Author Archives: Andrew Yates

Andrew Yates
Andrew Yates is an associate in the firm’s State & Local Tax Group. He focuses his practice on advising clients on state and local tax and regulation matters, as well as unclaimed property issues.  Read More

Minnesota Supreme Court Requires Payment of Interest to Owner of Unclaimed Property

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On March 7, 2018, the Minnesota Supreme Court issued a decision in Hall v. Minnesota, No. A16-0874, requiring the Minnesota Commissioner of Commerce to pay interest on proceeds from an interest-bearing account while the proceeds were in the custody of the state. Four owners requested the return of their unclaimed property in custody of the state, and the state complied.  After receiving their property, the owners sued the state claiming that the state's refusal to pay interest was prohibited under the Takings Clause of the federal Constitution. Minnesota statutes provide that the Commissioner [...]Read more

Georgia Proposes Response to Federal Tax Reform

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Almost two months since the President signed the Tax Cuts and Jobs Act (TCJA) into law, state legislators across the country are still evaluating the federal tax law’s effects on state revenues and whether to amend state law in response. Introduced on February 12, Georgia’s Internal Revenue Code conformity bill for the 2018 tax year, HB 918, is one example of how states may respond to federal tax reform. HB 918 conforms to many of the provisions in the TCJA, including the $10,000 state and local tax deduction limitation and the treatment of net operating losses. Like at the federal level, [...]Read more

Third Circuit Continues the Marathon Battle Over Delaware’s Escheat Law

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Delaware’s unclaimed property law continues to face challenges in federal court. Our Unclaimed Property Group runs through the latest twist in the ongoing Marathon v. Cook saga at the Third Circuit. Federal common law rule Ripeness of the challenge A dim view of Delaware’s aggressive audits Read the full advisory here. [...]Read more

Another Wynne for Taxpayers: Unconstitutional Limitations on Credits for Taxes Paid to Other States

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Clark Calhoun explores the implications of a decision from the U.S. Supreme Court in an article published in IPT Insider. (See p. 10 of the linked document.) In Comptroller of the Treasury of Maryland v. Wynne, the U.S. Supreme Court declared Maryland’s income tax credit scheme unconstitutional, holding that the state’s failure to provide a full credit for the state and local taxes paid to other states was internally inconsistent and, therefore, violated the dormant Commerce Clause. Calhoun's article focuses on a similar tax credit issue, the constitutionality of which seems highly suspect [...]Read more

Colorado Asks the Supreme Court to Overturn Quill

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On August 29, the Direct Marketing Association (DMA) submitted a certiorari petition to the U.S. Supreme Court asking the Court to review the Tenth Circuit Court of Appeals’ decision in Direct Marketing Association v. Brohl (Brohl II). The case already made one trip to the Supreme Court (Brohl I), in which the Court held that the Tax Injunction Act did not bar federal-court review of the case. On remand, the Tenth Circuit held that Colorado’s use tax reporting regime did not violate the Commerce Clause. (To refresh: Colorado’s regime requires out-of-state sellers to report sales to Colorado [...]Read more

Sales Tax Nexus Roundup – Introducing Louisiana and Tennessee

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We have been closely following the rapid rise of state laws and regulations imposing sales tax nexus or reporting requirements on out-of-state sellers with no physical presence in the state. In the wake of decisions by the U.S. Supreme Court and the U.S. Court of Appeals for the Tenth Circuit in cases brought by the Direct Marketing Association (see prior coverage), states have felt emboldened to enact provisions that challenge the Supreme Court's holding in Quill v. North Dakota, which demands that a seller have physical presence in a state before the state can require the seller to collect [...]Read more

Vermont Proposes Colorado-style Use Tax Reporting Law

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As we discussed in February, the Tenth Circuit upheld the constitutionality of Colorado’s use tax notification law with its decision in Direct Marketing Association v. Brohl (DMA II). In his concurrence to the decision, Judge Gorsuch predicted that “many (all?) states can be expected to follow Colorado’s lead and enact statutes like the one now before us.” (See Gorsuch, J., concurring, at 9). It appears that Vermont may be the first Colorado follower. Vermont is a seasoned player in the game of sales and use tax nexus and collection. In 2011, the state began requiring retailers who make [...]Read more

South Dakota Takes NCSL Challenge, Enacts Sales Tax Nexus Law

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In February, we discussed how the National Conference of State Legislatures (NCSL) circulated a letter to all the states encouraging them to enact laws to challenge the physical-presence standard for sales tax nexus articulated in Quill v. North Dakota. On March 22, South Dakota heeded the NCLS's call when Gov. Dennis Daugaard signed SB 106. SB 106 imposes a sales tax collection obligation on out-of-state sellers "as if the seller had physical presence in the state," provided that the seller meets one of two conditions: (1) the seller's gross revenue from taxable products or services delivered [...]Read more

Tenth Circuit Questions Quill’s Endurance

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Last month, we discussed states’ efforts underway to attack Quill Corp. v. North Dakota, which provides a bright-line safe-harbor from sales and use tax collection for taxpayers without physical presence in a state. We discussed Alabama’s regulation requiring out-of-state sellers with sufficient sales to collect sales tax regardless of physical presence, as well as draft legislation circulated to the states by the National Conference of State Legislatures (NCSL). Since then, a federal appellate court decision has given the states new ammunition. On February 22, the U.S. Court of Appeals [...]Read more

States Continue to Challenge Quill’s Physical Presence Standard

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When a client calls us to inquire about sales tax exposure, we instinctively start asking questions about people and possessions: “Do you have property in other states? Where do you have employees? Have you sent any sales representatives to any states where you have made sales?” For decades, tax practitioners have known that a proper sales tax nexus analysis begins with physical presence. It’s black-letter law, after all. States can’t levy sales tax on someone who isn’t there. We know this because of Quill Corp. v. North Dakota and National Bellas Hess v. Illinois before it. [...]Read more