SALT & Pepper

  • A Multistate Perspective on Taxation of Digital Products

    In a General Information Letter published in 2017, Illinois addressed how its taxation of canned and custom software would apply to cloud computing. The state explained that software as a service (“SaaS”) is not subject to the Retailers’ Occupation Tax, and SaaS providers are instead subject to the Servicemen Occupation Tax. Thus, providers of SaaS to Illinois customers will generally be subject to use tax on tangible personal property transferred as an incident to the sale of SaaS.
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  • Illinois’ Taxation and Apportionment of Partnership Income Earned by Corporate Partners

    Partnerships are not subject to the Illinois Income Tax. Instead, partners are taxed individually on their distributive shares from a partnership. For nonresident individual partners, only their pro rata share of the partnership’s income apportioned to Illinois is taxable. Corporate partners may be required to combine the partnership income and factors in their combined business income and factors if they are unitary with the partnership. However, it is always important to keep in mind that Illinois also imposes a Replacement Tax which is generally imposed at the entity level.
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  • The Illinois Franchise Tax

    The Illinois Franchise Tax is a weird tax. It is imposed on the privilege of exercising a franchise in Illinois or, in the case of foreign corporations, for the authority to transact business in the state. It is administered by the Illinois Secretary of State, not the Department of Revenue, and is measured by paid-in capital. Knowing the ins and outs of the Franchise Tax is a must for any corporation doing business in the state.
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About HMB Law

Welcome to HMB's SALT & Pepper blog. As the title suggests, this blog tracks important and emerging issues, trends and developments that affect our clients not only in State and Local Tax (SALT) but also in other disciplines and industries. This blog is designed to be a helpful resource. We hope our readers will find it practical, insightful and valuable.


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