Texas
Subscribe to Texas's Posts

Texas Comptroller’s Office Holds Roundtable on Proposed Regulation Targeting IT, Pharmaceutical Industries

On August 4, 2016, representatives of the Texas Comptroller of Public Accounts held a limited-invite roundtable to discuss the proposed amendments to 34 Tex. Admin. Code 3.584, relating to the reduced rate available under the Texas Franchise Tax for retailers and wholesalers. As previously reported, these proposed revisions were published in the Texas Register on May 20, 2016 and have the potential to double the tax rate for a substantial number of businesses – namely those in the information technology and pharmaceutical industries. Members of the Comptroller’s office present included Karey Barton, Associate Deputy Comptroller for Tax, Theresa Bostick, Manager of Tax Policy, William Hammer, Special Counsel for Tax and Jennifer Burleson, Assistant General Counsel. Several representatives of businesses and trade groups, along with legal and accounting professionals, were also present. Ms. Bostick opened the meeting by reiterating the language of the statute...

Continue Reading

Unclaimed Property Hunger Games: States Seek Supreme Court Review in ‘Official Check’ Dispute

Background As detailed in our blog last month, MoneyGram Payment Systems, Inc. (MoneyGram) is stuck in between a rock and a hard place as states continue to duel with Delaware over the proper classification of (and priority rules applicable to) MoneyGram’s escheat liability for uncashed “official checks.”  The dispute hinges on whether the official checks are properly classified as third-party bank checks (as Delaware directed MoneyGram to remit them as) or are more similar to “money orders” (as alleged by Pennsylvania, Wisconsin and numerous other states participating in a recent audit of the official checks by third-party auditor TSG). If classified as third-party bank checks, the official checks would be subject to the federal common law priority rules set forth in Texas v. New Jersey, 379 U.S. 674 (1965) and escheat to MoneyGram’s state of incorporation (Delaware) since the company’s books and records do not indicate the apparent owner’s last known...

Continue Reading

Breaking News: Texas Comptroller Publishes Retroactive Rule Targeting IT, Pharmaceutical Retailers; Clock Running on Comment Period

On May 20, 2016, the Texas Comptroller of Public Accounts published proposed amendments to 34 Tex. Admin. Code 3.584 – relating to the reduced rate available under the Texas Franchise Tax for retailers and wholesalers – in the Texas Register. As previously reported, these proposed revisions have the potential to double the tax rate for a substantial number of businesses – namely those in the information technology and pharmaceutical industries. The proposed changes to Rule 3.584 were first circulated as draft amendments to interested parties in April.  Although some interested parties opposed the draft, the official published version has remained unchanged after that initial informal review.  To summarize, entities “primarily engaged in retail or wholesale trade” are subject to a Texas Franchise Tax rate that is half the rate imposed on other businesses – 0.375 percent versus 0.75 percent for reports originally due on or after January 1, 2016.  To qualify for...

Continue Reading

Retailers, Such as IT and Pharmaceutical Vendors, Among Businesses Targeted by Texas Comptroller’s Proposed Rule Change

The Texas Comptroller of Public Accounts recently proposed amendments to 34 Tex. Admin. Code 3.584 relating to the reduced rate available under the Texas Franchise Tax for retailers and wholesalers. These proposed revisions, which appear to formalize elements of informal guidance issued in August of 2015, have the potential to substantially impact a great number of businesses, specifically in the information technology and pharmaceutical industries. The Texas Franchise Tax is imposed on taxable business entities, including corporations, partnerships and limited liability companies, doing business in the state of Texas. The generally applicable tax rate is 0.75 percent of “taxable margin”—which is itself computed under a complex set of statutes and regulations—however, the rate is reduced to 0.375 percent for entities “primarily engaged in retail or wholesale trade. To qualify for the reduced rate, a business must meet two statutory thresholds: first, it must...

Continue Reading

Texas Comptroller Defies the Laws of Physics

In this article, the authors examine a recent Texas administrative law judge’s opinion that says an out-of state company has nexus with Texas through downloaded software that it licenses to Texas customers.  They argue that the state comptroller’s adoption of the decision allows sales and use tax liability to be based on economic nexus instead of physical nexus and is therefore unconstitutional. Read the full article.

Continue Reading

STAY CONNECTED

TOPICS

ARCHIVES