Archives: Pending Cases

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Massachusetts Appellate Tax Board denies Multiple Points of Use sales tax refund claims

The Massachusetts Appellate Tax Board (“ATB”) has issued an order denying three sales tax refund claims involving multiple points of use (“MPU”) sourcing.  In each case, vendors had filed refund claims arguing that their customers were eligible for refunds of sales tax charged on the full sales price of software delivered to Massachusetts to the … Continue Reading

Massachusetts SJC Reaffirms Decision Sourcing 100% of Taxpayer’s Loans to Massachusetts — Confirms Opportunity for Out-of-State Financial Institutions

On Friday, August 12, the Massachusetts Supreme Judicial Court (the “SJC”) reaffirmed its decision in First Marblehead—that a financial institution that is commercially domiciled in Massachusetts can be required to source 100% of its loans to Massachusetts for purposes of computing its property factor numerator.  See The First Marblehead Corp. v. Commissioner, Supreme Judicial Court … Continue Reading

Tom Brady’s suspension reinstated, so what are the potential Massachusetts tax consequences?

Deflategate and the NFL’s suspension of quarterback Tom Brady for 4 games has been the NFL’s biggest news story of the past two years. On Monday, the United States Court of Appeals for the Second Circuit ruled in favor of the NFL, overturning a lower judge decision to vacate Patriots quarterback Tom Brady’s four-game Deflategate … Continue Reading

Massachusetts Net Worth “True Debt” Litigation Moves Forward—Oral Argument Held, Awaiting Decision

With oral argument and briefing complete, the Massachusetts Department of Revenue’s authority to increase the net worth component of a taxpayer’s corporate excise using its “true debt” analysis is under review by the Appeals Court in National Grid Holdings, Inc. et. al. v. Commissioner.  The appeal should be of particular interest to taxpayers because, in … Continue Reading

Supreme Judicial Court Rules Against Taxpayer in Regency Transportation

On January 6, the Massachusetts Supreme Judicial Court (“SJC”) issued its decision in Regency Transportation v. Commonwealth, finding against the taxpayer.  The taxpayer in Regency was a trucking company that purchased vehicles in states that did not charge sales tax on the purchases.  Regency used the vehicles more than half the time outside of Massachusetts … Continue Reading

Supreme Judicial Court hears Oral Argument in Regency

Today, the Massachusetts Supreme Judicial Court (“SJC”) heard oral argument in Regency Transportation v. Commonwealth, a case in which the taxpayer is challenging the Department of Revenue’s assessment of use tax on the full purchase price of vehicles that it purchased outside of Massachusetts and used more than half the time outside of Massachusetts as … Continue Reading

U.S. Supreme Court Vacates Decision in First Marblehead; Remands to Massachusetts Supreme Judicial Court

On October 13, the United States Supreme Court granted a request for review in the case of First Marblehead Corporation v. Massachusetts Commissioner of Revenue, and summarily vacated the decision issued January 28, 2015, by the Supreme Judicial Court of Massachusetts. The case has been remanded to the Supreme Judicial Court for further consideration in … Continue Reading

Massachusetts Denies ‘True Debt’ Treatment for Cash Management Obligations

The Massachusetts Appellate Tax Board (“ATB”) has once again issued a Findings of Fact and Report upholding a Department assessment on the basis that a taxpayer’s intercompany obligations under a cash management system were not bona fide debt.  The most recent decision, issued September 4, 2015, is Staples, Inc. and Staples Contract and Commercial, Inc. … Continue Reading

Report from the Boston Bar Association Annual Tax Conference

The Boston Bar Association held its annual tax conference this past Thursday, and as always the BBA pulled together a great lineup of practitioners, legislators, and Department of Revenue officials to discuss the latest in Massachusetts state tax.  The event was broken into four sections; one each on tax policy, litigation, and administrative updates, as … Continue Reading

Appellate Tax Board Case Update: MassMutual Proves Intercompany Debt is True Debt

Today, the Appellate Tax Board (“ATB”) released its Findings of Fact and Report in the related cases of Massachusetts Mutual Life Insurance Company and MassMutual Holding LLC v. Commissioner and MML Investor Services, Inc. v. Commissioner, in which the ATB held that intercompany debt between MassMutual and its affiliates was true debt. As true debt, … Continue Reading

First Marblehead Requests U.S. Supreme Court Review In SINAA Sourcing Appeal

In a case of interest for any taxpayer with substantial securitization activities, First Marblehead Corporation and Gate Holdings, Inc. have requested United State Supreme Court review of a recent determination of the Massachusetts Supreme Judicial Court (“SJC”), by way of this petition. The petition for review can be found here. The case involves the sourcing … Continue Reading

Update: Massachusetts Supreme Judicial Court Agrees To Hear Regency Transportation Appeal

The Massachusetts Supreme Judicial Court has agreed to accept jurisdiction and hear the taxpayer’s appeal in Regency Transportation, Inc. v. Commissioner, a case in which the Appellate Tax Board, (“ATB”) upheld the Department of Revenue’s assessment of use tax on trucks which, although stored and serviced in Massachusetts, were purchased outside of Massachusetts and used for transportation … Continue Reading

Washington Department of Revenue takes same position on taxability of early termination fees being challenged in Massachusetts

In a ruling that will be of interest to taxpayers following Massachusetts appeals on the issue, Washington has issued recent guidance (see Washington DOR – Termination Fees) asserting that early termination fees for cancelling cellular phone contracts are subject to retail sales tax as taxable telecommunications services. This guidance takes the same position that the Massachusetts Department … Continue Reading

Trucking Company Appeals ATB Decision Upholding Use Tax Assessment on Trucks Used in Interstate Commerce

In a case to watch for interstate trucking companies, Regency Transportation, Inc. is appealing a use tax assessment upheld by the Massachusetts Appellate Tax Board (“ATB”). Regency had challenged the Department of Revenue’s assessment of use tax on trucks which, although stored and serviced in Massachusetts, were purchased outside of Massachusetts and used for transportation … Continue Reading

Are eFax services taxable telecommunications services in Massachusetts?

While Massachusetts’ expansion of its sales tax to include computer-related services was repealed within three months of its enactment, the Massachusetts Department of Revenue continues to take a close look at sales treated as non-taxable services by vendors, and characterize those sales as either sales of tangible personal property or telecommunications services, both of which … Continue Reading

Interstate Truckers Beware—Massachusetts Aggressive Use Tax Policy on Vehicles Purchased Out-of-State Upheld by ATB in Regency Transportation Case

Early this month, the Appellate Tax Board issued a decision involving the application of Massachusetts use tax to trucks that could have implications for all transportation companies doing business in the Commonwealth. In Regency Transportation, Inc. v. Commissioner, the Board held that Regency Transportation, an interstate freight transportation company, was subject to Massachusetts use tax … Continue Reading

ATB Finds Genentech is Subject to Massachusetts Tax; Offers Guidance on P.L. 86-272

This post is part of a series of posts discussing key issues in the Appellate Tax Board’s recent decision in Genentech, Inc. v. Commissioner.  We previously reported on this decision in our prior post. In Genentech, Inc. v. Commissioner, the Appellate Tax Board held that the Massachusetts activities of a biotechnology company were not protected … Continue Reading

ATB Upholds Single-Factor Apportionment for Manufacturer

On November 17, 2014, the Appellate Tax Board released its Findings of Fact and Report in Genentech v. Commissioner which held that a pharmaceutical company qualified as a “manufacturer” under Massachusetts law, and was required to apportion its corporate excise tax base using the single sales factor formula for manufacturing corporations, instead of the three … Continue Reading

Massachusetts Taxpayers Foundation Tax Conference Report

On October 31, 2014, the Massachusetts Taxpayers Foundation put on their annual tax conference with panels comprised of a mix of tax practitioners and government officials covering the latest issues in Massachusetts taxes.  As always, the conference provided great content and an opportunity for taxpayers, practitioners and government officials to get up-to-speed on the latest … Continue Reading

ATB rules that orthopedic braces sold by orthopedic surgeon are exempt from sales and use tax.

Earlier today, the Appellate Tax Board (“ATB”) released its Findings of Fact and Report in Excel Orthopedic Specialists, Inc. v. Commissioner, holding that orthopedic braces—rigid and semi-rigid knee, elbow, ankle, wrist, and back braces—were exempt from sales and use tax when sold by a medical practice of orthopedic surgeons.  The ATB concluded that the braces … Continue Reading

Massachusetts Audits and Appeals Update—Transfer Pricing and Embedded Royalties

From time to time, we’ll be using this space to discuss recurring Massachusetts state tax issues were seeing at audit and on appeal.  In the first in this series, we’ll focus on transfer pricing adjustments. Over the past few years, the Department’s auditors have aggressively attacked intercompany payments between affiliated entities—especially for tax years prior … Continue Reading

Supreme Judicial Court hears argument in First Marblehead Case

An active bench at the Supreme Judicial Court heard oral argument in First Marblehead Corp. & Gate Holdings, Inc. v. Commissioner, Docket No. 2013-P-0935 this morning; posing pointed questions to both parties. At issue is whether Gate Holdings (“Gate”) is entitled to look to the activities of third-party loan services for purposes of sourcing its … Continue Reading

Are early termination fees charges for “telecommunications services” in Massachusetts?

The ATB recently received a petition challenging the imposition of sales tax on the early termination fee charged by a mobile telecommunications  The Department asserted at audit that the early termination fees were charges for telecommunications services and, thus, subject to Massachusetts sales tax.  The taxpayer is now challenging that assessment. Read more about the … Continue Reading

Commonwealth Faces Tough Questions from Appeals Court Justices In Sham Transaction Case

As we previously reported, last year the Appellate Tax Board issued a decision expanding the application of the sham transaction doctrine to transactions intended to transfer Massachusetts payroll and property to a corporation that otherwise lacked nexus with Massachusetts.  The case, Allied Domecq Spirits and Wines USA, Inc. v. Commissioner, Mass. App. Ct. Dckt No. 2013-P-0984, … Continue Reading
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