Three recent cases serve as a tool for taxpayers seeking guidance on when an out-of-state corporation owning a passive ownership interest in a passthrough entity doing business in New Jersey might be found to have nexus.
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Nexus
Proposed changes to services sourcing under California’s market-based sourcing regulations
This column discusses the definition of “benefits received” under the regulation for sourcing service receipts.
Sales-and-use-tax nexus in the internet age: What’s a retailer to do?
States have gotten creative and taken matters into their own hands in an attempt to collect lost tax revenue.
States probing boundaries of ‘physical presence’
States are attempting to increase revenues by enacting laws that expand the definition of nexus-creating activities.
Sales-and-use-tax considerations of software as a service
This column discusses compliance considerations, including nexus, taxability, and how to source
the revenues from customers.
State tax considerations for foreign companies with inbound U.S. investments
Non-U.S. taxpayers generally are surprised by the degree of complexity involved in complying with U.S. state and local taxes.
State and Local Tax Considerations for Inbound Foreign Entities
Foreign entities not engaged in a U.S. trade or business, not deemed to have a permanent establishment, or that have claimed a federal treaty exemption may still be subject to state and local income taxes.
Water’s-Edge Election: Effectively Connected Income and the 20% Rule in California
This item discusses how foreign corporations that generate income from intangible assets are affected by the economic nexus rules as well as the water’s-edge rules.
Factor Presence Nexus Standards and Market-Based Sourcing: A Tough Combination for Service Businesses
The combination of factor presence nexus
standards and market-based sourcing of services for sales factor purposes can have a particularly significant impact on multistate service providers.
New Jersey’s Sourcing Rule for Gain on Dispositions of Interests in Flowthrough Entities Can Be a Real Deal-Killer
Stress points that often produce significant difficulties include apportionment issues stemming from the mixed entity and aggregate treatment of flowthrough entities, the attribution of nexus up and down tiered flowthrough structures, and the impact on individual owners of residency rules and unusable credits for taxes paid to other states.
Colorado’s Use Tax Notice and Reporting Law Is Constitutional, Tenth Circuit Holds
The court held that the law does not discriminate against out-of-state retailers.
The Increasing Compliance Burden of Economic Nexus
State courts have supported the economic nexus theory, which does not require a business to actually conduct activities within the state to incur an income tax obligation.
California Appellate Court Rules on Nexus of Special-Purpose Entities, Tells Lower Court to Rule on Constitutionality of Filing Election
The court determined that two SPEs related to Harley-Davidson Inc., with no physical presence
in California, established nexus under Due Process and Commerce Clauses of the U.S. Constitution.
State Taxation of Financial Institutions: A Multidimensional Landscape
Economic nexus provisions, which often target financial institutions, vary considerably from state to state, and they can trigger income or franchise tax filing responsibilities of which taxpayers are often unaware.
Navigating SALT Nexus and Compliance for Not-for-Profits
Many not-for-profits do not know that the states in which they conduct business have many rules that may apply to them.
Ohio Supreme Court Rules in Favor of Nonresident Athletes Against City of Cleveland
The court found Cleveland incorrectly imposed its 2% local income tax on nonresident athletes’ exterritorial income in two separate cases.
Supreme Court Holds Challenge to Colorado Reporting Requirements Can Go Forward
Reversing the Tenth Circuit, the Supreme Court held that the Tax Injunction Act did not bar a suit that sought to enjoin the state of Colorado from enforcing a law requiring out-of-state sellers to notify Colorado customers of their use tax liability for purchases and report tax-related information about the purchases to the customers and the Colorado Department of Revenue.
Supreme Court Holds Trade Association Can Challenge Colorado’s Amazon Law
The federal Tax Injunction Act does not prevent the Direct Marketing Association from challenging a Colorado law imposing notification and reporting requirements on out-of-state retailers the U.S. Supreme Court held on Tuesday.
Recent State Tax Developments
Several important developments have occurred in the area of state taxation so far in 2014.
New York Tax Reforms Include Significant Changes for Nexus, Calculation of NOLs
New York tax law changes affect almost every aspect of corporate franchise and bank taxes.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
