Insights

Washington, D.C. – January 13, 2015: Crowell & Moring LLP is pleased to announce the publication of its third annual "Litigation Forecast: What Corporate Counsel Need to Know in the Coming Year," and the introduction of its first-ever "Regulatory Forecast 2015: What Corporate Counsel Need to Know in the Coming Year."

Washington, D.C. – January 17, 2013: Crowell & Moring LLP is pleased to announce it has elected seven attorneys to the firm's partnership effective January 1, 2013. The firm has also promoted three attorneys to the position of senior counsel, and nine associates to the position of counsel. The new partners, senior counsel, and counsel have been promoted from within the ranks of the firm's Washington, D.C., San Francisco, Brussels, and London offices.

While forming a new entity is generally quite easy, corporate structure and tax considerations play a fundamental role in a startup’s ability to raise capital. Prospective investors have expectations for how a “venture backable” business (i.e., a business with the potential to generate significant returns with a potentially high valuation) is to be organized under state law and classified for income tax purposes. However, the fundamental question for founders is: what actually makes the most sense for the business? Here we briefly discuss four structures for forming a new business and their tax classifications: (1) a state law corporation classified as a C corporation; (2) a state law corporation classified as an S corporation; (3) a limited liability company (“LLC”) classified as either a C corporation or an S corporation; and (4) an LLC classified as a sole proprietorship or partnership.

Maryland became the first U.S. state to create a digital advertising tax on February 12, 2021. The Digital Advertising Gross Revenue Tax (DAGRT) was originally passed in March of 2020, but subsequently vetoed by Maryland Governor, Larry Hogan. Maryland’s legislature voted to override the Governor’s veto, however. The contentious journey for DAGRT passage is likely to be overshadowed by a litigious future.

In Int'l Bus. Machs. Corp. v. Mich., Dep't of Treasury, No. 146440 (Mich. July, 14, 2014) (IBM), the Michigan Supreme Court held that the taxpayer was entitled to elect the Multistate Tax Compact's three-factor apportionment formula to apportion its income for purposes of the Michigan Business Tax (MBT) and was not required to use the "mandatory" single sales factor formula provided in a separate statutory provision. In overruling the Court of Appeals' 2012 decision that the Michigan legislature had repealed the Compact election provision by implication -- a decision that was widely criticized by many state tax experts including the authors of this Alert (see here) -- the Supreme Court found no clear indication that the Legislature intended to repeal the Compact election provision for the years at issue. Accordingly, reading the Compact election provision and the MBT's statutory apportionment provision in pari materia, the Court held that two statutes were compatible and could be read harmoniously. That is, if a taxpayer makes the Compact election, the three-factor formula is mandatory; if a taxpayer does not make the Compact election, the statutory single sales factor formula is mandatory. The Court also held that the MBT's gross receipts tax meets the definition of an income tax, and that the taxpayer could use the Compact's three-factor formula for both the Gross Receipts Tax and the Business Income Tax parts of the MBT.

Please join us for the 30th Annual Managing Tax Audits and Appeals seminar. We are offering this program in two locations: Marina del Rey, CA (near Los Angeles) and Washington D.C.

Please join us for the 30th Annual Managing Tax Audits and Appeals seminar. We are offering this program in two locations: Marina del Rey, CA (near Los Angeles) and Washington D.C.

Please click here to view the full conference presentation.

Gift cards, rewards points, and other loyalty programs have improved the way retailers, consumer brands, entertainment companies, restaurants, and other merchants connect with their consumers. However, with these innovative programs comes risk and compliance concerns. Specifically, stringent federal and state consumer protection laws that are sometimes in conflict make compliance associated with these programs tricky and expensive. At the same time, arcane escheat laws subject companies to potential liabilities in the millions for unclaimed property obligations. The risks to companies holding unredeemed account balances has increased as cash-strapped states have ramped-up their enforcement efforts, including Delaware’s recent challenge of third party gift card service provider models and separate issuer entities.