Large Internet Retailer Found Subject to CAT: Nexus Provisions Applied 
L.L. Bean, the Freeport, Maine-based company online retailer known for backpacks,  boots and camping gear, has a $210,770 disagreement with Ohio over the Commercial Activity Tax.  Tax Commissioner Richard Levin has ruled that L.L. Bean owes taxes and penalties for failure to pay the CAT on assessments from July 1, 2005 to March 31, 2008.

The CAT was enacted as part of the 2005 overhaul of the tax code. It is levied on a company's gross receipts and according to Ohio law is a tax on ''the privilege of doing business in this state.''  The state has held that the CAT is separate from the state sales tax.

This challenge to the interpretation of the Ohio Commercial Activity Tax nexus provisions is important to the future of its broad-based low rate application.

Numerous companies without a physical presence in the State of Ohio that have been audited and/or assessed have appealed findings that they owe the CAT. The nexus issue has not been reviewed in any court.

In his Aug. 10 decision, Levin said L.L. Bean must pay the CAT because it has a ''substantial nexus'' or connection with the state, as defined by Ohio law. A company has a ''bright-line'' presence if it has annual taxable gross receipts of at least $500,000 — a condition L.L. Bean met, Levin wrote.  According to Levin's decision, the company contended that the U.S. Constitution prohibits Ohio from imposing the tax because the nexus required is a ''physical presence,'' which L.L. Bean said it did not have. Levin said the prohibition does not apply.

The company has 60 days to appeal Levin's decision to the state Board of Tax Appeals, a three-member commission. A decision from the board can be appealed to a state appeals court or directly to the Ohio Supreme Court.

Illinois Tax Amnesty Program Coming This Fall 2010 
Illinois recently enacted a tax amnesty program that is a one-time opportunity for eligible taxpayers to satisfy qualifying tax liabilities with regard to various state taxes and avoid penalties and interest due.

The amnesty program will begin on October 1, 2010 and will end on November 8, 2010. The program only applies to tax liabilities for any taxable period ending after June 30, 2002 and prior to July 1, 2009. Upon payment by a taxpayer of all taxes due for any qualifying taxable period, the department will abate and not seek to collect any interest or penalties that may apply and will not seek civil or criminal prosecution for any taxpayer for the period of time for which the amnesty was granted.

Kansas Tax Amnesty Program
Kansas recently enacted a tax amnesty program that is a one-time opportunity for eligible taxpayers to satisfy their tax liabilities with regard to various state and local taxes and avoid penalties and interest due.

The amnesty program will begin on September 1, 2010 and will end October 15, 2010. The program only applies to tax liabilities due and unpaid for tax periods ending on or before December 31, 2008. Amnesty for penalties and interest will be granted only for those eligible taxpayers who, within the amnesty period and in accordance with rules and regulations, have properly filed a tax return for each taxable period for which amnesty is requested, paid the entire balance of tax due, and obtained approval of such amnesty by the Department of Revenue.

Amnesty is not available for certain liabilities which exist on or after September 1, 2010, such as audits, tax liabilities subject to administrative or judicial appeal, those in bankruptcy, or in criminal investigation or certain criminal or civil litigation. Further, no payment of penalties or interest made prior to September 1, 2010, are eligible for amnesty.

Florida Tax Amnesty Program
Florida recently enacted a tax amnesty program that is a one-time opportunity for eligible taxpayers to satisfy their tax liabilities with regard to various state and local taxes and avoid criminal prosecution, penalties, and in certain instances, the interest due.

The amnesty program began on July 1, 2010 and will end September 30, 2010. We have been working throughout the program with affected taxpayers. Any taxpayer who has entered into a settlement before July 1, 2010, is not eligible to participate. Eligible taxpayers must file the forms and other documentation specified by the Department of Revenue and must make full payment of tax due, the interest that may be due, and the administrative collection processing fee.

The window of time available on this amnesty program ends on September 30, 2010. 

For more information please contact your BC Engagement Executive or Theresa Mullen, State and Local Tax Leader at 330.266.4129.