In 2011, California enacted a “click-through nexus” law requiring out-of-state online retailers to collect sales tax on all taxable sales of tangible personal property made through internet-based referrals, effective Sept. 2012.
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State & Local Tax (SALT)
California Changes Combined Reporting for Assignment of Combined Group Sales
For tax years beginning on or after January 1, 2011, California requires that receipts from the sale of tangible personal property of all members of a combined reporting group be assigned (i.e., sourced) to California, regardless of whether a specific member has nexus in the state.
States Increase Use of U.S. Treasury Offset Program for Collection of State Income Taxes
Budget-weary states are increasingly relying on the federal tax intercept program to collect state income tax liabilities.
New Developments in Sourcing Services for Telecommunication Companies
Effective planning and recordkeeping in the apportionment area call for an in-depth understanding of a taxpayer’s business model, including technology-based processes and the related cost accounting systems used, in order to source revenues to the appropriate jurisdiction.
Selected Issues Concerning the State Income Taxation of Nonresident Trusts and Estates
This column discusses selected state income tax issues for nonresident trusts that are a direct result of several recent challenges, including societal and marketplace conditions, increasingly complex tax laws, and declining state revenues.
Appendix: States That Assess an Income Tax on the Flowthrough Entity
This appendix is published as part of the June 2011 State and Local Tax column: Uncertain Tax Positions for Flowthrough Entities: What Is an Income Tax?
Uncertain Tax Positions for Flowthrough Entities: What Is an Income Tax?
This column examines the unique state tax issues that arise under ASC 740 for privately held business entities that are organized as flowthrough entities.
AICPA Speaks Out Against Proposed Model Sales and Use Tax Statute
The AICPA testified at a hearing May 18 to voice its opposition to a model statute drafted by the Multistate Tax Commission (MTC) that would authorize states to require nonresident companies to report sales transactions with in-state consumers in an effort to increase use tax compliance.
The Emergence of Factor Presence Nexus Standards
Several states have replaced traditional nexus standards with factor presence nexus standards to trigger taxes based upon gross receipts and income.
Current Corporate Income Tax Developments (Part II)
This article covers some of the more important developments in the areas of apportionment, unitary groups/filing methods, administration, flowthrough entities, and other significant corporate state tax issues.
Current Corporate Income Tax Developments, Part I
Part I of this two-part article focuses on nexus, tax base, allocable/apportionable income, and Sec. 338(h)(10) transactions.
Tax Increases Contained in State Ballot Initiatives Soundly Rejected
On November 2, 2010, the midterm elections featured several ballot initiatives dealing with state tax matters. In most instances, voters rejected initiatives to the extent that they would raise taxes, implicitly requesting that their governments look for alternative means to solve their states’ budget deficits.
Click-Through Nexus and Information-Reporting Requirements
Affiliate nexus principles enable states to assert jurisdiction over out-of-state retailers that would not otherwise be required to collect and remit sales tax due to their lack of a physical presence. Not surprisingly, given the current budget shortfalls most states are facing, they have become increasingly aggressive in asserting affiliate nexus.
California’s Move to Single Sales Factor
Beginning January 1, 2011, multistate businesses may elect to use a single sales factor method of apportionment for purposes of their California corporate income tax return.
California S.B. 974’s Impact on California Enterprise Zones
Opponents of California’s Enterprise Zone (EZ) tax credit program have recently attacked its effectiveness, seeking to eliminate the use of targeted employment areas and retroactive vouchering, along with other modifications that would phase out the EZ in favor of a tax incentive program that focuses on improving California’s workforce development for future jobs.
The Challenges of State Transfer Pricing
Recently many states have been taking aggressive steps and becoming more sophisticated in challenging intercompany pricing.
Income Apportionment and Allocation after Mead
In MeadWestvaco Corp. v. Illinois Dep’t of Revenue, the Supreme Court held that the operational function test was not intended to modify the unitary business principle by adding a new ground for apportionment.
State and Federal NOL Rules Differ in Key Respects
State net operating loss (NOL) rules generally differ from federal NOL rules, and state NOL rules often differ from one another. This lack of consistency can lead to confusion about a taxpayer’s ability to utilize NOLs.
State Tax Considerations of Passthrough Entities
This column highlights areas of concern regarding state taxation of passthrough entities, including entity classification, conformity to federal tax conduit treatment, and tax reporting obligations.
Current Corporate Income Tax Developments (Part II)
During 2009, numerous state statutes were added, deleted, or modified; court cases were decided; regulations were proposed, issued, and modified; and bulletins and rulings were issued, released, and withdrawn. This article covers some of the more important developments in apportionment, unitary groups/filing methods, administration, flowthrough entities, and other significant corporate state tax issues.
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