News

San Francisco users of rideshare services including Lyft Inc. and Uber Technologies Inc. will be paying more starting in January, when a voter-approved ballot measure takes effect.

Puerto Rico’s plan to boost the export of services from the island created 36,222 jobs since 2012, when lawmakers enacted tax breaks to increase such business activity, according to the commonwealth’s commerce department.

The Alabama Department of Revenue Nov. 8 published a memorandum on legislative changes affecting motor vehicle registration records, for excise tax purposes. As a follow-up to the Rebuild Alabama Act Memo, registration validation edits are added to the registration record update routine to identify omitted or incorrect fuel types in the registration error report. The memorandum lists the fuel types that must be included in the motor vehicle registration record (except with regard to trailers), and provides a link to the updated registration record format. [Ala. Dep't of Revenue, Memorandum 2019-006, 11/08/19]

The Arkansas Office of Hearings and Appeals (OHA) Nov. 8 found that Taxpayer was liable for sales and use tax on the purchase of a motor vehicle. Taxpayer purchased a vehicle, but didn't register or pay tax on it. The Department of Finance and Administration (DFA) issued a notice of the proposed assessment assessing tax, a late payment penalty, and interest. Taxpayer claimed that she voluntarily returned the vehicle to the seller because she was unable to afford and tag it. The DFA noted: 1) Taxpayer took ownership and possession of the vehicle; 2) the sale of tangible personal property was subject to sales tax; 3) the documentation provided by Taxpayer was insufficient to establish a rescinded sale occurred; and 4) the DFA properly assessed the penalty and interest. Accordingly, the OHA sustained the DFA's assessment. [Ark. Dep't of Fin. & Admin., Docket No. 20-233, 11/08/19]

The Arkansas Office of Hearings and Appeals (OHA) Nov. 8 found Taxpayer wasn't liable for a sales and use tax credit on a motor vehicle purchase, sustaining the Department of Finance and Administration's (DFA) assessment. The DFA determined that Taxpayer purchased a new vehicle and didn't sell a used vehicle within 45 days as required by law to claim the trade-in credit. The DFA issued a title of suspense and a notice of proposed assessment. Upon review, the OHA found: 1) Taxpayer didn't prove the new vehicle's delivery was delayed; 2) Taxpayer received the new vehicle April 16, and sold the old vehicle 67 days after the purchase date; and 3) Taxpayer didn't prove entitlement to the motor vehicle tax credit. Accordingly, the OHA sustained the DFA's assessment. [Ark. Dep't of Fin. & Admin., Docket No. 20-140, 11/08/19]

The Arkansas Office of Hearings and Appeals (OHA) Nov. 6 sustained the Department of Finance and Administration's (DFA) sales and use tax assessments. Taxpayer sold machinery and equipment, replacement parts, and repair services. The DFA asserted Taxpayer's repair and maintenance services were subject to sales tax and the replacement parts were subject to use tax. Taxpayer conceded its repair services were taxable, but stated it was entitled to two exemptions, including an exemption for replacement of certain directly used manufacturing machinery and equipment. The OHA noted: 1) Taxpayer couldn't be exempt from sales tax in the absence of an exemption claim from its customers on the purchases; and 2) Taxpayer didn't prove that the replacement of any of the purchased components represented substantial replacement of all the components of its machinery. After the concessions agreed to by the DFA, the OHA sustained the remaining assessment. [Ark. Dep't of Fin. & Admin., Opinion Nos. 20-155, 20-156, 11/06/19]

The Arkansas Office of Hearings and Appeals (OHA) Nov. 4 sustained the Department of Finance and Administration's (DFA) individual income tax assessment. Taxpayers failed to file a return or submit proof indicating that they weren't required to file the return. Auditors conducted a tax audit and issued a notice of proposed assessment with interest and penalty. Taxpayers protested, stating that they moved to another state. The OHA found that Taxpayers: 1) were domiciled within the state prior to the purchase of a home in another state; 2) retained substantial connections with the state by retaining drivers' licenses, vehicle registrations, and voter registration within the state; 3) didn't establish that they abandoned their domicile or that the DFA's returns and assessments were incorrect; and 4) didn't establish the accuracy of farming expenses that resulted in a farming loss. Therefore, the OHA sustained the assessment. [Ark. Dep't of Fin. & Admin., Docket Nos. 20-029 et al., 11/04/19]

The Arkansas Secretary of the Department of Finance and Administration (DFA) Oct. 31 reversed a decision of the Office of Hearings and Appeals (OHA) concerning an individual income tax negligence penalty. Taxpayers operated a farm at their residence and reported net farm losses on Schedule F for 10 consecutive years. The DFA audited Taxpayers, disallowed the losses for three years, and assessed a negligence penalty. Taxpayers protested and the OHA reversed the penalty and found the fourth factor of IRC Section 138 weighed in favor of Taxpayers. The DFA sought revision and the Secretary found that: 1) reversal of the penalty wasn't supported by appropriate reasoning or analysis; 2) negligent misuse of Schedule F deductions allowed Taxpayers to claim net farming losses for ten consecutive years; and 3) OHA erred in analyzing factor four of the IRC Section 183. Therefore, the DFA reversed and modified the OHA's decision. [Ark. Dep't of Fin. & Admin., Docket Nos. 19-096, 19-097, 19-098, 10/31/19]

The California Office of Tax Appeals (OTA) Sept. 18 affirmed the Franchise Tax Board's (FTB) assessment of additional individual income tax and penalties, since Taxpayers didn't act with due care filing their return. Taxpayers used tax preparation software and alleged it didn't alert them when their 2015 return was rejected. Taxpayers filed an appeal against the FTB's denial of their refund claim for the late-filing penalty. The OTA found: 1) Taxpayers didn't file the 2015 return until 2017, more than 13 months after the due date; 2) the software gave notice of unsuccessful filing, affording Taxpayers an extension to file; and 3) Taxpayers didn't describe any efforts taken to file the return under the extension. Accordingly, the OTA sustained the FTB's assessment. [Cal. Office Tax App., Case No. 18010744, 09/18/19]

The California Office of Tax Appeals (OTA) Sept. 17 affirmed the Franchise Tax Board's (FTB) assessment of corporate income tax, penalties, and interest against Taxpayer. Taxpayer, a Delaware corporation, filed a federal income tax return but didn't file a California state return. The FTB assessed tax, penalties, and interest. Taxpayer protested, the FTB affirmed the assessment, and Taxpayer appealed. The OTA found: 1) the assessment wasn't reasonable, since it didn't allow a deduction for compensation paid; 2) Taxpayer didn't establish reasonable cause for not filing a return, so it wasn't entitled to a late-filing or demand penalty abatement; and 3) Taxpayer didn't allege or prove unreasonable delay or error by the FTB, so it wasn't entitled to an interest abatement. Accordingly, the OTA modified the assessment to allow a compensation deduction, and sustained the FTB's proposed assessment with interest and penalties. [Cal. Office Tax App., Case No. 18042977, 09/17/19]