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August 17, 2020

State and Local Tax Weekly for August 7

Ernst & Young's State and Local Tax Weekly newsletter for August 7 is now available. Prepared by Ernst & Young's State and Local Taxation group, this weekly update summarizes important news, cases, and other developments in U.S. state and local taxation.


State tax agency responses to the COVID-19 emergency

The Indirect Tax COVID-19 state response matrix provides updates on the latest state tax agency responses related to the COVID-19 emergency. The matrix is available on EY's Indirect Tax COVID-19 state response website, which is accessible directly through this link, or on where other important tax-related information pertaining to the COVID-19 emergency is available.


Colorado home rule, self-collected municipalities begin adopting economic nexus and marketplace facilitator collection laws after launch of online centralized filing portal

In June 2020, the Colorado Department of Revenue (CO DOR) launched the first version of the new Sales and Use Tax Simplification program (SUTS). This online centralized filing portal enables a single point of remittance for (1) all state-collected sales and use taxes and (2) local sales and use taxes of home rule, self-collected municipalities that have agreed to participate in SUTS. As of Aug. 5, 2020, 20 Colorado home rule, self-collected municipalities are participating in SUTS and 14 additional self-collected municipalities are in the process of executing agreements to participate as well.1

Since the SUTS launch, some home rule, self-collected municipalities have also adopted the Colorado Municipal League (CML) Model Ordinance on Economic Nexus and Marketplace Facilitators (Model Ordinance), which enables the adopting municipalities to impose economic nexus and marketplace facilitator collection laws when sales into the state (not just the individual municipality) exceed $100,000 per year.2 In introducing the Model Ordinance, the CML noted that home rule, self-collected municipalities should only adopt it if they participate in SUTS because the CML believes that complying with facilitator collection laws would be unconstitutionally burdensome under South Dakota v. Wayfair, Inc., 138 S.Ct. 2080 (2018) unless the municipality participates in SUTS. Specifically, the CML states on its website: "The risk of a lawsuit under the United States Commerce Clause if you [i.e., self-collected municipalities not participating in SUTS] were to enforce economic nexus without the single point of remittance is high. Using the single point of remittance portal [i.e., SUTS] and uniform language [i.e., Model Ordinance] will assist in lessening that risk, although not removing it entirely."

For additional information on this development, see Tax Alert 2020-1989.

North Carolina announces transfer pricing resolution initiative for corporate taxpayers

The North Carolina Department of Revenue (NC DOR) implemented a voluntary transfer pricing resolution initiative for corporate taxpayers to expeditiously resolve intercompany pricing issues. The initiative runs from Aug. 1, 2020 through Dec. 1, 2020, not including documentation or accounting follow-up.

According to the NC DOR, the purpose of this initiative is to "fairly and consistently expedite the resolution of corporate Intercompany Pricing Issues subject to N.C. Gen. Stat. [Section] 105-130.5A, provide certainty and uniformity to taxpayers, reduce time in disputes, and form an efficient basis for resolution of this corporate tax issue for all open tax years." For more on this initiative, see Tax Alert 2020-1996.


Federal: The IRS issued final regulations (TD 9907) under IRC §§ 162, 164 and 170, generally affecting taxpayers who make transfers to charitable organizations for business purposes and, in exchange, receive state or local tax credits or other third-party benefits. The final regulations: (1) provide safe harbors under IRC § 162 affecting the treatment of payments that businesses make to entities described in IRC § 170(c); (2) provide a safe harbor under IRC § 164 for payments to entities described in IRC § 170(c) by individuals who itemize deductions and receive, or expect to receive, a state or local tax credit in return; and (3) update the regulations under IRC § 170 to address how the quid pro quo principle applies to donors who receive benefits from a third-party in exchange for contributions. The regulations took effect Aug. 11, 2020.

Federal: The IRS issued proposed regulations (REG-107213-18) under IRC §1061, which recharacterizes as short-term capital gains certain net long-term capital gains of a partner holding one or more applicable partnership interests (APIs). An API is defined as a partnership interest that is transferred to, or held by, a taxpayer in connection with the performance of substantial services by the taxpayer or any related person in an applicable trade or business. For more on this development, see Tax Alert 2020-9042.

North Carolina: The North Carolina Department of Revenue (NC DOR) issued a summary of the state's market-based sourcing provisions which apply to tax years beginning on or after Jan. 1, 2020. According to the NC DOR, these provisions generally require receipts from services to be sourced to North Carolina if and to the extent the service is delivered to an in-state location. (Previously, such receipts were sourced based on the cost-of-performance method.) The state's market-based sourcing administrative rules provide for reasonable approximation when a taxpayer cannot determine the state to which a sale should be sourced and, when reasonable approximation cannot be determined, provide for the removal of such receipts from the factor calculation. The NC DOR summary addresses generally applicable rules and special/industry specific rules. Topics covered include guidance relating to receipts derived from: (1) in-person services, other than professional services (directly/indirectly provided by the taxpayer); (2) professional services; (3) non-in-person and non-professional services delivered to the customer, on behalf of the customer, or delivered electronically through the customer; (4) license or lease of intangible property; (5) sale of intangible property; (6) interest income received by a non-bank; (7) special rules for sourcing software transferred through a tangible medium and all other cases of software; (8) industry specific rules for wholesale content distributors, and banks; and (9) other special apportionment provisions. N.C. Dept. of Rev., Summary for Computing the Sales Factor Based on Market-Based Sourcing (July 16, 2020).


Arkansas: Mandatory service fees on "to go" restaurant orders is part of the sales price of the meal and as such is subject to Arkansas gross receipts tax (the state's title for its sales and use tax), which must be collected and remitted by the restaurant. Further, because the service fee cannot be deducted from the sales price, it remains subject to tax even if it is returned to the sales associate performing the service. Ark. Dept. of Fin. and Admin., Rev. Legal Counsel Op. No. 20200312 Re: Gross Receipts Tax — Service Fees (May 7, 2020).

Arkansas: A vehicle charging station operator's charges to customers for the purchase of electricity based on the time connected to a charging station plus related session and idling fees are subject to Arkansas gross receipts tax (the state's title for its sales and use tax) when the operator did not take a resale exemption on electricity purchased from a utility company. The Arkansas Department of Finance and Administration noted that "[t]here is no mechanism under the law by which a seller may be granted an exemption from collecting sales tax on the retail sale merely because the retailer has chosen to forego the available wholesale tax exemption on purchases for resale." Ark. Dept. of Fin. and Admin., Rev. Legal Counsel Op. No. 20190622 Re: Gross Receipts Tax — Taxability of Charging Stations for Electric Motor Vehicles (May 19, 2020).

Louisiana: New law (HB 69) provides that a taxpayer who is the winning bidder awarded a census block by the Federal Communications Commission (FCC) in the Rural Digital Opportunity Fund Auction is eligible for the state and local sales and use tax rebate for fiber-optic cable equipment. The rebate is equal to 50% of the sales and use tax paid on fiber-optic equipment used to distribute fixed and mobile broadband networks to eligible rural unserved areas in Louisiana. Each item of fiber-optic cable equipment is eligible for a single rebate (i.e., later transactions involving the sale or resale of that same item are not rebate-eligible). The rebate is not available for such purchases paid for with state or federal funds unless those funds are reported as taxable income or are structured as repayable loans. State and local rebates will be processed by the Louisiana Department of Revenue and the appropriate local taxing authority, respectively. In both cases, requestors must provide documentation of rebate-eligible sales and evidence that the requestor has been awarded a census block by the FCC. HB 69 took effect July 1, 2020. La. Laws 2020 (1st Extra. Sess.), Act 35 (HB 69), signed by the governor on July 13, 2020.

Michigan: A manufacturer of orthopedic-implants is not entitled to a refund of use tax paid on free, implants-related medical instruments it provided to hospitals because it imposed at least one requirement on hospitals regarding the instruments and thus, did not relinquish total control of the instruments. In so holding, the Michigan Court of Appeals (Court) found that although the Michigan Tax Tribunal (Tribunal) reached the correct result, it erred in adopting a nexus test applicable to sellers of property when the manufacturer did not receive consideration for the instruments provided free of charge. (The Tribunal found that the manufacturer used the instruments because it ceded control of them in a transaction with a significant connection to Michigan.) The Court reasoned that although the manufacturer transferred possession of the instruments to the hospitals, it retained ownership of the instruments by requiring the hospitals to reimburse it for any instrument loss or damage. Zimmer US Inc. v. Mich. Dept. of Treas., No. 349358 (Mich. Ct. App. July 23, 2020) (unpublished).

South Carolina: The South Carolina Department of Revenue (SC DOR) in response to a ruling request said that COVID-19 surcharges or fees, handling fees, takeout charges or similar fees charged by retailers due to the COVID-19 emergency as part of a sale of tangible personal property is includable in gross proceeds of the sale and, as such, is subject to the sales/use tax unless otherwise exempt. The SC DOR's response includes illustrative examples. S.C. DOR, SC Information Letter #20-23 Charges Imposed by Retailers Due to COVID-19 (Sales Tax) (Aug. 5, 2020).

South Dakota: The South Dakota Department of Revenue (SD DOR) issued guidance on internet related services not subject to tax and subject to tax. According to the SD DOR guidance, due to the expiration of grandfathering provisions set forth in the federal Internet Tax Freedom Act (P.L. 105-277) (ITFA) which allowed certain states to continue to impose their sales tax on internet access after the initial adoption of ITFA in 1998, as of July 1, 2020 internet access is no longer subject to South Dakota state and municipal sales tax. Examples of nontaxable internet related services include live chat or conferencing fees; prepaid internet service; fees for internet activation, disconnection, early termination, and reconnection; and internet service upgrade charges. Examples of taxable internet related services include internet email services; internet based live chat or conferencing sessions (i.e., webinar sessions); technical assistance and support; web hosting and or domain name registration; website development (without placement); website maintenance (without placement); and real-time streaming video/audio. The SD DOR guidance also addresses tax applicability related to the following: various services and equipment, websites (e.g., webpage development, preparing and placing websites, advertising on a webpage, website internet storage or hosting), other services (e.g., domain names, apps, search engines, strategic links, website security and certificates), resale, support services, voice over internet protocol, sales over the internet, and internet auction services. S.D. Dept. of Rev., "Internet" (July 2020).


Louisiana: New law (HB 4) extends the state's historic rehabilitation tax credit allowing the credit to apply to eligible costs and expenses of rehabilitation incurred before Jan. 1, 2026 (formerly, Jan. 1, 2022), regardless of the year in which the property is placed in service. No credit is allowed for expenses incurred on or after Jan. 1, 2026. The maximum aggregate total of tax credit that may be reserved by taxpayers is capped at $125 million annually. If the amount of reserved credits is less than the capped amount, the excess amount is available for issuance in subsequent calendar years. HB 4 took effect July 1, 2020. La. Laws 2020 (1st Extra. Sess.), Act 25 (HB 4), signed by the governor on July 13, 2020.

Louisiana: New law (SB 13) amends the Louisiana New Markets Jobs Act's premium tax credit, making available $75 million of qualified equity investment authority for certification and allocation for applications beginning Aug. 1, 2020. For all qualified equity investments issued on or after Aug. 1, 2020, the credits can be claimed over four years, starting with 15% for the fourth through sixth credit allowance dates and 10% for the seventh credit allowance. The credit carryforward period is reduced to five years (from 10 years). To claim the credit, an applicant must provide evidence that, on a collective basis with its affiliates, it has invested at least $100 million in Louisiana qualified active low-income community businesses or other Louisiana investments. SB 13 also modifies tax credit recapture provisions, expands various definitions, and defines new terms. La. Laws 2020 (1st Extra. Sess.), Act 17 (SB 13), enacted on July 13, 2020.

Mississippi: New law (SB 2563), effective July 1, 2020, creates the Incentives Transparency for a Prosperous Mississippi Act, making "[t]he awarding of an economic incentive to a certified applicant … contingent on a finding … that the applicant's qualified economic development project … is clearly in the best interests of this state." The law requires certified applicants3 that are awarded certain economic incentives to enter into a memorandum of understanding (MOU) with the state through the Mississippi Department of Revenue (Department) that includes time-specific performance measures for the applicant's qualified economic development project. The MOU permits the state to stop, readjust or recapture all or part of the economic incentive based on noncompliance. Certified applicants that do not meet performance measures cannot receive or be awarded an economic incentive for five years from the default notice date until they take specific steps to cure the default or repay the economic incentive. By March 1 of each year, certified applicants are required to file an annual report containing certain information regarding the qualified economic development project. Applicants awarded economic incentives before July 1, 2020 can file the applicable information voluntarily. SB 2563 took effect July 1, 2020. Miss. Laws 2020, SB 2563, signed by the governor on July 8, 2020.


New Jersey: The New Jersey Supreme Court (Court) reversed the New Jersey appellate court and reinstated the opinion of the New Jersey Tax Court, holding that a for profit entity that operates an upscale restaurant under a management subcontract agreement with a New Jersey public university is subject to local property tax on the portion of the building it occupies as it does not qualify for the public purpose property tax exemption. The entity does not qualify for the exemption under N.J.S.A. §54:4-3.3 (which exempts government property used for a public purpose) or N.J.S.A. §54:4 — 3.6 (which exempts property based on actual use for certain educational institutions and nonprofit organizations) because neither the entity nor the university (which is a governmental entity) established that the restaurant was used for a public purpose. Rather, the Court found, the overriding or paramount purpose of this commercial endeavor was focused on profitmaking and the entity was required to bear its fair share of the local tax burden. Further, the Court rejected the appellate court's approach to determining the public purpose which considered the relationships between the university and the restaurant in addition to various supporting factors. Gourmet Dining, LLC v. Union Twp., No. A-8-19 (N.J. S.Ct. June 30, 2020).

Oregon: The U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) found that the Oregon Department of Revenue (OR DOR) discriminated against a railway company in violation of the federal Railroad Revitalization and Regulatory Reform Act (49 USC § 11501(b)(4)) (4-R Act) by imposing property tax on the railway company's intangible personal property (i.e., accounting goodwill and other intangible property). Joining several other federal circuit courts of appeals (i.e., the Fourth, Seventh, Eighth, and Tenth Circuits), the Ninth Circuit held that the railway company could challenge its property tax assessment as discriminatory under the 4-R Act and that the railway company's proper comparison class was Oregon's commercial and industrial taxpayers. The Ninth Circuit also rejected the argument that the tax on intangible personal property is "generally applicable" and that the railway's "challenge is no more than a demand for exemptions offered to other taxpayers, … ." Finding instead that Oregon's property tax law has a generally applicable system that imposes property tax on all real and tangible (but not intangible) personal property for all Oregon taxpayers, and a separate rule for centrally assessed taxpayers requiring them to pay property tax on real, tangible, and intangible personal property. BNSF Railway Co. v. Ore. Dept. of Rev., No. 19-35184 (9th Cir. July 8, 2020).


Hawaii: The Hawaii Department of Taxation (HI DOT) issued an updated Tax Information Release (TIR) on its voluntary disclosure process (VDP), which allows a taxpayer to voluntarily disclose any liability for all Hawaii taxes including general excise tax, transient accommodations tax and corporate and individual net income taxes. Under the VDP, taxpayers that pre-emptively reveal any tax liabilities to the HI DOT may avoid criminal tax investigation, a civil audit, assessment, collection and have penalties and a portion of interest waived (the HI DOT's decision to waive penalties and interest will be made on a case-by-case basis). To be considered a voluntary disclosure, the taxpayer must fully cooperate with the HI DOT and disclose all circumstances relevant to Hawaii tax law; misrepresentation will cease further consideration of the disclosure. The following taxpayers are not eligible to participate in the VDP: those that have been contacted by the HI DOT prior to initiating the VDP, those under federal or state audit or criminal investigation or have participated in the VDP during the previous five years. Under the VDP, the HI DOT applies a 10-year look-back period in most cases; however, in some situations the HI DOT may apply a longer look-back period. In addition, the HI DOT will honor the terms of an agreement reached under the Multistate Tax Commission's VDP. The TIR sets forth the process for participating in the VDP. This TIR took immediate effect and supersedes prior TIRs on this topic. Haw. Dept. of Taxn., Tax Information Release No. 2020-03 Re: Voluntary Disclosure Practice (Aug. 3, 2020) (supersedes TIR Nos. 2010-07 and 2016-02).


California: The California Employment Development Department (EDD) announced that the annual Form DE 428T, Statement of Charges to Reserve Account, is being issued to contributory employers with a mail date of Sept. 4, 2020. The document reflects the employer's unemployment insurance (UI) benefit charges for the period from July 1, 2019 through June 30, 2020. These charges will be used in the computation of calendar year 2021 state UI tax rates. For more on this development, see Tax Alert 2020-1984.

Massachusetts: In TIR-20-9 Massachusetts Tax Implications of Selected Provisions of the Federal CARES Act, the Massachusetts Department of Revenue (MA DOR) explains its adoption of several provisions contained under the federal Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) (CARES Act) for personal income tax purposes. In general, Massachusetts conforms to the personal income tax provisions of the CARES Act except as it relates to the treatment of an employer's payment of employees' student loans. Because Massachusetts conforms to IRC §§ 127 and 221 as amended and in effect on Jan. 1, 2005, qualified education loan payments made by an employer are not excluded from an employee's Massachusetts gross income. Likewise, Massachusetts does not conform to the disallowance of the deduction for interest an employee pays on such loans. For more on this development, see Tax Alert 2020-1882.

New Jersey: The New Jersey Department of Labor and Workforce Development (NJ DLWD) has updated its employer unemployment insurance (UI) website to reflect that the NJ DLWD plans to relieve employers of the adverse impact of COVID-19 UI benefits on their accounts before the fiscal year 2022 UI tax rates are calculated. For additional information on this development, see Tax Alert 2020-1958.

Tennessee: The Commissioner of the Tennessee Department of Labor and Workforce Development announced that, retroactive to March 15, 2020 and through July 31, 2020, Tennessee employers will not be charged for COVID-19 UI benefits. The change is the result of enactment of SB 2520 (ch. 745), which also codifies the waiver of the one-week waiting period for COVID-19 UI benefits contained in Executive Order 15. For additional information on this development, see Tax Alert 2020-1925.

West Virginia: According to a management representative of Workforce West Virginia (WWV), employers are not being charged with COVID-19 unemployment insurance (UI) benefits. In an email response to EY's inquiry, he stated: "We are not charging taxable employers if the claimant filed due to COVID. With that being said, we have found that some are being charged despite having filed due to COVID and we are working to fix those." For additional information on this development, see Tax Alert 2020-1936.

Wyoming: New law (SF 1002) provides that the governor, by executive order, may declare that employers will not be charged for COVID-19 UI benefits. Specifically, the new law provides that: In addition to the list of benefits that shall not be charged to an employer's unemployment compensation account under Wyo. Stat. Ann. §27-3-504(e), no benefits shall be charged to an employer's unemployment compensation account if the governor, by executive order outlining the basis for the order and with the adoption of adequate standards and safeguards to assure the continued actuarial soundness of the unemployment compensation fund, determines that the charges should not be charged due to circumstances related to the unique coronavirus COVID-19 emergency. For more on this development, see Tax Alert 2020-1970.


Louisiana: New law (HB 64) imposes an 8% tax on the net revenues of fantasy sports contests offered to consumers in Louisiana, due and payable monthly. For all fantasy sports contests, "net revenue" means the amount equal to the total entry fees collected from all participants, less the winnings paid to the contest participants, multiplied by the location percentage for Louisiana. "Location percentage" means the percentage rounded to the nearest tenth of a percent of the total of entry fees collected from fantasy sports contest players located in Louisiana, divided by the total entry fees collected from all participating fantasy sports contest players. Lastly, "operator's net revenue" for all fantasy sports contests means the amount equal to the total entry fees collected from all participants entering the contests, less the winnings paid to contest participants. The bill took effect July 13, 2020. La. Laws 2020 (1st Extra. Sess.), Act 34 (HB 64), signed by the governor on July 13, 2020.

Louisiana: New law (HB 292) amends the definition of "hotel" as applied to certain tourist commissions and convention and visitors bureaus for purposes of local hotel occupancy tax to match the definition of "hotel" for state sales tax purposes in La. Rev. Stat. §47:301(6). Specifically, for: (1) occupancy taxes levied by commissions; (2) the Concordia Parish Tourist Commission; (3) the River Parishes Convention, Tourist, and Visitors District; and (4) the Madison Parish Tourism Commission, "hotel" means any establishment or person engaged in the business of furnishing sleeping rooms, cottages, or cabins to transient guests, where the establishment consists of sleeping rooms, cottages, or cabins at a single business location, a residential location (e.g., house, apartment, condominium, camp, cabin, or building structure used as a residence). A hotel does not include any establishment or person leasing apartments or a single-family dwelling on a month-to-month basis. HB 292 took effect July 1, 2020. La. Laws 2020, Act 184 (HB 292), signed by the governor on June 11, 2020.

Massachusetts: The Massachusetts Department of Revenue (MA DOR) in a letter ruling advised that complimentary hotel rooms provided by a hotel and casino operator to certain patrons for marketing purposes are not subject to room occupancy excise beyond any actual rent paid in money. The MA DOR concluded that since the patron receives the complimentary room under a discretionary company policy that requires no further obligation on the patron's part, the room occupancy excise does not apply to the operator's complimentary rooms. If, however, the operator received any consideration or other benefit beyond actual rent in money (direct or indirect) under a different arrangement, the MA DOR stated that the room occupancy excise would apply, calculated based on the fair market value of the room offered to a patron. Mass. Dept. of Rev., Letter Ruling 20-2 Applicability of the Room Occupancy Excise to Complimentary Rooms Provided by a Gaming Establishment (June 25, 2020).

Washington: The Washington Department of Revenue (WA DOR) issued a response to the ruling by the Washington Court of Appeal (court) in LeadingTree, LLC4 that a company providing an online loan marketplace should attribute receipts from fees related to these transactions to the location of the lenders for purposes of apportioning business and occupation (B&O) tax. The WA DOR's position is that "[t]he court's opinion does not suggest that Washington must always attribute receipts to a customer's business location, nor does the case represent a new legal framework. Thus, for example, if a taxpayer provides marketing or advertising services to a customer engaging in selling goods or services, the customer's most directly related activity is 'selling' and that activity occurs in the customer's market and receipts will be attributed to that location." Wash. Dept. of Rev., Tax Topics "LendingTree decision — what next?" (July 21, 2020).


North Carolina: New law (SB 719) amends various unclaimed property law requirements for holders, including electronic filing and reporting requirements, and enforcement authority. Currently, mandatory electronic report filing requirements apply to holders of abandoned property reporting 50 or more property owner records. Beginning July 1, 2021, all holders of property presumed abandoned for North Carolina purposes are required to electronically file such reports. Further, under state law amounts due an apparent owner for less than $50 may be reported in an aggregate amount without furnishing certain other property information. SB 719 excepts from this provision certain property such as a security or other equity interest in a business association, debt of a business association, or certain dividends, profits, distributions, etc., held or owing by a business association for or to certain parties. Additionally, effective on June 26, 2020, SB 719 clarifies what constitutes payment or delivery made in good faith and permits a holder who made a good faith payment or delivery to the state in error to request a refund. It also clarifies the state treasurer's unclaimed property enforcement authority, permitting the treasurer to order certain persons to produce reports and records, make required payments, and make required delivery of property. N.C. Laws 2020, SL 2020-48 (SB 719), signed by the governor on June 26, 2020.


Federal: On Aug. 6, 2020, President Trump announced in a Presidential Proclamation that the US will again be imposing a 10% punitive tariff on non-alloyed unwrought aluminum articles of Canadian origin. The tariffs, levied under Section 232 of the Trade Expansion Act of 1962, will go into effect on Aug. 16, 2020. Canada immediately responded to the tariff action by announcing dollar-for-dollar countermeasures. For more on this development, see Tax Alert 2020-2019.

International — Mexico: On July 24, 2020, amendments to Mexico's general customs regulations for 2020 were published in the Official Gazette. The amendments include changes to the current requirements, benefits and obligations of the Value-Added Tax (VAT) and Excise Tax Certification program (collectively, the "VAT certification"). These changes may impact the operations of businesses operating under the maquiladora and other regimes in Mexico. For more on this development, see Tax Alert 2020-1966.


International - Brazil: On July 21, 2020, the Brazilian government proposed a bill that would create a new tax, the Contribution on Goods and Services (CBS for its Portuguese acronym), which is intended to function as a federal VAT, and would replace the existing PIS and COFINS Contributions (Social Security Contributions on Sales). (See Tax Alert 2020-1943.) The insurance sector (which includes both the reinsurance and pension sectors) needs to assess the potential impact this bill would have on its business. As written, it could raise the tax cost of insurance sector activities by imposing a higher rate on domestic transactions, preventing the industry from recognizing and generating certain tax credits and increasing the cost of reinsurance abroad. (See Tax Alert 2020-1932.)

International — Ecuador: On Aug. 4, 2020, Ecuador published Executive Decree No. 1114 with regulations on the value-added tax (VAT) on digital services. The regulations define the digital services subject to the VAT, specifies what constitutes exempt services and outlines procedures for withholding and payment of the tax. Foreign suppliers of digital services, importers of such services and withholding intermediaries should review their responsibilities under the regulations.The regulations take effect Sept. 16, 2020. For additional information on this development, see Tax Alert 2020-2017.

Because the matters covered herein are complicated, State and Local Tax Weekly should not be regarded as offering a complete explanation and should not be used for making decisions. Any decision concerning matters covered herein should be reviewed with a qualified tax advisor.


1 The Colorado home rule, self-collected municipalities participating in SUTS are Avon, Brighton, Canon City, Colorado Springs, Craig, Dacono, Durango, Evans, Glendale, Glenwood Springs, Golden, Gunnison, Loveland, Montrose, Mt. Crested Butte, Pueblo, Ridgway, Rifle, Silverthorne and Snowmass Village.

2 The Colorado Municipal League maintains an updated list of self-collected home rule municipalities that have adopted the Model Ordinance here.

3 A certified applicant is any privately-owned corporation, partnership, company or other for-profit business enterprise or any individual receiving one or more economic incentives worth a total of more than $5 million.

4 LendingTree, LLC v. Wash. Dept. of Rev., No. 80637-8-1 (Wash. Ct. App., Div. One, March 30, 2020).