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The Franchise Memorandum

The Franchise Memorandum

Posts in State Taxation.
Posted in State Taxation

The New Mexico Court of Appeals affirmed a decision by an administrative hearing officer that a franchisor’s receipt of royalty fees under a franchise agreement were subject to gross receipts tax pursuant to New Mexico’s Gross Receipts and Compensating Tax Act. A&W Rests., Inc. v. Taxation & Revenue Dep’t, 2018 WL 4024741 (N.M. Ct. App. Aug. 22, 2018). In 2007, the state legislature amended the Act so that the definition of taxable “gross receipts” included the amount of money received “from granting a right to use a franchise employed in New Mexico,” and so that the ...

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Posted in State Taxation

On December 30, 2010, the Iowa Supreme Court affirmed the Iowa Department of Revenue’s imposition of income taxes on royalties an out-of-state franchisor, KFC Corporation, received from its Iowa franchisees. KFC Corporation v. Iowa Department of Revenue, No. 09-1032 (Iowa S. Ct. Dec. 30, 2010). As background, in Quill v. North Dakota, 504 U.S. 298 (1992), the U.S. Supreme Court had reaffirmed an interpretation of the Commerce Clause that prevents states from imposing sales or use taxes on any business without a “physical presence” in the state. The U.S. Supreme Court ...

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Posted in State Taxation

The recently enacted 2009-2010 New York State Education, Labor and Family Assistance Budget Bill (Budget Bill) amends the New York Tax Law to impose unprecedented new reporting requirements on franchisors. The relevant text can be found at http://assembly.state.ny.us/leg/?bn=A00157&sh=t in Subpart G, which starts on page 163. These requirements apply to any franchisor with at least one franchisee engaged in taxable sales in New York, although it is not clear how master franchise and area representative relationships will be treated. Under these requirements, a franchisor ...

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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