We are pleased to welcome Chase Howell to our firm. Mr. Howell assists members of the firm with tax litigation in a variety of forums. Mr. Howell also joins other members of the firm in writing about Texas tax topics including the Texas sales tax and Texas franchise tax.more
The Third Court of Appeals’ recent opinion in Badger Tavern, L.P. v Hegar provides several key takeaways for Texas taxpayers, including the court’s willingness to find jurisdiction outside of indigency suits, that Comptroller statements made in a rule’s preamble may constitute an invalid rule, and potential ramifications for the Comptroller’s recent amendments to the franchise tax cost of goods sold rule.
First, although the Third Court’s most recent jurisdictional opinions show that its hands are tied with respect to indigent taxpayers, Badger Tavern, L.P. confirms the court’s reluctance to pour a taxpayer out of court due to Comptroller complaints about insufficient...more
On August 21, 2018, Gulf Copper filed its Response to the Comptroller's Petition for Review. The Comptroller had previously filed a Petition for Review asking the Texas Supreme Court to reverse the decisions by the trial court and court of appeals. Gulf Copper won in both of those courts.
Gulf Copper rebuilds offshore oil rigs. The case concerns whether Gulf Copper may exclude payments to subcontractors and subtract its operating costs when calculating its "margin," which is the tax base under the Texas franchise tax. Despite the...more
The Texas Comptroller issued guidance in the wake of the Supreme Court’s landmark decision in South Dakota v. Wayfair, broadly advising businesses of how his agency will implement the decision. The decision allows a state to force out-of-state sellers (called “remote sellers”) to collect and pay over sales taxes of instate residents who purchase goods and services from the out-of-state sellers.
At the outset, the Comptroller recognizes that the physical presence nexus standard remains Texas’ law of the land for the time being. The Comptroller’s office expects to amend Texas’ rules to establish new rules for remote sellers, imposing tax collection obligations when the remote seller exceeds minimum thresholds for revenues and/or number of sales in the state. The Comptroller’s office stated it anticipates that the new rules will be effective in early 2019.
In an attempt to allay fears and foster “a smooth transition and a successful partnership with...more
Twice in a row, the Texas courts have held that a taxpayer must pay the full amount claimed due in order to gain access to the Texas courts to challenge a tax assessment. See Hegar v. CHZP and EBS Solutions v. Hegar. The court reached this conclusion notwithstanding the Texas constitutional provision that allows all residents, including corporations carrying on business in Texas, open access to the Texas courts to resolve their disputes. This provision was previously implemented under Texas Tax Code § 112.108, which allowed taxpayers who could not afford to pay the full assessment access to the courts upon submission of an affidavit demonstrating inability to pay, and hearing on same. That statute has...more
On June 21, 2018, the United States Supreme Court rejected the “bright-line” physical presence rule that has governed multi-state sales tax practices for the past half century. By issuing its long-awaited opinion in South Dakota v. Wayfair, the Court ushered in a new era for sales tax compliance, especially for e-commerce platforms and nation-wide retailers who may now be subject to sales tax compliance in the states into which they sell. The 5-4 decision treated South Dakota’s pilot economic nexus law and sales tax administration system as a model and levied pressure on the states and Congress to enact significant policy changes to bring billions of revenue dollars within the grasp of state and local governments in ways that don’t discriminate or unduly burden interstate commerce.
Specifically, states will need to treat South Dakota’s newly-enacted economic nexus statute and other circumstances surrounding South Dakota’s sales tax administration and compliance processes as the baseline against which to measure their own nexus statutes and...more
On June 21, 2018, the US Supreme Court fundamentally altered the multi-state taxation rules in ways which will precipitate the need for businesses to evaluate their state tax processes and resulting state tax liabilities. In South Dakota v. Wayfair, the Court held that a business did not need to be physically present in a state in order for the state to require it to comply with its sales tax laws. The decision affects all businesses that sell across state lines as well as internet sellers.
As a result, businesses selling products or providing services into more than one state need to evaluate and modify their current IT systems for scalability in order to handle the massive amount of compliance and other work the Court’s decision will require.
Check back for registration details for several live and webcast presentations, which...more
In Nabors Drilling Technologies USA, Inc. v. Hegar, the Court of Appeals fully denied Nabors’ sales and use tax refund arising from exemptions claimed for drilling-equipment and temporary storage.
Houston-based Nabors Drilling claimed it was entitled to a refund of use taxes paid on its purchases of component parts that it stored temporarily in Texas prior to shipping out-of-state, and alleged it was entitled to the drilling-equipment exemption for sales taxes paid on the component parts that were incorporated into drilling equipment to be used exclusively outside of Texas.
Nabors purchased component parts that it ultimately incorporated into oil and gas drilling equipment for sale to its customers located both inside and outside Texas. The court found that, at the time Nabors purchased the component parts, it did not document the intended place of use of each item, the parts were not...more
North v. South: Who will win this time? South Dakota v. Wayfair or Quill v. North Dakota. Click here to read the transcript of Tuesday’s (April 17, 20118) Oral Argument in the Wayfair case.more