2005).
73 VA Pub. Doc. No. 06-130 (10/25/06).
74 VA Pub. Doc. No. 06-86 (8/30/06).
75 WI DOR, Tax 2.49 and 2.495 (effective 7/1/06).
76 Ameritech Publishing, Inc. v. WI DOR, WI Tax App. Comm., Dkt. No. 01-I-227(P) (8/22/06).
77 AT&T Corp. v. DOR, AL DOR, Admin. Law Div., Dkt. No. CORP. 05-403 (6/30/06).
78 AZ DOR, Hearing Officer Case No. 200600035-C (9/15/06).
79 The new law is operative for tax years starting after 2005, except that for taxpayers that made a water’s-edge election prior to 2006, the provisions do not apply until the end of the current election period.
80 Appeal of Argonaut Group, Inc., CA SBE, Case No. 287738 (6/28/06).
81 ID State Tax Comm. Ruling Nos. 18901 and 18902 (5/26/06).
82 ID State Tax Comm. Ruling No. 18612 (9/29/05).
83 IN DOR, Ltr. of Finding No. 05-0512 (9/13/06).
84 IN DOR, Ltr. of Finding No. 02-0278 (6/1/06).
85 IN DOR, Ltrs. of Finding Nos. 05-0318 and 05-0319 (11/1/06).
86 Johnson Controls, Inc., v. KY Rev. Dep’t, KY Ct. App., Case No. 2004-CA-001566-MR (5/5/06).
87 103 KAR 16:200 (effective 8/7/06).
88 IPD 2006-3, MI DOT (5/8/06).
89 Manpower, Inc. v. Comm’r, MN S.Ct., A06-468 (12/7/06).
90 AT&T Corp. v. State Tax Comm’n, MS Chancery Ct., Hinds Cty, No. G-2000-31 S/2 (5/26/06).
91 In the Matter of Hallmark Marketing Corp., NY Div. of Tax App., No. 819956 (1/26/06).
92 OR DOR, amended OAR 150-314.280-(N) and 150-317.710(5)(b) (effective 7/31/06).
93 VA Pub. Doc. No. 06-52 (4/28/06).
94 Northwest Energetic Services, LLC v. CA FTB, CA Super. Ct., San Fran., No. CGC-05-437721 (4/13/06); for a discussion, see Dickerson, Hayes and Thomas, Tax Clinic, “California Superior Rules LLC ‘Fee’ Unconstitutional,” 38 The Tax Adviser (March 2007).
95 Ventas Finance I, LLC v. CA FTB, CA Super. Ct., San Fran., No. CGC-05-44000I (11/7/06).
96 This guidance can be found at http://www.ftb.ca.gov/forms/misc/3556.pdf.
97 See CA FTB, “Ask the Advocate,” March/April 2006 Tax News.
98 A103 KAR 15:020 (effective 9/1/06); 103 KAR 16:210 (effective 8/7/06).
99 The letter can be found at http://revenue.ky.gov/NR/rdonlyres/EEADE03A-49A8-429A-96C0-89A9B8B8B11C/0/KSCPAletter82206.pdf.
100 MA DOR, Ltr. Ruling No. 06-6 (4/24/06).
101 TN DOR, Ltr. Ruling No. 06-06 (3/14/06).
102 CA FTB, Notice No. 2006-1 (1/11/06). This initiative ended on March 31, 2007.
103 Ann. 2005-80, IRB 2005-46, 967.
105 LA DOR, Rev. Ruling No. 06-009 (6/29/06).
106 MA TIR No. 06-5 (4/13/06).
107 In the Matter of ICI Americas, Inc., Cal. SBE, Case No. 312753 (11/20/06).
108 NC DOR, Directive No. CD-06-1 (10/25/06).
109 Opin. of the Tax Comm’r No. 06-0001, OH Dept. of Tax’n (4/20/06).
110 Graham v. McKesson Information Solutions, LLC, GA Ct. App., Case Nos. A06A033 and A06A0334 (5/12/06).
111 MA TIR No. 06-21 (12/7/06).
112 HB 5356, 5357, 5358, 5359, 5360, 5361, 5362 and 4244 (signed by the governor 2/3/06).
113 Elliott v. Montana DOR, Mont., Case No. 05-336 (10/24/06).
114 VA Pub. Doc. No. 06-140 (11/29/06).
115 Louis Dreyfus Petroleum Products Corp. v. DOR, WI Tax App. Comm., Dkt. No. 03-I-132(P) (6/15/06).
116 General Electric Co. v. CA FTB, Cal. Super. Ct., San Fran., No. 449157 (8/30/06).
117 Journal No. 73, MI Senate, and Journal No. 71, MI House of Representatives (8/9/06).
118 DaimlerChrysler Corp. v. Cuno, S.Ct., 5/15/06.
119 Cuno v. DaimlerChrysler Corp, 6th Cir., 10/19/04, cert. den.
120 The commercial activities tax is a gross receipts tax and, thus, is beyond the scope of this article; for a discussion, see Tapia, Tax Clinic, “Beware Ohio’s CAT,” 37 The Tax Adviser (August 2006).
121 For more details, see Brookner and Brown, State and Local Taxes, “Sweeping Texas Franchise Tax Changes: The Margins Tax,” 37 The Tax Adviser (September 2006).

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