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Washington Department of Revenue Announces LendingTree Decision Does Not Prevent Sourcing of Services to Customer’s Customer Location

The Washington State Department of Revenue (the "Department") recently announced its interpretation of the Washington Court of Appeals' March 30, 2020, adverse ruling in LendingTree, LLC v. Dep't of Revenue, no. 80637-8-I (Wash. App. Ct. Mar. 30, 2020). See here for our prior analysis of the LendingTree opinion. In its interpretation, the Department takes the view that the LendingTree opinion "does not represent a new legal framework," but rather that the court simply followed the applicable business and occupation tax apportionment rules in sourcing service receipts to the customer's location and rejecting the Department's methodology sourcing to the customers' customers' location. The Department's response suggests that it intends to narrowly apply LendingTree's holding. The Department admits that the court agreed with LendingTree in designating the service at issue to be LendingTree's referral services (lenders pay a fee to receive referrals of potential...

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A Year’s Review of Massachusetts Tax Cases

Allied Domecq Spirits & Wines USA, Inc. v. Comm’r of Revenue, 85 Mass. App. Ct. 1125 (2014) In a unique case, the Massachusetts Appeals Court affirmed a ruling of the Appellate Tax Board (ATB) that two corporations could not be combined for corporation excise tax purposes for 1996 through 2004. The distinctive aspect of this case was that a company was found not to have nexus with Massachusetts even though it rented property in the state and had employees in the state. If the company had been found to have nexus, it could have applied its losses to offset the income of an affiliated Massachusetts taxpayer in a combined report. The Appeals Court pointed to factual findings of the ATB that the transfer of employees located in Massachusetts to the company “had no practical economic effect other than the creation of a tax benefit and that tax avoidance was its motivating factor and only purpose.” The Massachusetts Supreme Judicial Court denied the taxpayer...

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