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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Corporate Tax

Date & Time
  • event Date

    Thursday, April 18, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    110 minutes

Credit Information

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

$247.00
CPE
ALL

This course will provide guidance to corporate tax professionals, counsel, and advisers for navigating the various and evolving standards of state taxability of digital products and services, including emerging issues regarding taxes on blockchain technologies, to determine what component of a company's offering is taxable and in which jurisdiction(s).

Faculty

Jamie E. T. Szal
Partner
Brann & Isaacson

Ms. Szal focuses her practice on assisting businesses in all aspects of state and local tax controversy, from regulatory and administrative proceedings through civil litigation. She came to Brann & Isaacson following several years at the Massachusetts Department of Revenue. As Counsel in both the Litigation Bureau and Office of Appeals, she focused on complex tax issues facing corporations and pass-through entities. She earned her LL.M. in Taxation and Certificate in State and Local Taxation, both with distinction, from Georgetown University Law Center.

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David Swetnam-Burland
Partner
Brann & Isaacson

Mr. Swetnam-Burland regularly represents Brann & Isaacson’s business clients, including over a dozen of the 100 largest Internet retailers, in business, false claims, intellectual property, privacy, class action, and tax litigation. He has appeared in federal and state trial and appellate courts from Maine to California, and before federal and state agencies throughout the country. Dave also advises clients on compliance issues in the areas of data privacy and security and state and local tax. Mr. Swetnam-Burland has experience in all aspects of litigation, from dispositive motions through trial, and regularly handles licensing discussions and settlements as well. He has argued and won favorable judgments for the firm’s clients on motions to dismiss, summary judgment, at trial, and on appeal, and has handled successful oral arguments in the Federal Circuit Court of Appeals. Mr. Swetnam-Burland has served as lead counsel on a petition for a writ of certiorari filed in the U.S. Supreme Court, and co–authored many amicus briefs for leading national Internet retailers and other clients in the Supreme Court and the U.S. Circuit Court of Appeals for the Federal Circuit; he has co-authored law review and other articles on key issues in false claims, privacy, patent litigation, and state and local tax issues.

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Description

State tax advisers and companies providing various digital services, including AI and data processing services, digital products and services, cloud products and services, and blockchain products, face special challenges in determining how and where their products and services will be taxed. Individual states have numerous approaches regarding taxes on IT and digital services and products. Some individual states have specific statutes and rules aimed at determining what products and services each state taxes; however, these state rules may conflict with other states' practices.

Among the challenges providers face in assessing whether they will be subject to transaction taxes in a particular state is defining what product or service they are providing in that transaction. This is particularly true where the transaction has bundled elements. If the "true object" of the item sold is included in a state's definition of taxable products or services, then the sale likely is subject to transaction tax. In most jurisdictions, including a taxable product or service in a bundle with an otherwise nontaxable service may make the entire transaction taxable.

The U.S. Supreme Court's decision in South Dakota v. Wayfair has given the states more power to tax digital services. That, combined with the advent of employees working from home, presents challenges to the practitioner in determining the states in which an IT company has tax obligations.

Listen as our experienced panel discusses the various challenges of determining the taxability of IT services and products; explains the challenges, problems, and solutions regarding sourcing/nexus/bundled pricing; and reviews best practices for structuring contracts and transactions to segregate taxable from nontaxable services and products.

Outline

  1. General approach to analysis of IT service contracts in the face of divergent state tax laws, including six questions:
    1. What is the product or service?
    2. Is it a bundled product or service?
    3. To what state(s) is the product sourced?
    4. Does the state tax the product sourced?
    5. Do exemptions or direct pay permits apply?
    6. Does the provider have nexus with the state where the service is sourced?
  2. Approaches regarding digital products and services: taxability and sourcing
    1. The WA law
    2. The SSUTA approach
    3. Texas law
  3. Blockchain:
    1. Are the products subject to sales tax?
    2. Sourcing of products

Benefits

The panel will review these and other key issues:

  • What approaches are states taking to define the nature of IT products or services for purposes of determining taxability for sales and use tax?
  • How do various states address whether installing servers or software would make otherwise nontaxable IT services subject to state sales and use tax?
  • How do the various states treat digital products and services?
  • What are applicable principles regarding blockchain products?

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Identify various factors used in determining states' approaches to taxing sales of IT services and products
  • Recognize contracts and transactions that properly exempt nontaxable services from state sales tax
  • Determine techniques for segregating nontaxable services and products
  • Ascertain whether specific states offer outsourcing and data center exemptions

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, planning, preparing and filing sales and use tax collection and returns on behalf of multi-state businesses; supervisory authority over other preparers/accountants. Knowledge and understanding of the Multistate Tax Commission model rule and the various methodologies used by states to identify and calculate state sales and use tax, including the factor presence nexus standard and market-based sourcing standard.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.