Tax News Brief: 2025 First Quarter

Welcome to Weaver’s Specialty Tax Services quarterly news brief. This news brief covers the top issues across our Specialty Tax Services, including State and Local Taxes (SALT), Fixed Assets, Transaction Tax Advisory, Tax Provisions, Tax Credits, International Taxes and Motor Fuel Taxes.

©2025

State and Local Taxes

Property Tax | Sales and Use Tax | Severance Tax

Property Tax

• An Irion County oil and gas compression rental company has been facing double taxation on its property by both the county where it stores its compressor inventory and the county where the property was located on January 1. Despite filing 25.25(c) motions to remove the property from its tax rolls, the motions were denied, and the Texas Supreme Court affirmed the judgment.

Sales and Use Tax

• Maryland Court of Appeals is allowing a utility to claim sales tax refunds for purchases of conductor, substation and transformer equipment, deeming them eligible as part of a “production activity.”
• Texas ruled that Texas Comptroller of Public Accounts failed to comply with aspects of the Texas Administrative Procedure Act. As a result, the Court permanently enjoined the Comptroller from enforcing specific subsections of Rule 3.334, effective July 4, 2024, and remanded them for further review in alignment with the Texas Tax Code.
• Louisiana expanded the state’s sales and use tax provisions to include "digital products" for taxable periods beginning on or after January 1, 2025.
• The Illinois Department of Revenue issued a compliance alert to enhance participation in the Department's Direct Pay Permit (DPP) program.
• The Texas Comptroller ruled that the sales tax manufacturing exemption does not apply to purchases of ice cream collars, as the collars do not produce a chemical or physical change to the ice cream during production.
• Louisiana is implementing significant changes to its sales and use tax system starting January 1, 2025.
• The Texas Comptroller ruled that an all-inclusive fee based on power usage for hosting cryptocurrency mining hardware is not taxable.

Severance Tax

• The Texas Supreme Court ruled that when the valuation point of gas is set "at the well," gas used off premises as fuel is deductible for royalty purposes.
• The Louisiana House proposed a bill that would result in significant severance tax reforms.

Tax Credits

• The U.S. Tax Court ruled against an engineering firm's research credit claim, reinforcing the need for clear documentation of technical uncertainty.

International Taxes

• The U.S. Treasury released final regulations to provide clarity for taxpayers who previously moved IP offshore and are now bringing it back to the U.S.
• The IRS and the U.S. Department of Treasury released new guidance outlining plans to introduce a new transfer pricing methodology aimed to align U.S. regulations with the OECD's Pillar One.
• Germany will implement significant changes to its transfer pricing compliance regulations, including new requirements, shortened deadlines and penalties.
• The Australian Taxation Office issued new guidance regarding intercompany transactions that may attract closer scrutiny, including related-party financing, intangible assets, controlled foreign entities and thin capitalization rules.
• The U.S. Treasury released final and proposed regulations regarding gains and losses for qualified business units (QBUs). These regulations provide guidance on currency gains and losses from transactions between foreign branches or divisions and their tax owners using different functional currencies.
• The IRS Large Business and International Division issued interim guidance on foreign tax redeterminations (FTRs), providing clarification on reporting requirements for taxpayers under examination.
Featured
Tax News Brief: 2024 Fourth QuarterRead Article
 
Article
Tax News Brief: 2024 Fourth Quarter