KPMG reports: Arkansas, California, Delaware, Washington

Arkansas, California, Delaware, Washington

KPMG’s This Week in State Tax—produced weekly by KPMG’s State and Local Tax practice—focuses on recent state and local tax developments.

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  • Arkansas: An administrative law judge concluded that machinery used to reprocess waste material into a new product was not exempt from the sales and use tax under the state’s manufacturing exemption.
  • California: The Franchise Tax Board issued a chief counsel ruling, concluding that royalty income derived from an unrelated party’s use of the taxpayer’s licensed marks was not a protected activity under Public Law 86-272 and that the taxpayer’s active involvement with the use of the licensed marks was not a de minimis activity. Thus, the taxpayer was considered taxable in the other states, and was not required to “throw back” receipts from sales of tangible personal property because it was not protected under Public Law 86-272 in those states.
  • Delaware: A lawsuit concerning the constitutionality of certain aspects of Delaware’s unclaimed property enforcement process is pending, with the parties filing a joint motion to dismiss the case with prejudice. 
  • Washington: An administrative law judge concluded that a medical imaging service provider could not deduct from its B&O tax base—the B&O tax being the tax that is imposed broadly on gross income without deduction for business expenses—amounts received from patients that were subsequently paid to a group of physicians. The fees paid to the physicians to interpret the medical images were not excludable from the B&O tax.


Read more at KPMG’s This Week in State Tax

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