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Welcome to the third edition of Cover Your SaaS. Following a brief mid-summer hiatus from which the authors returned pale as ever, we dive once more into the cloud computing and digital product SALT developments you and your clients should be aware of. This is a bumper edition, so we have organized the updates by general topic rather than solely by jurisdiction. Let us know what you think of the changed format for the newsletter. We will continue archiving updates…

Welcome to the second edition of Cover Your SaaS, your new favorite(ish) semi-regular publication from HMB Legal Counsel’s State & Local Tax team. Far from accepting a sophomore slump, this edition boldly delves into SALT developments in the digital products sphere, the importance of separately stating charges, and the dangers of straying into taxable telecommunications. As before, we organize the stories by jurisdiction, give you the headline, the context and explain why the story matters. If you have follow-up questions,…

Welcome to the first edition of Cover Your SaaS, a new semi-regular publication from HMB Legal Counsel’s State & Local Tax team. Using the latest in news-scanning technology, i.e., the daily emails that land in our inbox, our goal is to keep you updated on key SALT developments in the digital and cloud computing space. The format is simple. We organize stories by jurisdiction, give you the headline, the context, and let you know why the story matters. If you…

Gathering and Organizing The first step in implementing your estate planning is to prepare lists of personal and financial information.  These should include lists of assets, estate planning documents, personal information, important people and personal directives.  Once gathered and organized, keep the information up-to-date and stored in a safe place.  Here is a closer look at what information you should include on each list: Your Assets The name and address of all financial institutions with which you have bank accounts,…

As you undoubtedly know by now, on January 1, 2020, Illinois became the 11th state to legalize the possession and use of adult-use cannabis. The new law, the Cannabis Regulation and Tax Act, 410 ILCS 705, et seq., (the “CRTA”) – all 610 pages of it – establishes the framework of one of the most regulated industries today. More than just laws about personal possession and use, the CRTA includes numerous provisions regarding the new business opportunities in Illinois, including…

1. Letters of Wishes are Theoretically Sound Trustees may have difficulties determining whether to make distributions when the grantor’s intentions are unclear. Consider a trust provision that provides for a beneficiary’s support in the form of reasonable medical expenses. The trust’s sole beneficiary approaches the trustee requesting a distribution for a gastric bypass surgery. The surgery can cost upwards of $45,000 and is the preferred method of achieving seventy-five pounds of weight loss. However, the surgery may be unsuccessful, and may result in post-operation complications and side effects that could…

A Mareva injunction freezes a defendant’s assets to avoid their dissipation and to enable a judgment to be later satisfied.  Ontario courts have found that the injunction is limited to circumstances where there is a real risk of removal, dissipation or disposition of assets to avoid the consequences of a judgment. Chitel v. Rothbart, 39 O.R. (2d) 513. In a recent decision in HZC Capital, Inc. v. Lee, 2019 ONSC 4622, the court expounded on the proof needed to obtain…

Five Basic Steps to Being Prepared As 2020 kicks off, cybersecurity remains ever present in the news whether its predictions for cyberattacks in conflict between state actors, such as the United States and Iran, or the recent New York Times report regarding a possible hack at the Ukrainian gas company at the heart of the impeachment investigations. Additionally, this week, it was reported that the chief information security officer for Mayor Pete Buttigieg’s presidential campaign resigned over differences allegedly “regarding the architecture and…

In December 2019, the Securities and Exchange Commission (the “SEC”) proposed amendments to the definitions of “accredited investor” and “qualified institutional buyer”. The securities laws use these definitions as important qualification standards for prospective investors in private offerings. As a qualification standard, the accredited investor definition is a core elements of several registration exemptions used by private companies when raising capital and, as a result, reduces compliance costs to help the market function efficiently. The proposed amendment follows a concept…

This blog, originally issued on January 9, 2020, has been updated and revised to reflect the Illinois Secretary of State's issuance of revised Form BCA 14.05, Annual Report, and new Form BCA 8.12, Female and Minority Directors Report, which clarify and implement Public Act 100-589's reporting requirements. Simply stated, as reflected on amended Form BCA 14.05, only those domestic and foreign corporations with their principal executive offices located in Illinois will be subject to the reporting requirements of new Section…

In the last several years to assist tracing of assets and discovery of perpetrators, courts in English common law countries have shown a willingness to assist victims by ordering third parties to disclose information through discovery about wrongdoings under Norwich Pharmacal relief. Developments in the Cayman Islands and BVI provide the following insights for counsel assisting these victims. Cayman Islands Relief endorsed whether or not there is a sound basis for bringing proceedings. Discover Investment Company v. Vietnam Holding Asset…

A federal district court may order discovery under 28 U.S.C. Section 1782 “for use in a proceeding in a foreign or international tribunal” upon application by any “interested person.”  A district court has the discretion to permit discovery under statutory prerequisites where a) the party seeking the discovery is an “interested person” with reasonable interest in judicial assistance of the U.S. court or is a “foreign or international tribunal”, b) the evidence sought is to used in a “proceeding in…

In a prior post, I explained the basics of the Chicago Personal Property Lease Transaction Tax (“Transaction Tax”), including the applicability of the tax to tangible personal property and software, potentially applicable exemptions and exclusions from the tax, and collection issues. This follow-up post in the Practitioner Series further clarifies the application of the Transaction Tax to “cloud” software products and explores the interplay with the Illinois Retailers’ Occupation Tax (“ROT”). Expanding the Definition of a Nonpossessory Computer Lease As…

State taxation of corporate partners in multistate partnerships raises interesting issues. In many circumstances, the corporate partner is subject to multistate taxation and is therefore engaged in the process of allocating and apportioning its income on a multistate basis. The difference between allocating and apportioning partnership income could have a material impact on a corporation's state blended rates utilized for provision purposes and could go as far as turning an otherwise non-cash paying taxpayer into one that pays cash taxes.…

In 2009 in Black Swan Investment ISA v. Harvest View Limited BHVC (Com) 2009/399, the court established the principle that a court can act in aid of foreign proceedings where it can be shown that there is property situated in BVI which belongs to the defendant in the foreign proceedings and which may be enforced against in the event the foreign proceedings are successful. Then, the BVI court may use its territorial power to preserve the assets. Further, in Osetinskaya…

On February 25, 2019, the Second Circuit in the Madoff liquidation decided that Sections 548 and 550 of the Bankruptcy Code can be applied extraterritorially to recover fraudulent transfers. There, offshore feeder funds were recipients of investors' fraudulent transfers and contended that U.S. fraudulent transfer law did not apply abroad. The Second Circuit reasoned that Section 548 allows a trustee, for the protection of an estate and its creditors, to avoid a debtor's fraudulent, hindersome or delay-causing property transfer that depletes…

Of course, laws are changing all the time. But with medical marijuana laws being enacted in states around the country at a quick pace, the list of shifting rights and obligations related to the workplace is growing like a weed. Background Even with marijuana still considered an illegal substance under federal law, that tension does not preclude states from making medical marijuana legal, within their border, with their own desired regulations. To date, 33 states have enacted medical marijuana laws,…

Singapore has become a financial and business center in Asia, which means that a number of foreign companies and individuals have assets there. Until now, the question of whether a Singapore court has the power when a dispute is being litigated in a foreign court to grant a Mareva injunction, a pre-action seizure of assets, had not been clearly answered. The court in China Medical Technologies v. Wu Xiaodong  (2018) SHGC 178 has now clarified the question. The answer is a resounding…

With the Tax Cuts and Jobs Act (TCJA), many taxpayers have begun to focus on the manner in which states tax foreign income. Illinois' taxation of foreign income is fairly in line with most other states. However, given how much states can diverge on this complicated issue, having a general understanding of how the state treats foreign income is necessary for any multinational business operating in Illinois. Overview of Illinois' Apportionment of Foreign Income Illinois is a combined reporting state.[1]…

In previous posts, we have explored several local Illinois taxes, including the Chicago Personal Property Lease Transaction Tax and Cook County Parking Lot Tax. Also notable is the Chicago and Cook County Amusement Tax, which can apply more broadly than taxpayers often anticipate. Specifically the scope of the amusement tax has been expanded over the last few years to non-traditional amusements, including electronically transferred television shows, movies, videos, music, and games. Imposition of The Amusement Tax Although the Chicago and…

Pursuant to 28 U.S.C. Section 1782, a party may apply to conduct discovery in the U.S. for use in foreign proceedings. In a recent decision from the U.S. District Court for the Southern District of New York, In re Ruiz, 2018 U.S. Dist. Lexis 180262, the court considered whether former investors in Banco Popular could conduct discovery against Banco Santander in New York for use in foreign proceedings before the General Court of Justice of the European Union. Banco Santander…

In a previous article, I shared our insights related to the Cook County Department of Revenue ("Department") audit and administrative hearings process. That article focused on the Department's appeals process and, more importantly, the affirmative steps that taxpayers must take to formally protest an assessment issued by Department. This article focuses on one of the County taxes that has recently been targeted by the Department, the Parking Lot and Garage Operations Tax ("Parking Lot Tax"). In the past 3-5 years,…

In a previous post, we addressed the basics of Illinois corporate income tax apportionment. We also addressed how while most corporations are required to follow the standard statutory formula, the state imposes unique rules on a number of industries, including  financial organizations. In addition to financial organizations, insurance companies must also apportion their income to Illinois according to special rules. As with financial organizations, beginning with the tax year ending December 31, 2017, insurance companies must be included in the…

In a previous post, we discussed how Illinois taxes software. 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.[1] Thus, providers of SaaS to Illinois customers will generally be subject to use tax on tangible personal property transferred…

In  Marquette Bank v. Gesiakowski, et al., 2015 IL App (1st) 142627, the Illinois First District Appellate Court recently ruled in favor of a lender in a mortgage foreclosure case that resolved interesting issues regarding a mortgagee's ability to foreclose on real estate held in a land trust, when the beneficial interest in that land trust is held by spouses as tenants by the entirety. Lawrence Gesiakowski obtained a loan from Marquette Bank to support his business, and as security for…

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