Any retailer, even one operating in just one locality, knows that sales tax collection can quickly become complicated. Different goods and services may be subject to different rates or exempt from tax, and some purchasers may be exempt. Operating in multiple localities with different regimes only compounds the problem.

As if it were not enough to worry about audits by local tax authorities, companies that file reports with the Securities and Exchange Commission may also need to be concerned with the adequacy of their sales tax compliance controls.


Continue Reading How’s Your Sales Tax Software? The SEC May Be Interested

The IRS recently concluded in internal legal advice (available at http://www.irs.gov/pub/irs-lafa/111101f.pdf) that an automobile dealer could not deduct the cost of acquired goodwill when an automobile manufacturer terminated the dealer’s franchise. Although the advice specifically applied to a car dealer, it could apply equally in any franchise situation. As internal legal advice, it is not precedential but does reflect the thinking of the IRS.
Continue Reading IRS Denies Deduction for Worthless Goodwill When Retailer’s Franchise Is Terminated

There have been several recent developments in the continuing efforts by states to make out-of-state Internet retailers collect and remit sales taxes.

Brick-and-mortar retailers are required to collect sales taxes. However, where an out-of-state Internet seller ships goods into the state but has no other in-state contacts, the transaction is not subject to sales tax. The recipient of the goods is supposed to pay a use tax in the same amount. Commercial enterprises are subject to state sales and use tax audits and generally comply, but individual purchasers seldom do. Brick-and-mortar retailers believe that this gives Internet retailers an unfair advantage. Many cash-strapped states would like to require the Internet sellers to collect and remit the use tax, rather than relying on their own residents to comply.


Continue Reading “Amazon” Sales Tax Developments

Retail leases typically contain provisions allowing the landlord to charge the tenant a pro rata share of taxes paid by the landlord. The particular wording of the lease governs what the landlord can and cannot charge a tenant. Looking for ways to cut costs, more tenants are monitoring the taxes passed through by landlords and challenging certain charges.


Continue Reading Taxes May Not Be a Straight Pass-Through Under Retail Leases

Case: Amazon.com LLC and Amazon Services LLC v. New York State Department of Taxation and Finance, Index No. 601247/08 (Sup. Ct. N.Y. 2009)

The One Sentence Summary: A New York court dismissed Amazon.com’s suit challenging the constitutionality of a recently enacted New York State law requiring out-of-state companies, including those engaging exclusively in e-commerce, to

The One Sentence Summary: While some view a tenant’s obligation to pay taxes as a pass-through from the landlord, this characterization is often inaccurate. Landlords frequently collect more in taxes than they in fact pay, and sometimes they collect less. Courts and juries in deciding what amount of taxes the landlord is entitled to charge

Case: The Limited Stores, Inc. v. Franchise Tax Board, No. A102915 (Cal. Ct. App. 6/8/07)

The One Sentence Summary: Because national retailer’s inclusion of short-term securities’ full redemption price as “gross receipts” unfairly represented the extent of its business activity in California, Franchise Tax Board prevailed on challenge to retailer’s calculation of California taxes.


What