Artificial intelligence, or more commonly AI, seems to be what everyone is talking about nowadays. Businesses are investing hundreds of billions into AI research and, in parallel, integrating AI products into their day-to-day operations in order to maximize business savings and obtain a competitive advantage over their competitors.  It is no secret the tax treatment of AI could have profound consequences for businesses. However, most states have not made their position on the taxability of…
State legislators have already proposed a number of digital and data tax bills in 2021, some of which are new proposals while others reintroduce proposals from previous legislative sessions. The proposed bills fall into one of three categories: taxes on digital advertising services, taxes (or fees) targeting social media providers, and taxes on the sale or monetization of personal data.  Most of the proposals are in the early stages, but a Maryland bill originally introduced last year is moving closer to a legislative vote on whether to override the governor’s veto.
Two states recently unveiled transfer pricing enforcement tactics to, in their view, combat improper intercompany profit shifting.
The Indiana Tax Court recently ruled in favor of The University of Phoenix, Inc. (“University of Phoenix”) on an important issue of first impression involving the sourcing of service revenue for purposes of computing Indiana’s corporate income tax apportionment factor.  The University of Phoenix, Inc. v. Indiana Dep’t of State Revenue, Cause No. 49T10-1411-TA-00065 (Ind. Tax Ct. 2017). Baker & McKenzie LLP represented the University of Phoenix in the case. The Tax Court held that in sourcing service revenue, Indiana law requires a taxpayer activity/cost-based analysis and rejected the market/customer-based analysis historically advanced by the Indiana Department of State Revenue (“Department”).Â