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State & Local Tax news

February 2021

Welcome to the February 2021 Issue of the Aprio State & Local Tax (SALT) Newsletter

With dozens of different taxes imposed by the 50 states (and thousands of local jurisdictions), we recognize how challenging it is to keep up with current issues and developments. This newsletter is designed to provide insights on developments in state and local taxes including new legislation, regulations, rulings and cases addressing issues such as corporate and personal income taxes, sales and use taxes, nexus, franchise/net worth taxes, etc.

This issue of the newsletter contains articles addressing:

In case you missed prior issues of this newsletter, please click here.

If you have any comments, questions or suggestions regarding current or future topics, or if you would like to learn more about Aprio's SALT Practice, please email me at Thank you.

Jeff Glickman
Jeff Glickman, J.D., LL.M.
Partner-in-Charge, State & Local Tax Practice


Alabama Enacts Significant Income Tax Reform

By Jeff Glickman, J.D., LL.M., Partner-in-Charge, SALT Practice

Alabama has passed new income tax reform that includes adopting a single sales factor for apportionment, repeal of its throwback rule and decoupling from GILTI. In addition, the state is the first to enact an elective pass-through entity tax since the IRS published Notice 2020-75.  



Intercompany Transactions: How Diligent Documentation Can Help You Avoid B&O Tax Liability

By By Tina M. Chunn, SALT Senior Manager

Although intercompany transactions will typically net out for income tax purposes, that isn’t necessarily the case for states that impose gross receipts taxes. Taxpayers should properly document their intercompany transactions to qualify for any applicable exemptions; otherwise, both the payor and payee could owe tax on the same revenues.




The Liquidation Exception to Business Income: When It Does and Doesn’t Apply

By By Betsy Tuck, SALT Manager

Some states provide an exemption to business income for liquidations and will instead classify gains from such transactions as nonbusiness income. However, the specific requirements for claiming the liquidation exemption must be satisfied, and states are likely to apply a narrow interpretation to those requirements.




Is Vendor-Hosted Software Taxable? A New Rhode Island Ruling Offers Clarity to Providers

By By Kristen Mantilla, SALT Associate

For sales tax purposes, when classifying a transaction as taxable software or a nontaxable service, states will often apply the “true object” test, and if the software is actually providing the service, then the state is likely to characterize the entire transaction as taxable software.


About Aprio's State and Local Tax Practice

Aprio's State and Local Tax (SALT) practice advises clients on the state and local tax implications of their business operations, allowing clients to strategically minimize their liabilities and risks. Our team has over 50 years of combined SALT experience working in industry, state departments of revenue, public accounting and private law practice. We specialize in all areas of SALT, including matters related to state tax nexus, corporate and personal income taxes, sales/use tax, franchise/net worth taxes, credits and incentives, and mergers and acquisitions. In addition, we represent clients in administrative matters before state revenue departments around the country, including audit defense and settlement negotiations, pursuing voluntary disclosure agreements and obtaining letter rulings.