KPMG reports: California (throwback rule); California (tax procedure); Illinois (telecommunications); Massachusetts (publisher as manufacturer); Massachusetts (computer back-up services) 

October 1: KPMG’s This Week in State Tax—produced weekly by KPMG’s State and Local Tax practice—focuses on recent state and local tax developments and features a series of short podcasts presented by KPMG tax professionals. Text of the podcasts is also available.

Today’s edition, for October 8, 2012, includes the following topics (listen to the podcasts; to read text, click on the links below).


  • California [PDF 23 KB] - The California Franchise Tax Board (FTB) addressed when the “throwback” rule (i.e., sales of personal property required to be “thrown back” to California if shipped from the state and the taxpayer is not subject to tax in the destination jurisdiction) is required for tax years beginning on or after January 1, 2011. The FTB also clarified that under California’s new Finnigan rule, sales made by any group member into any state where one group member had sales exceeding $500,000 and was not protected under Pub. L. 86-272 would not be required to be thrown back to California.
  • California [PDF 22 KB] - California Assembly Bill 2323—requiring the State Board of Equalization to publish certain decisions on its website within 120 days of deciding the tax matter—is enacted.
  • Illinois [PDF 23 KB] - The Illinois Department of Revenue issued a general information letter concluding that a taxpayer’s vehicle telematics services (allowing customers to summon help or obtain information through a control unit) were information services, and not telecommunications services that were subject to the Illinois telecommunications excise tax.
  • Massachusetts [PDF 24 KB] - The Massachusetts Appellate Tax Board concluded that an out-of-state book publisher must use the single-sales factor apportionment formula for manufacturing corporations. The taxpayer’s design and editorial activities, combined with its control over the books’ specifications, resulted in a significant degree of change and refinement to the final books produced, and thus were essential and integral steps in the process of manufacturing the books so that the taxpayer was properly classified as a manufacturing corporation.
  • Massachusetts [PDF 23 KB]: The Massachusetts Department of Revenue concluded that online computer back-up and restoration services were not subject to sales tax.



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Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.




©2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

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