and Nexus: Constitutional limitations on state powers to tax interstate business. Protected solicitation and de minimis activities under Public Law 86-272. Attributional and economic nexus. Consequences of selling over the Internet, through employees or independent contractors, advertising, delivering, owning or leasing property in a state, other issues. Dealing effectively with nexus questionnaires. The applicable standard for franchise, privilege, other non-income taxes and service companies.
Unitary and Separate
Accounting: Unitary, combined, consolidated and
separate returns: When does the state or the taxpayer have the right
to choose? Limitations on the states’ ability to force unitary
combination. Tests for determining when a business is unitary after
Container and how they may be turned into planning opportunities
for the astute tax practitioner.
Business and Nonbusiness
Income: The business/nonbusiness distinction as interpreted by UDITPA, Multistate Tax Compact and other states. The latest on the transactional versus functional tests. State taxation of capital gains, dividends, interest, rents, royalties after ASARCO/Woolworth, Allied-Signal and MeadWestvaco. Factor representation and adjustment opportunities.
The Tax Base and
Conformity Issues: State tax treatment of income from federal obligations, taxes paid to other jurisdictions, depreciation, net operating losses, 338(h)(10) transactions, passive holding companies, corporate distributions, foreign source income. Planning and refund opportunities. Areas of state taxation that could be impacted by federal tax reform.
State taxation of flow-through entities and their owners. Types
of entities used. Conformity, nexus, unitary, apportionment and
tax base issues. Planning opportunities.
Ethics and Managing the State Tax Function: Structuring the state tax planning, compliance and audit activities to maximize effectiveness while complying with personal ethical standards and those set by the AICPA, ABA, local state CPA societies and bar associations. Consideration of Sarbanes-Oxley, ASC 740 (FIN 48) and other developments that have made ethics a more important part of the state tax practice. Procedures for filing refund claims, amending returns, and responding to notices.
The Property Factor:
Determining the relevant property and the timing of its inclusion
— tangible, intangible, real and personal. Capitalizing leasehold
interests. Using original cost, net book value, basis or fair market
value to measure the property factor. Impact of depreciation strategies
on, and the role of inventories in, the formula. Situs issues. Treatment
of specialized industries.
The Payroll Factor:
Examining the scope of the payroll factor — wages, salaries
and other personal service compensation. Treatment of management
fees, partnership reimbursements, outside contractors, leased or
shared employees, specialized industries. Ascertaining the place
where services are performed — defining “incidental services”
and “base of operations.” Using the cash versus accrual
The Sales Factor:
Determining the type of receipts — tangibles, intangibles, services or a combination — and the proper sourcing method to apply — market, cost of performance, origination and more. Treatment of returns, allowances, installment and occasional sales, discounts; services, rents, royalties, investment income, other intangibles. Throwback, throwout and dock sales.
Current Developments: Current administrative, court and legislative developments on such critical interstate tax topics as: how to identify discriminatory state tax statutes; limitations on the applicability of NOLs; challenges to the increasing use of economic nexus standards for income tax purposes and for other non-traditional state taxes such as the Ohio CAT; how states are defining the unitary concept and business/nonbusiness distinction; apportionment sourcing issues for services and other industries; procedural traps for the unwary. Planning and refund opportunities.
State and Multistate
Tax Audits: The audit process – from information
requests and extensions of the statute to the final conference.
Ethical considerations. Dealing with the consequences of centralized
versus decentralized records. Handling a Multistate Tax Commission
audit. Conducting audits in an electronic environment.
Practical application of the concepts presented.