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California Supreme Court Denies BOE Petition for Review in Lucent Technologies

Last week, the California Supreme Court denied the State Board of Equalization’s (BOE’s) petition for review in Lucent Technologies, Inc. v. State Bd. of Equalization, No. S230657 (petition for review denied Jan. 20, 2016). This comes just months after the California Court of Appeals held against the BOE and ordered it to pay Lucent’s $25 million sales tax refund. As explained in more detail below, the denial finalizes the favorable precedent of the Court of Appeals in Nortel Networks Inc. v. State Bd. of Equalization, 191 Cal. App. 4th 1259, 119 Cal. Rptr. 3d 905 (2011)—representing a monumental victory for a broad range of taxpayers in California and opening the door for significant refund opportunities. Moreover, the California Supreme Court’s denial affirms the Court of Appeals decision that the BOE’s position was not substantially justified and the taxpayer was entitled to reasonable litigation costs of over $2.6 million. Background Lucent and AT&T...

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Louisiana Supreme Court Upholds Bundling Portable Toilet Leases and Cleaning Services, but Not Sure About True Object of Resulting Transactions

If you are ever waiting in line for portable toilet facilities at the St. Patty’s Day Parade and in need of something to think about, consider the property and service you are about to use: Is it the lease of tangible personal property, the provision of a cleaning and waste removal service, or both? The Supreme Court of Louisiana grappled with this fundamental sales and use tax issue in Pot-O-Gold Rentals, LLC v. City of Baton Rouge, No. 2014-C-2154 (La. Jan. 16, 2015). Approaching the provision of toilets and services as a single transaction and finding the true object to be unclear, the court interpreted the taxing statute narrowly and ruled in favor of the taxpayer. Underlying the opinion is an unusually broad, all-or-nothing bundling approach to the taxability of goods and services provided together. The City of Baton Rouge taxes the lease of tangible personal property but does not tax the provision of cleaning services. The taxpayer provided both: a...

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Division of Tax Appeals Rules Patent License Fees Not Subject to Sales Tax in New York

New York State Division of Tax Appeals administrative law judge (ALJ) recently ruled in Matter of AMO USA, Inc. on the question of whether patent license fees are properly subject to sales tax as part of the sale of tangible personal property. The ALJ determined that the patent license fees were not taxable because they were received in exchange for the right to use the taxpayer’s patents, which was a valuable, intangible right that could be sold separately from any tangible personal property. Read the full article.

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