KPMG reports: Alabama, Alaska, Colorado, Idaho

KPMG reports focus on recent state and local tax developments

KPMG reports focus on recent state and local tax developments

KPMG’s This Week in State Tax—produced weekly by KPMG’s State and Local Tax practice—focuses on recent state and local tax developments.

  • Alabama: The state’s tax tribunal held that a taxpayer was not required to add back interest paid to an Irish affiliate because it qualified for the subject-to-tax exception to the state’s related-party addback rules. The Department of Revenue had tried to argue that because the foreign entity receiving the income was able to reduce its tax base by deducting interest paid to an affiliate, the subject-to-tax exception would not apply. However, the tax tribunal concluded that interest income that the foreign affiliate received from the taxpayer was considered subject to a tax even if no actual taxes were paid on such item of income in the taxing jurisdiction by reason of deductions or otherwise.
  • Alaska: The state’s Supreme Court held that a lower court did not err when it upheld the constitutionality of a statute requiring certain foreign corporations doing business or incorporated in no or low tax jurisdictions to be included in the Alaska combined report.  However, the high court determined that the lower court erred when it held that the statute requiring the inclusion of entities doing business or incorporated in low or no tax jurisdictions was void for vagueness.
  • Colorado: The Department of Revenue issued additional “frequently asked questions” (FAQs) on the $0.27 retail delivery fee that retailers were required to begin collecting the fee on July 1, 2022.  The fee applies to every retail sale of taxable tangible personal property that is delivered by a motor vehicle to a purchaser in Colorado. The FAQs confirm that the fee is not included in the tax base at the state level but, however, note that the fee may be subject to sales tax in self-collecting home rule jurisdictions. At least one city, Denver, is taking steps to revise its municipal code to exclude the retail delivery fee (and certain bag fees) from the city tax base.
  • Idaho: The Tax Commission issued draft regulations addressing the state’s revised sourcing laws. The draft regulations generally incorporate the Multistate Tax Commission (MTC) model rules for sourcing service and intangible receipts, and also provide guidance on the annual election to use an evenly weighted three-factor formula that is available to electronical corporations, telephone corporations, communications companies, and taxpayers subject to a special industry apportionment rule under Idaho Rule 580. 

Read an August 2022 report prepared by KPMG LLP


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.