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Transaction Taxes

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Continuing the unpleasant theme of aggressive state tax proposals, a bill has surfaced in the New York Assembly (following a companion bill that was introduced in the New York Senate last Spring) that seeks to impose a five percent tax on the “gross income . . . [from] every corporation that derives income from the data individuals of this state share with such corporations.” The new data tax is being proposed for inclusion in Section…

In an era of ever-expanding state tax bases, there are two new legislative proposals in Maryland (SB 2) and Nebraska (LB 989) that seek to either extend a current tax base (in the case of Nebraska, the sales tax base) or create a new tax (in the case of Maryland) to capture digital advertising revenues. The Maryland tax also signals a continued trend toward nuanced gross-receipts-type taxes. If a tax targeting digital advertising services sounds familiar, that is because the Ohio Department of Taxation attempted to extend the Ohio sales tax to digital advertising services in 2016 (though this extension was rejected by the Ohio Legislature’s enactment of an exemption from the sales tax for digital advertising services later that same year).

The Illinois legislature recently passed several tax related bills along with a budget. The tax changes are primarily reflected in Senate Bills 689 and 690. Governor Pritzker signed S.B. 689 on June 5, 2019 and is expected to sign S.B. 690 shortly. The following is a summary of some of the more significant tax changes applicable to businesses.

Six online retailers recently sued the Massachusetts Department of Revenue over the pre-Wayfair enforcement of regulation 830 CMR 64H.1.7 (“Remote Sales Tax Regulation”). The complaint argues that, prior to the Supreme Court’s decision in South Dakota v. Wayfair, Inc., No. 17-494 (U.S. Jun. 21, 2018), the Remote Sales Tax Regulation violated the Due Process Clause of the U.S. Constitution and the Internet Tax Freedom Act. On Due Process, the six online retailers argue the Remote Sales Tax Regulation places an undue burden on, and discriminates against, interstate commerce. The online retailers also argue that the Remote Sales Tax Regulation violates the Internet Tax Freedom Act’s prohibition of discriminatory taxes on electronic commerce.