Posts by Timothy P. NoonanPartner
New York is one of the most, if not the most, aggressive states when it comes to tax enforcement. That’s why it was a bit confusing when the New York State Department of Taxation and Finance (the “Tax Department”) remained uncharacteristically silent following the landmark Supreme Court decision in South Dakota v. Wayfair. But that’s finally changed! On January 15, 2019, the Tax Department issued a Notice explaining its position on economic nexus for sales tax purposes. In this article, we’ll (1) provide a brief review of how the Wayfair case changed tax administration, (2) discuss New York’s new guidance, and (3) address some of the potential issues that are likely to arise as a result of this new guidance.
This article originally appeared in Law360 and is reprinted with permission.
It’s a new year here at “NY Tax Minutes,” but don’t worry, we’re still delivering all the month’s New York City and state tax news in a way that’s made for New Yorkers. Fast. But as we close the books on 2018 and look ahead to another year of tax updates, we’re adding a new wrinkle to this month’s column. We’re pulling out our crystal balls and predicting whether the news that brought 2018 to a close will continue into the New Year or whether we can turn the clock on these issues.
As the calendar flipped to 2019, we’ve seen continued activity in states looking to find some way to combat the loss of SALT deduction to “help” its in-state taxpayers. The Tax Cuts & Jobs Act (“TCJA”) (P.L. 115-97) capped the individual state and local tax deduction at $10,000 per year beginning January 1, 2018, making it even harder for folks in high-tax states to stomach the payment of state and local taxes. To alleviate this burden, various states have offered up a myriad of “workarounds” usually in form of charitable contributions or new taxes designed to shift the tax burden from individuals (whose SALT deductions are capped) to businesses (which face no such cap). As we move into a New Year, let’s examine some of the recent developments.
This promises to be the most “exciting” tax season ever for your friendly neighborhood accountants! It makes me a little relieved that I declined to follow in the footsteps of my father and grandfather (both CPAs) and turned to the legal world instead! With so many changes in the federal tax law, it’s going to be tough for accountants (and software companies) to keep up. And because most states’ tax laws are based on federal law or use federal tax rules as a starting point, so many of these federal changes will flow-through to state tax returns as well.
This article originally appeared in Law360 and is reprinted with permission.
We’re back with the fifth installment of “NY Tax Minutes.” And once again, we’re delivering all the month’s New York City and state tax news in a way that’s made for New Yorkers. Fast.
Earlier this month, those who oppose the SALT cap must have been pleased to see the results in the mid-term elections. With Democrats taking over the house, there’s already talk (here and here) that the next Congress will take aim at the cap. But quietly, on the other side of the battle lines, shots were fired by the federal government, as attorneys for the United States Department of Treasury and IRS filed a Motion to Dismiss the Complaint in State of New York, State of Connecticut, State of Maryland, and State of New Jersey v. United States Department of Treasury, The Internal Revenue Service and The United States of America, 18-cv-6427 on November 2 as noted here in the corresponding Memorandum of Law Supporting the Government’s Motion to Dismiss.
South Dakota Governor Dennis Daugaard and State Attorney General Marty Jackley announced on October 31, 2018 that the State of South Dakota has entered into a settlement agreement and stipulation of dismissal resolving all issues that had remained in the landmark Wayfair case. The settlement agreement and stipulation of dismissal were made with Wayfair Inc. and its co-litigants, Overstock.com Inc. and Newegg Inc., to resolve all remaining issues in South Dakota v. Wayfair Inc. State circuit court must still give its final approval to the settlement agreement reached by the parties and to the dismissal of both cases.
This originally appeared in Law360 and is reprinted with permission.
We’re back with the fourth installment of "NY Tax Minutes." And once again, we’re delivering all the month’s New York City and state tax news in a way that’s made for New Yorkers. Fast.
This month, we continue to chronicle New York’s response to the federal Tax Cuts and Jobs Act’s $10,000 cap on state and local tax deductions; we highlight important takeaways from the attorney general’s recent $30 million settlement announcement with a hedge fund manager in a tax whistleblower action; and we cover the tax department’s draft amendments to the state business corporation franchise tax regulations dealing with declaring and paying estimated taxes. We also highlight this month’s new and noteworthy decisions from the Tax Appeals Tribunal.
Fifteen or so years ago, there was a debate brewing between Connecticut and New York about the so-called “convenience rule.” New York had the rule, so Connecticut residents working for New York employers were subject to it. But Connecticut didn’t have the rule, so Connecticut residents couldn’t get credit for taxes paid to New York against their Connecticut income tax liability.
This originally appeared in Law360 and is reprinted with permission.
We’re back with the third installment of "NY Tax Minutes." And once again, we’re delivering all the month’s New York state and city tax news in a way that’s made for New Yorkers. Fast.
This month, we revisit New York’s ongoing battle with the federal government over the recently enacted $10,000 cap on state and local tax deductions; we take a look at the importance of taxpayer testimony in domicile cases; we address the ever-growing list of non-audit related legal challenges facing taxpayers in New York state, including whistleblower lawsuits and class actions; and, lastly, we review New York City’s recent (better late than never) guidance on repatriated income for business taxpayers.
The renewal period for Highway Use Tax registrations is just around the corner. The Tax Department, ever mindful of the leverage this affords, just sent out a slew of computer-generated notices that inform taxpayers with outstanding tax liabilities that the Department cannot issue them a renewed Certificate of Registration and decals until the liabilities are resolved.
This originally appeared in Law360 and is reprinted with permission.
Well, thankfully, Law360 didn’t cancel our column after month one, so we’re back with the second installment of “NY Tax Minutes.” If we can make it here, we’ll make it anywhere!
Once again, we’re delivering all the month’s New York State tax news in a way that’s made for New Yorkers. Fast. This month, we cover the governor’s brash response to the IRS’s proposed end to one of New York’s SALT deduction cap workarounds and highlight the Tax Appeals Tribunal’s recent decision explaining the procedures for claiming sales and use tax refunds after a failure to properly protest an original assessment. We also cover two recent New York State Notices addressing the state’s treatment of IRC § 965 repatriation amounts, along with a recent Advisory Opinion on the proper (or improper) use of sales tax exemption certificates.
Earlier this summer, the New York City Department of Finance issued a memorandum explaining the recognition and allocation of deferred income from nonqualified deferred compensation plans (“NQPs”), specifically geared towards hedge fund managers. (NYC Department of Finance, Finance Memorandum 18-6, “Recognition and Allocation of Deferred Income from a Non-Qualified Deferred Compensation Plan,” June 29, 2018 (“Memorandum 18-6”). Sorry about the delay in reporting. Tax lawyers need vacations too.
This originally appeared in Law360 and is reprinted with permission.
Life moves fast in New York. So do taxes. New York state (and City) tax a lot of people, places and things. The state and city’s audit divisions and administrative appeal tribunals are both among the most active in the country. So how, you’re asking yourself, do I possibly keep up with all the headlines, rulings, opinions and law changes happening across the Empire State? Well, you’ve come to the right place.
Once a month, your authors, two practicing tax attorneys (nerds) with ties all over the state (Tim was born and raised in Buffalo; Craig grew up on the shores of the St. Lawrence River, before moving to New York City) will give you a full update on everything New York tax. But we’ll also deliver the news in a way that’s made for life in New York: fast.
So, without further fanfare, we give you the first installment of "New York Tax Minutes." This month, we cover New York state’s deafening silence on the Wayfair ruling and the state’s pending lawsuit against the federal government over the recently enacted state and local tax deduction cap. We also highlight two recent New York state and city publications addressing some complicated apportionment issues surrounding hedge fund manager compensation.
On June 27, 2018, the New York State Division of Tax Appeals and the Tax Appeals Tribunal (collectively “DTA”) sent its Annual Report for the Fiscal Year 2017--2018 to the Governor and to the heads of the Senate and Assembly. Each year, these reports contain some new and noteworthy figures. This year’s highlights include:
Well, it happened. Back in January, New York’s Governor Andrew Cuomo announced that the State was considering, among other things, a lawsuit against the federal government for taking away the SALT deduction as part of the 2017 tax overhaul. We talked about that issue here, and I've also talked more generally about the pain and suffering (and residency changes) caused by the loss of the SALT deduction. But yesterday, New York followed through in court, and it had some helpers.
Wow.
This morning the U.S. Supreme Court sent a shockwave through the Internet—and the SALT community—by issuing its long-awaited decision in the South Dakota v. Wayfair case and resoundingly overturning the Quill physical-presence nexus standard that had been the law of the land for sales tax purposes for the past several decades.
Here at Noonan’s Notes Blog, we previously covered the substance of the Governor’s Proposed FY 2019 Budget here and the Final Budget here. On May 25, 2018, the New York State Department of Taxation and Finance (the “Department”) issued a Technical Memorandum—TSB-M-18(4)I—providing its summary of the personal income tax changes enacted in the final 2018-2019 budget. The TSB-M is available here.
2018 has been an amazing year for tax practitioners. Since the passage of the Tax Cuts and Jobs Act, practitioners have been scrambling to understand the implications of the federal tax overhaul and to begin work on implementing new strategies for clients. And though the legislation obviously occurred at the federal level, many SALT practitioners have been dealing with the dramatic fallout at the state level as well, since aspects of the federal tax reform have had complicating and unexpected ramifications for state tax purposes.
As state tax lawyers, we are often asked for advice on navigating different—and often competing—state tax schemes. The law in this area is subject to a handful of constitutional limitations. For instance, the Commerce Clause requires (among other things) that state taxes be fairly apportioned. So in the case of nonresidents and other out-of-state or multistate taxpayers, many state tax schemes determine the taxability of a transaction or person based on the numbers of days spent in the taxing state. Consequently, our advice to nonresident taxpayers often turns on the number of “days” involved. This concept of counting “days” is actually pretty important in our world! But one thing that can be interesting in these cases is seeing how different states treat seemingly similar situations or transactions.
On May 15, 2018, Amazon Services, which assists third parties selling their products through the online Amazon Marketplace, sent an email notifying third-party sellers that “Amazon has received a valid and binding legal demand from the New York State Department of Revenue (DOR)” (we assume the request came from the New York State Department of Taxation and Finance—the state agency responsible for administering tax laws in New York State). According to Amazon’s email, Amazon plans to release the following information to New York regarding its third-party sellers by June 1, 2018:
On March 7, 2018, the NY Tax Department issued its first income tax advisory opinion of the year. The content of the advisory opinion, a review of the rules governing the timing of the tax credits associated with the state’s Brownfield Cleanup Program, isn’t particularly noteworthy. What struck us here at Noonan’s Notes, and made the opinion blog-worthy, is the timing of the opinion. Though the Tax Department has many functions (e.g., return design and processing, enforcement/audit, tax collection, etc.), this opinion may illustrate that additional resources should be allocated to its interpretation and education functions.
Yesterday we put out an "Alert" the Governor’s final 2019 budget bill. It contains everything you need to know about what tax provisions passed in the budget (and what did not pass).
Here at the Noonan’s Notes Blog, we’ve been following the process closely (see my prior report on the proposed budget here). Here’s my take on how everything shook out:
For years we’ve been following a ticking income tax time bomb of sorts, dealing with a big 2017 issue for hedge fund managers receiving deferred income. We first started talking about this in 2013 (click here for the article) and followed-up on it a few times later (including here), wondering how states would react to all this. But up until last week, we’ve heard nothing from the New York tax department on the issue.
New Tribunal Case Offers Up a New Framework for Answering this Question
New York’s two-part test for statutory residency has been heavily litigated over the years, and one of the biggest issues has involved the determination as to whether a taxpayer maintained a “permanent place of abode.” In 2014, the State’s highest court in Gaied v. NYS Tax Appeals Tribunal struck down the Tax Department’s overly-broad interpretation of “permanent place of abode” in favor of a more sensible interpretation. In doing so, the High Court declared that in order for a place to constitute a permanent place of abode (“PPA”), “there must be some basis to conclude that the dwelling was utilized as the taxpayer’s residence.” And later in the decision, the Court opined that to qualify as a PPA, “the taxpayer must, himself, have a residential interest in the property”
Governor Andrew Cuomo declared a State Disaster Emergency for counties affected by the March 2018 Nor’easters that began early this month. If you hadn’t heard the term before, a nor’easter is a large cyclone usually accompanied by heavy rain or snow that can cause hurricane-force winds, blizzard conditions, and coastal flooding. To us folks in Buffalo, we also call this “Tuesday.”
It’s “budget season!” On January 16th, Governor Cuomo released the FY 2019 Executive Budget, which is available here, and one day later the Department of Taxation and Finance issued a preliminary report on consequences of the Federal Tax reform and possible legislative responses, which can be found here. We blogged about some of this last month. Then, just last week, in his “30-day amendments” to the FY 2019 Executive Budget, we got to see more of the Governor’s proposals take shape. Now the dust has somewhat settled on all these proposals, so let’s take a look. The highlights of the proposed amendments, which include a new optional Employer Compensation Expense Tax system, increasing the options for charitable deductions, and provisions designed to decouple the state tax code from the federal tax code, are summarized below.
We are just a couple days into 2018, and the fallout from the recently passed federal tax reform has already begun.
On Friday afternoon, we emailed many clients and friends regarding the possibility of a “last chance” to claim a disappearing federal income tax deduction by paying 2018 state income tax estimates at the end of 2017. Apparently some of you didn’t get the email until Sunday. Sad! More on that below.
Due to the likely elimination of almost the entire SALT deduction in 2018, this could be the last opportunity for taxpayers to pay state and local taxes and still ensure a full federal tax deduction. Keep reading to learn more.
Here's what you need to know about the likelihood of a disappearing SALT deduction.
On October 17, 2017, the New York State Division of Tax Appeals and Tax Appeals Tribunal (collectively “DTA”) submitted its annual report to the Governor and heads of the Senate and Assembly for the 2016-17 fiscal year. Numbers-wise, we don’t see a tremendous change over last year in the outcomes of Administrative Law Judge and Tax Appeals Tribunal cases.
For years, there have been whispers about a big 2017 tax issue for hedge-fund managers. What’s the deal?
Just when you thought you knew everything there was to know about multistate corporate income tax apportionment, the states start switching up the rules!
Last Friday, members of the NYS Legislature introduced a bill aimed at clarifying the definition of “permanent place of abode” under Tax Law § 605(b)(1)(B) for statutory residency purposes. Under that statute, a person is generally taxable as a resident if they meet a two-pronged test: (1) maintain a “permanent place of abode” in New York and (2) spend more than 183 days in New York.
For years, practitioners and taxpayers have struggled with the cumbersome, four-page power-of-attorney form that the New York Tax Department has required taxpayers to use when they wanted to appoint a representative to help them with their tax matter.
But this week, the NYS Tax Department rolled out a new web application where POAs can be filed online.
Last week, another great domicile case was issued by New York’s Division of Tax Appeals. The case, entitled Matter of Patrick, chronicled a movie-esque love affair between long-lost high school sweethearts and—more importantly for our purposes—another win for a taxpayer in a change-of-domicile case. We also covered this case in our TiNY Blog.
The New York State Department of Taxation and Finance has issued a new sales tax ruling on the taxability of club dues at a social club. In an advisory opinion released May 24, tax department held that fees charged to nonmembers for club-sponsored activities are not subject to tax merely as a result of the club’s relationship to its members and that the nature of each activity should determine its taxability. The ruling was also written up in a recent Tax Notes article, in which yours truly was quoted.
Last week the Tax Department published another advisory opinion on a “software as a service” issue, continuing the trend of rulings on software sales “in the cloud.” A few years ago, I wrote an article on sales tax issues in the cloud-computing context generally, and we have also covered New York cases where the issue has come up. In this most recent opinion, the taxpayer asked whether charges for its “video generating services” were subject to sales tax. And not surprisingly, the Department concluded that the sales were taxable, continuing its trend of taxing almost everything that moves in the cloud.
During the past several years, we have seen a continuing trend in New York personal income tax audits involving the examination of federal tax issues. The New York State Tax Department, overall, has one of the more sophisticated and aggressive personal income tax audit groups in the country. For years, as I have outlined in numerous blogs and articles, the Tax Department’s residency audit program has been second to none. But as we have seen, the Tax Department focuses more on flow-through entity issues. We also have seen the expansion of an interesting phenomenon: federal tax audits being conducted by New York tax auditors.
Here’s a note on an interesting development in the ongoing litigation between the Tax Department and Sprint. For background, Sprint has been embroiled in the false claims action brought by New York State as a result of allegations that Sprint knowingly under-collected sales tax on bundled charges to New York cellular customers. When the case was brought several years ago, it was the first big false claims case brought by the State under the new False Claims regime that included tax violations under its realm. Sprint unsuccessfully tried to dismiss the lawsuit altogether, but a couple of years ago New York’s Court of Appeals held that the action could continue.
On March 7th, a Superior Court in Connecticut issued a decision that could have a significant impact on some investment fund managers who live in Connecticut but manage funds in other states. In Jonathan A. Sobel v. Commissioner of Revenue Services, the Judge held that investment (and therefore intangible) income received by Mr. Sobel, a partner in a partnership that served as the general partner and advisor of certain investment funds, was New York source income and therefore Mr. Sobel could claim a credit on his 1997 and 1998 Connecticut resident tax return for taxes paid to New York (yes, the case has been going on that long!).
Last month we published an article in State Tax Notes about my favorite topic: our win in the 2014 Gaied case. Folks around here are a bit tired of me talking about Gaied. Heck, there’s even a video out there! But I couldn’t let Gaied’s 3rd birthday go by without a mention. That would just be mean.
The U.S. District Court for the Southern District of New York recently held that UPS violated an agreement it had signed with the state of New York, as well as New York law, when it transported unstamped, untaxed cigarettes from and between Native American reservations for a number of shippers and awarded the state compensatory and monetary damages, with what could mean up to $872 million.
Vilma Bautista once worked for Imelda Marcos, the former first lady of the Philippines – who was so incredibly rapacious and wealthy that she famously owned more than 2,700 pairs of shoes. Last week, she found herself in the news for another, less interesting issue: as a party in a New York Tax Appeals Tribunal case.
The New York State Bar Association Tax Section has made their feelings known about proposed legislation that could have a negative impact on the tax appeals process in New York, in a report principally authored by Paul R. Comeau, my partner at Hodgson Russ.
Last year, we filed a lawsuit on behalf of Richard Chamberlain and Martha Crum against the New York State Tax Department, alleging that New York’s statutory residency scheme improperly subjected them to double taxation in violation of the Federal Commerce Clause.
New income tax guidance has been released by the City of Detroit, aimed specifically at professional athletes. The guidance clarifies how professional athletes should apportion their income to Detroit for purposes of its city income tax.
Matter of CLM Enterprises illustrates the long-established rule that form always wins over substance in the sales tax area. The taxpayer was a holding company that owned several car dealerships, all as single member LLCs, which are disregarded for income tax purposes but NOT sales tax purposes. The issue in the case concerned how it was treating loaner cars. For several administrative and liability reasons, the group decided that all loaner cars should be titled to the taxpayer. The loaner cars initially were acquired by the dealerships, but then were transferred by the dealerships to the taxpayer. No cash changed hands, however. This was not a “sale” in the ordinary context. Whatever the case, when customers used the loaner cars, expenses associated with this were allocated to the respective dealership.
Governor Cuomo’s proposed budget legislation for fiscal 2017-18 was released on January 18, 2017. In his briefing that evening, the governor remarked that one of the “main aspects of this budget is tax policy.” That’s certainly one way to captivate the attention of tax practitioners!
The NYS Tax Department’s ongoing efforts to combat identify theft and deter fraud have yielded a new requirement for this filing season. Beginning with the 2016 tax year, all e-filed personal income tax returns must provide certain information from the taxpayer’s state-issued driver’s license or non-driver ID.
Late last week the Tax Appeals Tribunal issued a decision (in Matter of Purcell) reversing several prior Administrative Law Judge determinations on a technical issue related to the calculation of the tax reduction credit that was available in the old Empire Zone Program. I actually covered this issue several years ago in a Noonan's Notes article. And though that alone doesn’t make this very exciting, the case is noteworthy given that the tax department had lost as many as 4 cases at the Administrative Law Judge level over the past several years on this issue, and undoubtedly has probably settled several others favorably for taxpayers. The Purcell case goes in the exact opposite direction as all these prior cases, and holds that the tax department’s methodology for computing this “tax reduction credit” was reasonable.
Last week we had the opportunity to attend the first annual New York State Tax Summit, a daylong seminar put on by the New York State Department of Taxation and Finance at their offices in Brooklyn. It was a fantastic event, with senior Department officials presenting a wide variety of topics and issues for discussion. There were close to 200 attendees present. And the Agenda was impressive. Here are some of the highlights of the day:
Chicago lawyer Stephen Diamond has made quite a name for himself in recent years for his perceived abuse of the Illinois False Claims Act (“FCA”). Many believe Diamond is misusing the FCA or is using it for self-serving reasons not consistent with the FCA’s intent.
Chicago lawyer Stephen Diamond has made quite a name for himself in recent years for his perceived abuse of the Illinois False Claims Act (“FCA”). Many believe Diamond is misusing the FCA or is using it for self-serving reasons not consistent with the FCA’s intent.
Chicago lawyer Stephen Diamond has made quite a name for himself in recent years for his perceived abuse of the Illinois False Claims Act (“FCA”). Many believe Diamond is misusing the FCA or is using it for self-serving reasons not consistent with the FCA’s intent.
Chicago lawyer Stephen Diamond has made quite a name for himself in recent years for his perceived abuse of the Illinois False Claims Act (“FCA”). Many believe Diamond is misusing the FCA or is using it for self-serving reasons not consistent with the FCA’s intent.
As practitioners who deal with New York income tax audits on a day-to-day basis, we often have a front row seat to new audit techniques and new areas of focus. And in recent years, we have noticed a lot more audit activity in the partnership or flow-through entity area. Most of this has centered around nonresident owners of flow-through entities, and more specifically the methodology in which these entities allocate income in and out of New York. As I have outlined before in some other articles (click here and here), often we can gain insight on trends like this by studying the audit guidelines that the Tax Department issues to its auditors. The Tax Department’s Nonresident Audit Guidelines are more widely-known, and available on the Tax Department's website., Over the years, however, the Tax Department has also issued different iterations of its Nonresident Allocation Guidelines, with the most recent version being issued in June 2013. But after about 17 focused minutes of Google searching (which is the maximum amount of time one should spend Googling something), I have not been able to find those guidelines anywhere on the Tax Department’s website, or on the Internet generally. That is, of course, until now.
There are always “traps” in the tax law, where taxpayers unwittingly walk into a tax problem that they didn’t see coming. In the residency area, some taxpayers often got trapped on a move-in or move-out situation, with the Tax Department taking the position that “statutory residency” trumps “domicile.” Thus, a taxpayer who didn’t move into New York until, say, August of a particular tax year still could be taxed as a full-year resident if he or she ran afoul of New York’s statutory residency test (i.e., the taxpayer maintained a permanent place of abode for almost the whole year and spent more than 183 days in the state). Indeed, the Nonresident Audit Guidelines (see page 64) contained a whole section about this.
Guess what? We may have closed this trap!
One of the more interesting aspects I’ve seen in residency cases in my practice is the importance and understanding of a taxpayer’s intent in the overall analysis. That’s part of what makes residency cases so unique. There are likely very few situations in federal or state tax law where what is kicking around in somebody’s mind is critical to the determination of the tax issue. But the domicile test—which looks to discover where a taxpayer has his permanent or primary home—turns on the notion that the taxpayer’s intent can be a deciding factor. This can make the audit process really difficult. How do you prove to an auditor what your client was thinking? You can point to objective facts; you can point to case law; but how do you get into someone’s head? And more importantly, how do you convince an auditor to do the same?
It seems I can’t get through a work day lately without some tax alert, webinar invite, article, or tweet addressing the new IRS tangible property regulations. These new rules have caused quite the uproar in the tax community, as outlined by articles here, here, and here. These regulations are aimed at questions as to whether expenditures on tangible property are currently deductible, or whether they must be capitalized and recovered through depreciation over time. And the principal question that the final regulations address is whether expenditures relating to the maintenance and alteration of tangible property, including buildings and other fixed assets, are properly treated as repairs, which are currently deductible, or are required to be capitalized as an improvement to the property. That distinction—between deductible repairs and capital improvements—has been mostly developed through judicial decisions, based on facts and circumstances. But in 2003, the IRS issued Notice 2004-6 , announcing that it intended to propose regulations in this area. And with the expediency and speed we have come to expect from our government, final regulations were issued in September 2014, and more recently the IRS announced simplified procedures offering relied to certain small businesses.
One of the more interesting state tax issues we get to deal with as state and local tax practitioners involve questions in the sales tax area. One of the reasons is because the answer to every sales tax question is the same: “it depends.” State sales tax statutes have so many ins and outs, exemptions and exclusions, ifs, ands, ors, and buts that there rarely is a clear answer. And even if there is a clear answer, it often depends on the application of a variety of different facts and circumstances. This usually results in articles every year about the different tax consequences that can arise in silly circumstances, such as the taxability of bagels depending on whether or not they are sliced or not; candy bars being taxable based on whether or not they are in the candy or cookie aisle, etc.
But the other interesting aspect of sales tax is that it touches everybody: every business, every taxpayer, every industry. A couple of years ago, we started to learn this firsthand when a lot of my income tax clients in the Wall Street area started contacting me about sales tax issues. Sales tax on Wall Street? What can that be about?