"Virtual Presence" Nexus: Wayfair Overturns Historic Quill Physical Presence Nexus Rule

The much-anticipated United States Supreme Court Wayfair opinion has been issued. In a 5-4 decision, the Court overturned its historic physical presence nexus standard, to be replaced by an inquiry into whether the taxpayer has availed itself of the privilege of carrying on business in the state. The thresholds in the South Dakota tax system were found to meet this test, and the state's tax simplification as part of the Streamlined Sales and Use Tax Agreement (SSUTA) meant that there would not be an undue or discriminatory burden on out-of-state businesses. The case was reversed and remanded for further proceedings, which leave open the option of further challenges but likely will put the South Dakota economic nexus law into effect. [More]

Arkansas Supreme Court Says That Erroneous Assessment Property Tax Appeal Can Proceed

The Arkansas Supreme Court recently issued a pro-taxpayer decision recognizing an erroneous assessment property tax refund claim as a distinct action from a valuation dispute. DeSoto Gathering Company, LLC v. Hill ("DeSoto II"), 2018 Ark. 103 (Mar. 29, 2018). While not an earth-shaking decision, it is heartening to see the Arkansas Supreme Court recognize that an erroneous assessment claim is a viable independent action. [More]

Flash Inventory? Thoughts on the FLIS Enterprises Withdrawals from Stock Analysis

While the Arkansas Supreme Court's recent decision in Walther v. FLIS Enterprises, Inc., 2018 Ark. 64 was mostly watched for its ruling that sovereign immunity is not jurisdictional, it went on the grapple with the substantive tax question: whether the tax base for gross receipts tax on a fast food franchisee's free meals given to employees is the cost of the ingredients or the menu price of the meals. The Supreme Court reversed the trial court and ruled in favor of the Department that the tax base is the menu price. [More]

In a Relief to Taxpayers, Arkansas Supreme Court Says Sovereign Immunity Is Not Jurisdictional

Today's Arkansas Supreme Court opinion in Walther v. FLIS Enterprises, Inc., 2018 Ark. 64, coupled with the Department of Finance and Administration's own restraint, provides substantial comfort that the doors to Arkansas courts remain open for taxpayers seeking judicial relief. The court held that sovereign immunity is an affirmative defense to be raised, rather than a jurisdictional requirement that the court should raise on its own. Given that the Governor and DFA have indicated that they will not raise sovereign immunity, there is a high likelihood that tax cases can continue to proceed in state court. [More]

At Oral Argument, Justices Seem Reluctant to Find Sovereign Immunity a Jurisdictional Bar

Yesterday's oral argument in Walther v. Flis Enterprises, Inc., no. CV-17-240, should provide some comfort to taxpayers concerned about losing their right to litigate disputed tax claims where the tax in question has been paid to the state. At oral argument, counsel for the Arkansas Department of Finance and Administration explained that they had wanted to bring the issue to the court's attention but were not themselves advocating for it. Without DFA advocating for sovereign immunity, the justices seemed reluctant to apply it themselves sua sponte. [More]