In a New York corporate franchise tax case involving an out-of-state company that operated a travel

In a New York corporate franchise tax case involving an out-of-state company that operated a travel reservation facilitation business, it was improper for the Division of Taxation to classify the company’s receipts as other business los angeles convention center events receipts that were earned at the point of customer access. An examination of the nature of the transactions, when considering the ordinary meaning of the word services, led to the inexorable conclusion that the receipts at issue were the result of performed services. The division insisted that, according to its regulation, human involvement was required in order for the receipts to have emanated from services performed. However, the division’s interpretation of the regulation in this case appeared to be an impermissible expansion of the law. By its plain language, the law did not require human involvement at the moment of sale in order for services to be performed. Even if the division’s interpretation were correct, its conclusion on this point was factually incorrect because it ignored the evidence of human involvement throughout the company’s process of providing its services (e.g., los angeles convention center events employees involved in the creation of software and the negotiation of agreements los angeles convention center events with various travel service providers). As the receipts in question were derived from the provision of services, which were performed outside New York, it was determined that they were improperly allocated by the division to New York. Further, the state Legislature amended the law to change los angeles convention center events the allocation of service receipts to a customer sourcing approach, beginning with 2015. Such a change would be unnecessary if the law were interpreted as the division suggested. los angeles convention center events By allocating the company’s transactions los angeles convention center events to the site of its customers’ computers, the division applied a customer sourcing approach that was not effective until January 1, 2015, and ran contrary to the statutory scheme in place during the years at issue. In addition, the division incorrectly adjusted the parent holding company’s return by allocating some of an affiliated company’s advertising services receipts to New York. Finally, there was evidence that the parent holding company leased office space in New York City but failed to report or pay the MCTD surcharge. Because those facts went unrefuted by the taxpayers, the proper MCTD surcharge had to be recalculated.