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Martens, Todd, Leonard & Ahlrich is pleased to announce that Danielle Ahlrich has been selected as a 2017 Texas Rising Star in business tax. The Rising Stars list is comprised of the top up-and-coming Texas attorneys who are 40 or younger or have been in practice for 10 years or less. Rising Stars are selected based on nominations by members of the elite Texas Super Lawyers list. No more than 2.5 percent of Texas attorneys were chosen for this honor. The Texas Rising Stars list will be published in the April 2017 issues of Texas Monthly and Texas Rising Stars magazines.

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The Third Court of Appeals recently held that a buyer of the assets of a small business was liable for the sales tax liability incurred by the business prior to the sale. This potential liability is known as “successor liability.” Successor liability may arise when an individual or a business entity purchases assets of an existing business, and unknowingly assumes the business’s tax liability as a result of the purchase. See Tex. Tax Code § 111.020. If a buyer fails to withhold the amount specified by the Comptroller, the buyer will be personally liable up to the amount of the purchase price, for the taxes of the seller. See Tex. Tax Code § 111.020(b).

The seller can request that the Comptroller issue a certificate stating that no tax is due or the amount that must be paid before a certificate can be issued. See Tex. Tax Code § 111.020(c). The Comptroller must issue the certificate or statement within 60...

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Martens, Todd, Leonard & Ahlrich wishes Amanda Taylor well with growing her general civil appellate practice with Beck Redden, LLP. Ms. Taylor is a top-notch, board-certified civil appellate attorney, and we look forward to working with her on pending and future tax appeals.

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Martens, Todd, Leonard & Ahlrich is pleased to announce that Katie Wolters has been selected to join the Austin Bar Association/ Austin Young Lawyers’ Association 2017 Leadership Academy. The Leadership Academy was established to assist Austin-area lawyers in making a difference in our community, serving the Bar, and promoting professional development. Throughout the year, members participate in a series of presentations by leaders in public policy, government, the private sector, non-profit organizations, and the Bar. The course culminates with a class project.

About Katie Wolters

Ms. Wolters is an associate at Martens, Todd, Leonard & Ahlrich. Ms. Wolters assists clients with both tax controversies and civil appeals in a variety of forums, including the State Office of Administrative Hearings, state district court, and the Texas appellate courts. Ms. Wolters also joins other members of...

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A recent memo issued by the Comptroller’s Tax Policy Division provides guidance on the Texas franchise tax treatment of various types of vendor funded incentives. The issue is whether the incentives reduce COGS, are included in revenue, or are ignored altogether. Vendors provide incentives as allowances, credits, and rebates to retailers through a variety of programs to support merchandise purchased for retail. Vendor Funded Incentives (VFI) refers to this collection of programs and includes incentives like volume-based purchase adjustments, sales-based incentives, produce placement incentives, new store allowances, and depletion allowances.

Some retailers argue that VFI should not be treated as a reduction in the COGS deduction for franchise tax purposes, because VFI relate to the sale of goods rather than the purchase of goods for resale.

The Comptroller’s position is that certain VFIs relating to advertising...

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In 2016, the Comptroller’s Tax Policy Division authored a memorandum announcing a policy interpretation change based upon the decision in Titan Transportation, L.P. v. Combs. [1] The memorandum was issued on the heels of the Texas Supreme Court’s denial of the Comptroller’s Petition for Review. [2]

Titan Transportation hauled and deposited aggregate (a construction material made of rock, gravel, dirt, sand, or fines) at construction sites using independent...

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An attorney was recently held liable for the tax debts of his defunct PC, in which he served as the sole officer and director. In Jeff Kaiser, PC v. State, Kaiser operated his law practice as a professional corporation (“PC”) until 2003, when he forfeited its business privileges by failing to file Texas franchise tax reports. He was the sole officer and director of the PC. After 2003, he filed for Chapter 7 bankruptcy and continued to practice law as a sole proprietorship. In 2008, during his bankruptcy proceedings, Kaiser filed franchise tax reports for the defunct PC for report years 2004-2008 reporting income from his solo law practice after the PC’s charter was forfeited. In 2013, the state filed suit to collect the franchise tax owed from 2004-2008. Shortly after, the state filed a lien solely for the 2004 report period.

Kaiser argued that it is unconstitutional for the state to impose liability on a natural...

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On August 25th, our law firm filed an amici curiae brief on behalf of six Texas franchise taxpayers in Hegar v. Autohaus, LP, LLP, a cost of goods sold case pending at the Third Court of Appeals. Concerned about the narrow arguments presented by the parties and the financial and administrative burdens imposed by the Comptroller’s calculation methods, the amici taxpayers seized the opportunity to present the court with a straightforward, statutorily-based COGS analysis that relies heavily upon Internal Revenue Code concepts (such as IRC Section 263A) and will benefit taxpayers across many industries. In response, the Comptroller notified the court that it will file a response by September 26th.

The amici brief is available for review here. For more information, please contact: Jimmy Martens,...

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The Comptroller recently updated its Local Sales & Use Tax Collection- A Guide for Sellers publication. This publication provides a helpful overview of local sales and use tax guidelines, including a discussion of when and which local taxes are due. The updated publication is currently available on the Comptroller’s website.

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Nexus is the connection between a taxpayer and a state that triggers an out-of-state taxpayer’s obligation to comply with that state’s tax laws. Although nexus laws differ between states, the United States Supreme Court decision in Quill Corp. v. North Dakota has remained the controlling authority for over twenty years. 54 U.S. 298 (1992). Quill held that economic presence was not sufficient to establish nexus for a remote seller. Id. But recently, states across the U.S. have begun to attack the physical presence requirement imposed by Quill through legislation seeking to recoup sales tax from online sales.

Texas followed suit, although it has not gone as far as other states. Texas enacted an affiliate nexus law and amended existing law in a way that suggests that sale of tangible personal property into Texas creates nexus, although the Comptroller has yet to enforce this provision. See Tex. Tax Code § 151.107(a)(3), (7) & (8) (effective Jan. 1, 2012). Yet, in contrast, the Comptroller cited Quill as the...

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