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September 19, 2023
2023-1559

State and Local Tax Weekly for September 1 and September 8

Ernst & Young's State and Local Tax Weekly newsletter for September 1 and September 8 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.

TOP STORIES

New Jersey issues corporate income tax nexus guidance, adds various internet and financial activities to lists of protected and unprotected activities under P.L. 86-272

On Sept. 5, 2023, the New Jersey Division of Taxation (NJ DOT) issued guidance (TB-108) describing activities that will create nexus with New Jersey for Corporation Business Tax (CBT) purposes to reflect recent legislative changes (i.e., adoption of a bright-line economic nexus standard and, in the context of combined reporting, adoption of the Finnigan method to source New Jersey receipts). Significantly, the NJ DOT expanded its lists of protected and unprotected activities under P.L. 86-272 to include various activities conducted over the internet as well as sales involving financial products, financial instruments and financial services. This new guidance applies to privilege periods ending on and after July 31, 2023.1

The NJ DOT's positions on protected and nonprotected internet activities generally follow those expressed in the most recent revised Statement of Information concerning practices of the MTC and supporting states under P.L. 86-272 (Statement) issued by the Multistate Tax Commission (MTC), with some modifications, including guidance on internet and financial activities not addressed in the MTC's Statement (e.g., activities involving digital assets and internet advertising services). For more on the Statement, see Tax Alert 2021-1608.

NJ DOT's position on activities that are protected or unprotected by P.L. 86-272

P.L. 86-272 is a federal law prohibiting states from imposing state income tax on out-of-state sellers whose in-state activities do not exceed soliciting orders of tangible personal property. P.L. 86-272 does not apply to sales of intangible property or services. The NJ DOT said that, for an out-of-state corporation's in-state activities "to meet the [P.L.] 86-272 standard, the activities must either be limited solely to speech or conduct that invites an order OR be ancillary activities related to the requests for an order."

The NJ DOT views sales and activities involving financial products, financial instruments and financial services as not being sales of tangible personal property and therefore not protected by P.L. 86-272. The NJ DOT specifically noted that the following activities are not protected by P.L. 86-272:

  • Soliciting credit cards and other financial products and services from New Jersey customers
  • Offering, soliciting, selling, accepting or buying digital assets (e.g., virtual currency, non-fungible tokens) and offering services related to those assets

The NJ DOT also expanded its list of protected and unprotected activities under P.L. 86-272 to include various activities conducted over the internet. The following describes select protected and unprotected activities.

The NJ DOT views the following in-state internet and financial activities of a corporation as protected by P.L. 86-272:

  • Providing assistance to customers by posting FAQs on the taxpayer's website (Example 9)
  • Placing on customers' computers or other electronic devices software, apps or cookies that are ancillary to soliciting orders that are neither sold to data brokers or other third parties nor used to gather data to sell services to the taxpayer's business customers (Example 10)
  • Offering only tangible personal property for sale on the taxpayer's website, with the website allowing customers to search for items, read product descriptions, purchase items and select delivery options without engaging in any in-state activities or other activities that exceed P.L. 86-272 protection (Example 11)
  • Accepting electronic payment (e.g., credit card, other electronic method) for the online purchase of tangible personal property (this does not apply when the taxpayer is paid with a digital asset that the taxpayer resells, as part of its business, to an in-state customer) (Example 12)
  • Inviting and/or accepting, through an internet-based platform, applications for employment if the only in-state positions being offered are sales jobs and the employee would only conduct a solicitation function and in-state non-solicitation jobs are not being offered (Example 13)

The NJ DOT views the following in-state internet and financial activities of a corporation as not protected by P.L. 86-272:

  • Selling internet advertising services to New Jersey business customers that allow the taxpayer to provide targeted advertising to New Jersey individuals based on information mined from software, apps or cookies the taxpayer placed on the individual's computers or devices (this activity is not addressed in the Statement) (Example 20)
  • Offering, soliciting, selling, accepting or buying digital assets (e.g., virtual currency, non-fungible tokens) and offering services related to those assets (this activity is not addressed in the Statement) (Example 15)
  • Soliciting credit cards, other financial products and services from New Jersey customers (Example 14)
  • Regularly providing post-sale assistance to customers through an electronic chat or email that customers initiate by clicking on an icon on the corporation's website (Example 21)
  • Inviting and/or accepting, through an internet-based platform, applications for employment that are not specifically targeted to in-state residents or for in-state non-sales jobs (Example 25)
  • Placing on New Jersey customers' computers or other electronic devices software or ancillary data (e.g., apps or cookies) that gather market or product research that is packaged and sold to data-brokers or other third parties (Example 19)
  • Remotely fixing or upgrading New Jersey customers' products by transmitting code or other electronic instructions to those products over the internet as part of a subscription service purchased by the customer or as part of a warranty service contract (Example 18)
  • Offering, selling, providing maintenance or performing such under a warranty/extended warranty service contract, whether in person or over the internet (Example 16)
  • Contracting with a marketplace facilitator to facilitate the sale of the corporation's products on the marketplace facilitator's online marketplace, where the marketplace facilitator maintains inventory, including that of the corporation, at fulfillment centers in New Jersey (Example 17)
  • Contracting with New Jersey customers to stream (not download) videos and music to electronic devices (Example 22)
  • Contracting with New Jersey customers for subscription services (this activity is not addressed in the Statement) (Example 23)
  • Contracting with New Jersey customers to provide certain business services via internet-connected devices, computers and machines (collectively, "device") using an application installed on the device, where the services are conducted on the taxpayer's computer and transmitted back to the customer's device based on information from the customer's in-state device (Example 24)
    • Such services include quality control, manufacturing production line maintenance, research and development, product design, logistics, regulatory and other types of services

Additionally, the NJ DOT explained that the state's adoption of the Finnigan method to source New Jersey receipts will preclude a combined group from claiming P.L. 86-272 protection if one member of a combined group has activities that are either not protected by, or exceed the protections of, P.L. 86-272.

For more on this development, see Tax Alert 2023-1527.

INCOME/FRANCHISE

Kansas: The Kansas Department of Revenue announced that effective Jan. 1, 2024, the normal corporate income tax rate under K.S.A. 2022 Supp. 79-32,110(c)(1) will be reduced to 3.5% (from 4%) of Kansas taxable income. (The rate of the surtax that applies to Kansas taxable income in excess of $50,000 — currently 3% — was unchanged.) Kan. Dept. of Rev., "Notice of Corporate Income Tax Normal Rate Reduction" (Kan. Register, Vol. 42, No. 35, Aug. 31, 2023).

Massachusetts: The Massachusetts Department of Revenue (MA DOR) issued guidance on the taxability of capital gain on the sale of Ch. 121A Urban Redevelopment Project following the Massachusetts Supreme Judicial Court ruling in Reagan v. Commissioner of Revenue, 491 Mass. 446 (2023). In Reagan, the Court held that a Ch. 121A Urban Redevelopment Project partnership's capital gains from the sale of its projects were exempt from tax under Mass. G.L. c. 121A, Section 18C(f), which exempts Section 18C Entities (i.e., individuals, joint ventures, partnerships, limited partnerships and trusts) from tax "on account of a project". The Court found that the phrase "on account of a project" is not limited to activities enumerated in the definition of "project" (such as construction, operation, maintenance of a building), but rather includes "any taxes causally connected to the project." In this case, the capital gain from the project falls within the exemption because "the value of the capital gain results from the 121A Partnership undertaking and carrying out the projects." Applying this ruling, the MA DOR said that under ch. 121A, a taxpayer's capital gain from the sale of project is exempt from tax when the project is causally connected to the project and the sale is within the statutory exemption period. Mass. Dept. of Rev., TIR 23-9: Reagan v. Commissioner of Revenue — Taxability of Capital Gain on the Sale of a Chapter 121A Urban Redevelopment Project (Aug. 11, 2023).

Montana: In reversing a district court ruling, the Montana Supreme Court (Court) held that Montana's use of out-of-state income within its individual income tax framework of calculating a nonresident individual's Montana income, specifically within the statutory formula for determining the net operating loss (NOL) deduction, "is explicitly authorized" and, thus, does not violate state or federal constitutional principles. Regarding the NOLs, the taxpayers had carried over raw, unused Montana losses from 2009–2013 and deducted them directly from their 2014 and 2015 Montana income amounts. The Montana Department of Revenue (MT DOR) denied the NOL carryover deduction, finding the taxpayers failed to follow the formula for calculating the deduction. The district court reversed the MT DOR, finding the NOL statute unconstitutional because it allowed taxation of non-Montana income. On appeal, the Court reversed and agreed with the MT DOR's that the district court erred in ruling the state's NOL statute unconstitutional. The Court explained that Montana taxable income is an individual taxpayer's federal adjusted gross income, which includes out-of-state income, with state specific adjustments, and the state's NOL formula incorporates federal modifications to NOLs under IRC Section 172(d). In short, Montana's NOL carryover deduction is the excess of Montana allowed deductions over a taxpayer's taxable income in any given year, subject to certain limits. The Court found that the NOL statute "[c]learly … does not permit direct carryover of Montana-only raw unused losses for a deduction from Montana income in future years, without regard to application of statutory parameters for the NOL deduction, including its application within the taxable income of a taxpayer." The Court also rejected the taxpayer's argument that because Montana's NOL formula uses taxable income, which includes income from all sources, to determine eligibility for, and the amount of the, NOL deduction, the deduction is reduced or eliminated and, consequently, their taxable income is increased and their out-of-state income is indirectly taxed. Instead, the Court found that "while out-of-state income is incorporated within the [NOL deduction] formula … it does not act as a tax on that income … " The Court further noted that even though the taxpayer's Montana taxable income includes non-Montana sources, they are not subject to improper taxation since their non-Montana source income is eliminated from Montana taxation. Tiegs v. Montana Department of Revenue, 2023 MT 168 (Mont. S.Ct. Sept. 5, 2023).

New Jersey: The New Jersey Division of Taxation (NJ DOT) issued guidance on combined reporting allocation method, income reporting and filing methods effective for privilege periods ending on and after July 31, 2023.2 As of that date, New Jersey adopts the Finnigan method to source New Jersey receipts. The three combined reporting methods available under the New Jersey Corporation Business Tax are water's-edge (default method), world-wide and affiliated. For water-edge purposes, the guidance addresses non-U.S. corporations claiming treaty protection as a member of a water's-edge combined group and income of a non-U.S. corporation that is a member of a water's-edge combined group. For affiliated purposes, the guidance addresses income of non-U.S. corporations that meet the definition of U.S. domestic corporations for purposes of the New Jersey affiliated group election and non-U.S. corporation claiming treaty protection as a member of an affiliated group election. The NJ DOT is allowing a one-time exception to change a combined return election method made before tax year 2023. This prospective change to the combine group's filing method can be made on the 2023 Form CBT-100U; any election made on the 2023 Form CBT-100U return will be considered the start of the binding period for purposes of N.J.S.A. 54:10A-4.11(b). The NJ DOT noted that it will not permit a retroactive change in filing status for tax years before 2023. N.J. Div. of Taxn., TB-109 "Combined Group Filing Methods for Privilege Periods Ending on and After July 31, 2023" (Sept. 5, 2023).

South Carolina: The South Carolina Department of Revenue issued updated guidance on the state's conformity to the Internal Revenue Code (IRC) from 2021 through 2023. The guidance also lists the various IRC provisions and recent Federal Acts the state has not adopted, including certain provisions in the CARES Act and the Consolidated Appropriations Act of 2021. IRC provisions that are not specifically adopted include, but are not limited to, the following: Sections 55 through 59A (related to minimum taxes), Section 78 (related to the dividends received from certain foreign corporations), Section 163(j) (relating to the business interest expense limitation), Sections 250 and 267A, 861 through 909, 912, 931 through 940 and 944 through 989 (related to taxation of foreign income), Sections 1501 through 1505 (related to consolidated tax returns), Sections 2001 through 7655 (with certain exceptions), among other provisions. S.C. Dept. of Rev., South Carolina's Guide to Internal Revenue Code Conformity from 2021–2023 (Aug. 2023).

SALES & USE

California: The California Office of Administrative Law has approved the California Department of Tax and Fee Administration's (CDTFA) amendments to Cal. Code Regs. tit. 18, Section 1684.5 that modify and clarify provisions for marketplace facilitators and marketplace sellers. Revisions to the regulation amend and add definitions under Section 1684.5(a). These changes:

  • Modify the definition of "facilitate" to expand facilitation activities to include "listing products for sales", delete an exception from the definition of facilitate (this exception has moved to a new subsection on "advertising", which is discussed below), and delete the examples that had been under this definition.
  • Amend the definition of "listing products for sale" to mean "creating or posting or authorizing or providing the means for another person to create or post a written, verbal, pictorial, graphic, or similar means or announcement of tangible personal property [TPP] for sale in a marketplace, including … an advertisement that contains an announcement of [TPP] for sale."
  • Add a definition of "order taking" to mean "the process of getting or obtaining a buyer's order for a marketplace seller's [TPP] by telephone, fax, email or any other physical or electronic means, including … the customer including the items in a physical or virtual shopping cart at checkout."
  • Modify the definition of "payment processing services" to mean "any services related to charging a buyer the price to purchase a marketplace seller's [TPP], collecting, handling, or processing the payment, and transmitting any portion of the payment to the marketplace seller. Such services include … providing a physical or virtual credit or debit card terminal, integrating payment processing with an online shopping cart at checkout, or otherwise directly or indirectly authorizing or providing the means for payment processing in any manner."
  • Add a definition of "providing customer service or accepting or assisting with returns or exchanges" to mean providing any service related to a marketplace seller's TPP to a potential buyer or providing any service to a buyer related to their purchases of the marketplace place seller's TPP. Such services include answering questions about the property, the property's use or the terms of sale; assisting buyers with a refund, credit or exchange request; and accepting returns or exchanges.

In addition, amendments modify the definitions of "branding sales as those of the marketplace facilitator" and "marketplace facilitator", add a definition of "fulfillment or storage services", and add examples to the definition of "marketplace".

The revision adds new Section 1684.5(d) "Advertising", which pulls exception language that, prior to this revision, had been included in the definition of "facilitate". A person, including those who operate a newspaper or internet website, that advertises TPP for sale, refers purchasers to the seller, and does not participate further in the sale, is not facilitating the sale. Such a person is not considered the seller and retailer for the sale for purposes of determining whether the person has to register with the CDTFA as a marketplace facilitator and the person is not the retailer selling or making the sale of TPP under Section 1684.5(c), regardless of whether the person is a marketplace facilitator, the seller is a marketplace seller, the TPP is advertised in a marketplace or the advertisement includes an offer to sell TPP. The revision adds examples of "advertising".

Section 1684.5(b) "Registration Requirement for Marketplace Facilitators and Marketplace Sellers" is amended to clarify that marketplace facilitators and marketplace sellers calculates the $500,000 threshold by including all sales of TPP for delivery in the state regardless of whether the sales are taxable.

The regulatory action took effect Aug. 28, 2023.

Missouri: In response to a ruling request, the Missouri Department of Revenue (MO DOR) discussed which purchases of the taxpayer related to the development of an in-state utility scale solar farm are exempt from sales and use tax. The MO DOR found the following purchases exempt from sales and use tax: (1) solar panels, solar panel racking and supports, combiner boxes, inverters, solar collection transformers, project substation and interconnection transformers — these are part of the solar energy system and are exempt under RSMo Section  144.030.2(46) and 144.615.3; (2) tracking systems and Supervisory Control and Data Acquisition (SCADA) system control center — while not part of the basic components of a photovoltaic system, these monitor the status of the system and contributes to improve efficiency and are exempt under RSMo Section 144.030.2(46); and (3) electrical DC wiring, AC electrical wiring and data cabling — these are exempt when they are moving the energy through the actual system because they are a part of the photovoltaic energy system. The taxpayer's purchases of site fencing and gravel access and service roads do not qualify for a sales and use tax exemption because these items are not part of the photovoltaic energy system. Mo. Dept. of Rev., LR 8258 (July 31, 2023).

Tennessee: In response to a ruling request, the Tennessee Department of Revenue (TN DOR) determined the applicability of the state's sales and use to an online school's sales of online licensing courses, course textbooks that can be downloaded as a PDF and exam guide courses. The TN DOR found both the online licensing course and exam guide course are subject to sales and use tax as remotely accessed computer software. The TN DOR noted that the addition of a live chat feature would not alter the taxability of these transactions. The course textbooks are not subject to tax, regardless of whether they are in digital or physical form. Lastly, the TN DOR said that a proposed mortgage loan originating course, which includes self-paced state-module course in the transaction, would be subject to sales and use tax. Tenn. Dept. of Rev., Letter Ruling #23-07 (Aug. 21, 2023).

Wisconsin: The Wisconsin Department of Revenue announced that both the City of Milwaukee and Milwaukee County have certified ordinances, approving new sales and use taxes allowed under legislation enacted in 2023 (Act 12). The Act authorized the City of Milwaukee to enact a 2% sales and use tax and Milwaukee County to enact an additional 0.4% sales and use tax. Because the certifications were received by the WI DOR before the statutory deadline, these taxes can be imposed starting Jan. 1, 2024. Wis. Dept. of Rev., Press Release "City of Milwaukee and Milwaukee County certify new sales taxes" (Aug. 31, 2023).

BUSINESS INCENTIVES

Georgia: The Georgia Department of Revenue (GA DOR) for purposes of the film tax credit has provided guidance on the treatment of "interim production period expenditures" incurred during the strikes by the Writers Guild of America (WGA) and Screen Actors Guild — American Federation of Television and Radio Artists (SAG-AFTRA). The GA DOR explained that during these strikes, production companies may incur interim production period expenditures associated with holding studios and maintaining sets. These interim production period expenditures qualify for the film production credit if the production company continues filming in Georgia and they can only be claimed for the qualifying year in which the filming in Georgia continued. Thus, such expenditures incurred as a result of a production shutting down can be included if the production company resumes filming in Georgia post-strike, but they cannot be claimed if filming in Georgia is not resumed post-strike. The effective date for WGA is May 2, 2023 through the end of the WGA strike, and for SAG-AFTRA it is July 14, 2023 through the end of the SAG-AFTRA strike. Ga. Dept. of Rev., Policy Bulletin IT 2023-01 "Film Tax Credit" (Sept. 2023).

Kansas: The Kansas Department of Revenue issued guidance on the transferability of the research and development (R&D) tax credit. Starting in 2023, the amount of the R&D credit is increased to 10% (from 6.5%) and, in addition to corporations, the credit can now be claimed by Kansas income taxpayers, including individuals, partnerships, S corporations, limited liability companies and other pass-through entities. Further, because the credit is now transferable and the transfer may occur before the taxpayer claims the credit, taxpayers must complete and submit form K-204 Research and Development Credit Application before claiming the credit. A taxpayer without a current tax liability can transfer new credits to any person. The transferee can claim the credit in the tax year when it was transferred and can carry forward excess credit until it is fully used; note, that credit carryforward is subject to the limitations and requirements in place when the credit was earned. Transferred credits are not refundable. Only the full credit received by the transferor may be transferred to the transferee and the credit can only be transferred once. Either the taxpayer or the transferee must submit documentation of any transferred credit, and form K-260 "Kansas Tax Credit Transfer Notification" must be completed. Kan. Dept. of Rev., Notice 23-09 "Research and Development Tax Credit" (Sept. 6, 2023).

COMPLIANCE & REPORTING

Florida: The Florida Department of Revenue (FL DOR) said that it will follow the IRS tax relief regarding tax return filing and payment due dates for taxpayers affected by Hurricane Idalia. Florida corporate income taxpayers that file returns with original due dates or extended due dates falling on or after Aug. 27, 2023 and before March 1, 2024, have until March 1, 2024 to file the return and pay tax due. The FL DOR listed on its website the Florida counties for which the tax relief applies. The FL DOR noted that this relief applies to additional areas designated by the IRS as being eligible for this relief. Fla. Dept. of Rev., Website posting "Corporate Income Tax (CIT) Relief for Hurricane Idalia" (Sept. 2023); Fla. Dept. of Rev., Memorandum "Hurricane Idalia Corporate Income Tax Suspension of Due Dates and Extension Periods" (Sept. 7, 2023).

South Carolina: The South Carolina Department of Revenue (SC DOR) announced that it is providing taxpayers affected by Hurricane Idalia the same filing and payment relief provided by the IRS (IR-2023-163, Sept. 6, 2023). Thus, the SC DOR is postponing certain filing and payment deadlines originally falling on or after Aug. 29, 2023 and through Feb. 15, 2024 until Feb. 15, 2024. This extension applies to the filing of the 2022 South Carolina income tax return for individuals, C corporations and trusts, as well as the quarterly estimated payments that were originally due on Sept. 15, 2023 for corporations and Jan. 16, 2024 for non-corporate taxpayers. This relief, however, does not apply to tax payments for the 2022 individual income tax returns, which were due April 18, 2023. Nor does the relief apply to current collection matters. The relief does apply to quarterly payroll returns due Oct. 31, 2023 and Jan. 31, 2024. The SC DOR noted that this relief does not apply to other taxes, including state and local sales and use taxes, property tax returns filed with the SC DOR, motor fuel user fees, state accommodations taxes, and beer, wine and liquor taxes. The SC DOR said that it will consider granting any additional relief provided by the IRS and that it may provide additional relief on a case-by-case basis. S.C. Dept. of Rev., SC Information Letter #23-12 "Hurricane Idalia Tax Relief for Persons and Businesses in South Carolina" (Sept. 7, 2023).

PAYROLL & EMPLOYMENT TAX

Illinois: Effective Jan. 1, 2024, SB 0208 requires employers to provide employees working within Illinois up to 40 hours of paid leave per 12-month period. Employees must be employed for 90 days before they are entitled to use paid leave and employees hired before Jan. 1, 2024, can begin using paid leave effective March 31, 2024. Governor J.B. Pritzker stated in a press release that under the law, "1.5 million workers will begin earning paid time off starting in 2024." For additional information on this development, see Tax Alert 2023-1463.

Nebraska: Governor Jim Pillen signed into law LB191, which, effective May 26, 2023, changes the due date of state unemployment insurance (SUI) voluntary contributions and makes other changes affecting employers. Nebraska law allows experience-rated employers to make voluntary contributions that may reduce their combined SUI tax rate to the next lower rate. The Nebraska Department of Labor (Department) sends to eligible employers each December information concerning the voluntary contribution required to affect a lower SUI tax rate for the subsequent calendar year along with complete experience rating information. LB191 requires that the Department "promptly" notify employers of a determination of liability or the combined SUI tax rate either electronically or by mailing a notice to the last known address of the employer. Employers newly liable for Nebraska SUI tax on or after May 26, 2023, must, at the time of registering for a Nebraska SUI account, designate their preferred method of receiving notices (electronic or mail) and provide the name of their designated representative, if applicable. For more on this development, see Tax Alert 2023-1439.

MISCELLANEOUS TAX

Alabama: In response to a ruling request, the Alabama Department of Revenue (AL DOR) determined that electricity a pipe manufacturing company plans to use for heating in induction furnaces and electricity it plans to use for heating in certain zones of annealing ovens would qualify for the exclusion from utility gross receipts tax under Ala. Code 1975, Section 40-21-83(5), provided the electricity is separately metered. The AL DOR reasoned that the electricity used in the induction furnaces directly heats iron and transforms it into a molten state, enabling the iron to be cast into a pipe, and the electricity used in the annealing ovens produces heat that is directly used to transform the cast pipe. Because the electricity would be used in the process to manufacture the pipe product, it would qualify for the exemption. Ala. Dept. of Rev., Revenue Ruling 2023-002 (Aug. 9, 2023).

Washington: The Washington Department of Revenue (WA DOR) issued guidance clarifying when a person is a qualified employer of record eligible for a business and occupation (B&O) tax deduction from gross income for employee costs when the person is providing paymaster services. To qualify for the deduction, the WA DOR said that a person must meet the following four requirements: (1) the person must be a qualified employer of record, (2) the person must be providing paymaster services, (3) the person's paymaster services must be provided to an affiliated business, and (4) the amounts the person is paid must be to cover the costs of a qualified employee. The WA DOR guidance focuses on amounts not covered by the deduction and the four requirements, and it includes illustrative examples. Wash. Dept. of Rev., Excise Tax Advisory 3196 (Aug. 24, 2023).

VALUE ADDED TAX

International — Italy: A recently enacted tax reform law will amend, among other things, some of the most important Italian value added tax (VAT) principles and rules with the aim of making the Italian VAT Law progressively and fully compliant with the relevant European VAT regulation. Law No. 111 dated Aug. 9, 2023 (better known as the Enabling Law for Tax Reform or, simply, the Enabling Law), published on Aug. 14, 2023, delegates the Italian Government to issue, within the next 24 months, one or more legislative decrees providing a general review of the Italian tax system. A brief summary of the main news introduced by Article 7 of the Enabling Law regarding VAT matters follows. For more on this development, see Tax Alert 2023-1455.

International — Nepal: The Nepal Inland Revenue Department recently amended the procedures relating to Value Added Tax and Digital Services Tax applicable to digital services consumed in Nepal. Specifically, the changes apply to providers that render digital services to consumers in Nepal but do not have a fixed place of business in Nepal. For additional information on this development, see Tax Alert 2023-1454.

UPCOMING WEBCASTS

Thursday, October 5. Refocusing on the global trade functional organization - A global trade perspective (1:00-2:00 p.m. ET New York; 10:00-11:00 a.m. PT Los Angeles). As a result of multiple years of trade disruption and geopolitical tensions, companies are recalibrating, refocusing and re-establishing their interest in their global trade function's organizational design. Global trade professionals have navigated higher customs duty costs, increased complexity from the ever-changing regulatory environment, and a need for increased operational efficiencies to help reduce supply chain delays. This webcast accompanies our recent report Refocusing on the global trade functional organization — a global trade perspective' and will share the benchmarking results of peer global trade professionals on how they are organizing their global trade functions to be more efficient, reduce customs duty costs and effectively manage risks, also taking into consideration technology advancements. Some of the questions that will be explored include: What should be the scope of the global trade function? Where should global trade sit within the company — Tax, Legal, Finance, Supply Chain? Should operational activities be separated from compliance activities? How can the global trade function contribute to the company's overall operational efficiency? Register.

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.

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ENDNOTES

1 For a discussion of CBT nexus for privilege periods ending before July 31, 2023, see TB-79(R) (revised Sept. 5, 2023).

2 New Jersey's combined reporting provisions for periods ending before July 31, 2023 are discussed in TB-89(R).