An Introduction to the Nevada Commerce Tax

Size: px
Start display at page:

Download "An Introduction to the Nevada Commerce Tax"

Transcription

1 February 2016 An Introduction to the Nevada Commerce Tax The extent of the burden created by Nevada s new gross receipts tax will depend largely on how the tax is implemented. By Sara M. Arvold, CPA; Jonathan M. Cesaretti, J.D., LL.M.; Shawn M. Kane, CPA; and Daniel P. Sieburg, CPA, J.D. Audit Tax Advisory Risk Performance

2 Crowe Horwath LLP Previously published by the Journal of Multistate Taxation and Incentives (Thomson Reuters/Tax & Accounting) Volume 25, Number 9, January 2016 On June 9, 2015, Gov. Brian Sandoval signed Nevada Senate Bill (S.B.) 483 into law. Among other things, S.B. 483 contains a new generally applicable gross receipts tax (the commerce tax), which was effective July 1, Although the tax has many features in common with the other generally applicable state gross receipts taxes, it presents a number of new and potentially problematic issues. With the imposition of the commerce tax, S.B. 483 also makes some significant changes to Nevada s payroll taxes. 2 The discussion that follows is broadly divided into two sections. The first section introduces the commerce tax and a discussion of problematic issues. The second section includes an analysis of how the tax compares with the other relatively recently enacted state gross receipts taxes, as well as an analysis of how the tax compares with the tax regimes of Nevada s neighboring states. 1 S.B. 483, 78th Leg. (Nev. 2015). 2 Note that S.B. 483 also includes other changes, including increases in the excise tax on cigarettes, increases in certain state business license fees, modifications to the state mineral taxes, and a permanent extension of the local school support tax portion of the sales and use tax. These law changes are beyond the scope of this article. 2

3 An Introduction to the Nevada Commerce Tax: Excise and Miscellaneous Taxes Overview of the Nevada Commerce Tax The commerce tax is a gross receipts tax imposed on each business entity (in other words, it is filed on a separate company basis) with Nevada gross revenue exceeding $4 million. 3 Imposition of Tax The term business entity is broadly defined to include corporations, partnerships, limited liability companies (LLCs), associations, joint ventures, limited liability partnerships, business trusts, professional associations, joint stock companies, and holding companies, as well as business activities reported by individuals on Form 1040 Schedules C, E, or F. 4 The definition is broad enough to include entities that are disregarded for federal income tax purposes in that the definition includes LLCs, and the statute does not include disregarded entities in its list of exceptions to the business entity definition. 5 Although the definition of business entity is broad, there are notable exceptions, including, among other things: Real estate investment trusts (with certain exceptions) and real estate mortgage investment conduits Entities with Nevada activities that are confined to owning, maintaining, and managing certain types of intangible investments Entities defined as passive entities under the statute, which appear to be roughly analogous to so-called investment partnerships under Illinois and California laws 6 Not-for-profit organizations that qualify as tax-exempt under IRC Section 501(c)(3) 7 3 S.B. 483, S.B. 483, 4(1). 5 S.B. 483, 4(2) provides a list of items that are not included in the definition of business entity. 6 Cal. Rev. & Tax. Code ; 35 Ill. Comp. Stat. 5/1501(a)(11.5). 7 S.B. 483, 4. 8 S.B. 483, S.B. 483, Although the Texas margins tax is treated as an income tax for financial accounting purposes and does provide substantial deductions where it arguably should be subject to P.L , Texas currently maintains that P.L does not apply. 34 Tex. Admin. Code, 3.586(e). 11 S.B. 483, 3. Passive entities, for purposes of the Nevada commerce tax, are defined as limited liability companies, partnerships, or trusts (other than a business trust) that, during the tax period, generated at least 90 percent of their federal gross income from investment-type activities. Rent specifically is excluded from the types of income that would qualify under the 90 percent test. 8 The commerce tax provides expansive definitions of business entity, exceptions to the business entity subject to the tax, numerous deductions, and tax rates for various activities. The commerce tax is less forthcoming, however, on the subject of nexus. The commerce tax is imposed on the privilege of engaging in business in the state. 9 As a privilege tax based on gross receipts, an out-of-state business is not entitled to the protections of Public Law (P.L.) Business means any activity engaged in or caused to be engaged in with the object of gain, benefit, or advantage either direct or indirect, to any person or government entity. 11 Like many other modern state tax statutes, the commerce tax appears to reduce the issue of nexus to a sales factor presence test in other words, the only self-imposed limitation appears to be whether there are enough sales (or gross revenue) sitused to the state. The commerce tax statutes assume an ability to impose the tax on any 3

4 Crowe Horwath LLP business that has more than $4 million of Nevada gross revenue, as sitused by the tax itself. The only nexus limitation that might be gleaned from a reading of the statute is actually provided in the section for deductions, which states that taxpayers (those already subject to the tax) may deduct from gross revenue that which this State is prohibited from taxing pursuant to the Constitution or laws of the United States. 12 The vague nexus threshold notwithstanding, the relatively large filing threshold of $4 million in Nevada sitused gross revenue, low commerce tax rates, and the U.S. Supreme Court s unwillingness to play Commerce Clause referee may result in little actual protests, appeals, or eventual case law in the area of nexus regarding this tax. 13 Computation of Tax Base As noted earlier, the tax base is Nevada gross revenue, which is defined as the total amount realized by a business entity from engaging in a business in [Nevada], without deduction for the cost of goods sold or other expenses incurred, that contributes to the production of gross income. 14 As a taxpayer might assume, the amount realized from the sale of products or services is included in gross revenue, but the definition also includes, among other things, amounts realized from the sale, exchange or other disposition of a business entity s property; amounts realized from the performance of services; and amounts realized from another person s possession of the property or capital (for example, the lease or licensure of tangible or intangible property) of a business entity. Exclusions From Gross Revenue Although gross revenue is broadly defined, the commerce tax does provide for some exclusions from gross revenue. Specifically excluded from the definition of gross revenue are the following: Amounts realized from the sale, exchange, or disposition of intellectual property 15 Value of cash discounts allowed by the business and taken by the customer 16 Value of goods or services provided to a customer on a complimentary basis 17 Amounts realized from transactions subject to or described in IRC Sections 118, 331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, or 1033, regardless of the business entity s federal income tax classification under 26 C.F.R Amounts indirectly realized from a reduction of an expense or deduction 19 Value of property or services donated to an IRC Section 501(c)(3) organization if the donation is tax deductible pursuant to the provisions of IRC Section 170(c) 20 Amounts not considered revenue under U.S. generally accepted accounting principles (GAAP) S.B. 483, 21(1)(a). 13 It is unclear whether those entities below the $4 million threshold would have any reporting requirements, but, like the issue of nexus, there may be little motivation to challenge such a requirement should it be imposed. 14 S.B. 483, 8(1). 15 S.B. 483, 8(3)(a). 16 S.B. 483, 8(3)(b). 17 S.B. 483, 8(3)(c). 18 S.B. 483, 8(3)(d). 19 S.B. 483, 8(3)(e). 20 S.B. 483, 8(3)(f). 21 S.B. 483, 8(3)(g). 4

5 An Introduction to the Nevada Commerce Tax: Excise and Miscellaneous Taxes Deductions From Gross Revenue In addition to excluding certain items from gross revenue, the commerce tax provides a number of deductions, 22 which generally fall within a handful of broad categories: deductions presumably designed to avoid pyramiding of the tax, deductions for refunds and expensed bad debt, deductions for certain financial transactions, deductions for amounts that avoid taxation of the federal or Nevada governments, deductions for employee leasing corporations, and deductions for revenue on which it would be otherwise unconstitutional to impose a tax. Deductions to avoid pyramiding of the tax. The commerce tax is imposed on a separate-entity basis. As it is well-recognized that taxpayers subject to a gross receipts tax regime are likely to pay tax on the same revenue more than once (so-called tax pyramiding), provisions have been included in the commerce tax designed to reduce tax pyramiding. The commerce tax avoids pyramiding the tax in two ways. First, the tax allows for a deduction for the amount of pass-through revenue. 23 It should be noted that revenue received from intercompany transactions between business entities that are part of an affiliated group as defined in the commerce tax falls under the definition of pass-through revenue. 24 Please note that the term affiliate group is substantially different as it is defined under the commerce tax from its definition for federal income tax purposes under IRC Section Second, the commerce tax allows a deduction for the distributive or proportionate shares of receipts and income from a pass-through entity, which under the commerce tax is defined as either an entity treated as a partner for federal income tax purposes or as a disregarded entity for federal income tax purposes. 25 Deductions for refunds and expensed bad debt. The commerce tax provides deductions for returns and refunds to customers and bad debts expensed for federal income tax purposes. 26 Deductions for finance transactions. The commerce tax also provides for deductions for financial transactions, including: 22 See generally S.B. 483, S.B. 483, 21(l). Pass-through revenue includes, but is not limited to, revenue received that is required by law, contract, or fiduciary duty to be distributed to another person or government entity. (See 11 for specific examples or applications.) 24 S.B (f). The affiliated group is defined to mean any two or more business entities (as defined under the commerce tax) under the control (50 percent directly or indirectly) of one or more common owners or by one or more members of the group. 25 S.B. 483, 21(p) and S.B. 483, S.B. 483, 21(1)(x) and (y). Interest income (other than interest on credit sales) Hedging transactions Amounts related to repayment of principal of loans, bonds, mutual funds, certificates of deposit, or marketable instruments Proceeds from issuance of a business entity s own stock Proceeds from insurance policies (other than those received for loss of business revenue) Amounts received in accounts receivable factoring transactions The tax basis of securities and loans sold by a business entity 5

6 Crowe Horwath LLP Deductions for interaction with federal and Nevada governments. The commerce tax allows a deduction for dividends or interest from U.S. and Nevada securities or bonds. 27 Any amount of revenue received from the operation of a facility located on federal government property or operated primarily to house military members also is deductible. 28 The statute provides for a deduction for amounts received from Medicaid, Medicare, and certain other federal and state programs. 29 However, the statute limits the deduction to 50 percent for those receipts if the taxpayer is a health care institution. 30 Costs incurred by healthcare providers for uncompensated care are allowed as a deduction from gross receipts, but any payment later received is included in gross receipts for the quarter in which the payment is received by the healthcare provider. Deductions related to other Nevada tax regimes. Although Nevada does not have a corporate income tax, it does have a number of receipt or excise taxes that apply to specific products or industries. The commerce tax attempts to reduce the amount of revenue included in tax bases that already would be taxed under another chapter of the Nevada Revised Statutes. As such, the commerce tax provides deductions for gross receipts used to determine gaming license fees, mineral extraction and royalty excise taxes, liquor taxes, and insurance premiums taxes. For example, an insurance company would take a deduction for premium income for which insurance premiums tax was paid. 31 Deduction for wages of employee leasing companies. The commerce tax also provides for a deduction for employee leasing companies 32 for the amount received from its clients for employee wages, payroll taxes, employee benefits, and workers compensation. 33 Deductions of revenue that the state is constitutionally prohibited from taxing. The commerce tax provides a catch-all deduction for gross revenue that the state is prohibited from taxing according to the U.S. Constitution or the Nevada Constitution. Although most of the more significant aspects of these restrictions appear to be covered in this and other areas of the commerce tax, a complete analysis of these restrictions is beyond the scope of this article. 34 Situsing of gross revenue The sourcing provisions included in the commerce tax appear to be fairly conventional, but they are worth some discussion. The provisions related to real and tangible personal property are standard Uniform Division of Income for Tax Purposes Act (UDITPA)-like apportionment sourcing rules: Gross revenue from rents and sales of real and tangible personal property are sitused to Nevada if the real property is located in Nevada, 35 and sales of tangible personal property are sitused to Nevada if the property is delivered or shipped to a buyer in Nevada, regardless of shipping terms S.B. 483, 21(b). 28 S.B. 483, 21(n). 29 S.B. 483, 21(i). 30 S.B. 483, 21(j). Health care institution is defined to include pharmacies and a broad range of medical facilities defined under Nev. Rev. Stat , which includes hospitals, hospice care, surgical centers, certain clinics, and other facilities. 31 S.B. 483, 21(c)-(h). 32 An employee leasing company is a company that places any of the regular, full-time employees of a client company on its payroll and, for a fee, leases them to the client company on a regular basis without any limitation on the duration of their employment or that leases to a client company five or more part-time or full-time employees or 10 percent or more of the total number of employees within a classification of risk established by the Commissioner. Nev. Rev. Stat. 616B.670(3). 33 S.B. 483, 21(k). 34 See Constitution of the State of Nevada. 35 S.B. 483, 22(1)(a) and (b). 36 S.B. 483, 22(1)(c). 6

7 An Introduction to the Nevada Commerce Tax: Excise and Miscellaneous Taxes 37 S.B. 483, 22(1)(f). 38 S.B. 483, 22(1)(g). 39 S.B. 483, 22(1)(e). 40 S.B. 483, S.B. 483, 22(1). 42 It is the authors understanding that, in connection with setting the tax rates, the state incorporated lessons learned by Texas in the implementation of the Revised Franchise Tax. As with the current state income tax trend, Nevada is situsing services and other sales under a market approach. The general rule for situsing services is based on the proportion the purchaser receives of the benefit in Nevada. 37 The other gross revenue rule (revenue not described under a specific rule in the statute) is sitused, to the extent possible, by determining the physical location of the purchaser. 38 If the physical location is not determinable using the business records of the taxpayer, the gross revenue is not considered Nevada revenue. Lastly, there is a curious provision regarding transportation services that requires both the origin and destination point of the transportation services be in Nevada, excluding all interstate and international transportation that merely begins or ends in Nevada, rather than using mileage as do many other states apportionment formulas. 39 Exhibit 1: NAICS codes and tax rates NAICS Code and Description Tax Rate 11 agriculture, forestry, fishing, and hunting 0.063% 21 mining, quarrying, and oil and gas extraction 0.051% 22 and 517 utilities and telecommunications 0.136% 23 construction 0.083% 31, 32, and 33 manufacturing 0.091% 42 wholesale trade 0.101% 44 and 45 retail trade 0.111% 481 air transportation 0.058% 484 truck transportation 0.202% 482 rail transportation 0.331% 483, 485, 487, 488, 491, and 492 other transportation 0.129% 493 warehousing and storage 0.128% 511, 512, 515, and 518 publishing, software, and data processing 0.253% 52 finance and insurance 0.111% 53 real estate and rental and leasing 0.25% 54 professional, scientific, and technical services 0.181% 55 management of companies and enterprises 0.137% 561 administrative and support services 0.154% 562 waste management and remediation services 0.261% 61 educational services 0.281% 62 healthcare and social assistance 0.19% 71 arts, entertainment, and recreation 0.24% 721 accommodation 0.2% 722 food services and drinking places 0.194% 81 other services 0.142% Any business not categorized above 0.128% Rates of Tax As currently enacted, there are 26 different rates under the commerce tax. 40 The rate at which a business will be taxed under the commerce tax depends entirely on the business s industry classification under North American Industry Classification System (NAICS) codes. 41 For a business engaged in more than one industry, the tax rate corresponds to the industry in which it generates the highest percentage of its Nevada gross revenue. The tax rates range from percent to percent, and the tax rate is percent for businesses with an industry classification that does not fit any of the NAICS codes listed. 42 See Exhibit 1 for further information. The commerce tax applies a single rate to each taxpaying entity. The commerce tax rate is determined by the classification in which the taxpayer is primarily engaged. It should be noted that this determination may not be changed year to year; a business entity must apply to the Nevada Department of Taxation to change its rate, and the department must determine that the business no longer is engaged primarily 7

8 Crowe Horwath LLP in its previously designated business category. 43 Given the difference in rates and the fact that taxpayers are locked in subject to departmental consent to change, this critical determination is an area that may be subject to audit controversies. The Reporting Year Issues A business entity s method of accounting for gross revenue for purposes of the commerce tax is the same as that for federal income tax purposes. 44 From a practical perspective, for taxpayers that do not have the same tax year as the state s fiscal year, the statute appears to require that taxpayers provide a reconciliation to present their Nevada receipts for the June 30 reporting period. For example, the commerce tax, which was effective July 15, 2015, will be collected on an annual basis. According to the statute, the first payment, as well as reporting, will be due Aug. 15, 2016, for the July 1, 2015, through June 30, 2016, tax year. 45 Taxpayers will be permitted to request a single 30-day extension to pay the tax. Although the statute provides for no penalties to be assessed based on the 30-day extension period, interest will be imposed. 46 Based on the statute, there appears to be no requirement to make estimated payments of any kind. The statute makes no provision for any reporting year other than the July 1 through June 30 fiscal period. As discussed in more detail later, reports are due within a relatively short time frame (45 days following tax year-end). Most taxpayers, even those not on a June 30 fiscal year-end for their financial accounting and income tax reporting, will be required to submit their best estimate of the tax liability prior to the due date for the return and, once the final numbers become known, would adjust the amount of tax accordingly. The Commerce Tax Provides a Potentially Significant Credit Against Nevada s Payroll-Based Tax S.B. 483, the legislation that imposes the commerce tax, also includes a number of amendments to Nevada s payroll-based tax. 47 For example, a credit for commerce tax paid is allowed to be applied to Nevada s payroll-based tax. 48 This credit may significantly reduce the burden of the commerce tax on local Nevada businesses. Since 2003, Nevada has had a payroll-based tax, confusingly labeled the modified business tax. The tax affects every Nevada employer that also is subject to the Nevada unemployment compensation law. 49 The tax is based on total gross employee wages less healthcare benefits that are covered by the employer. 50 Nevada imposes this tax at two rate classifications. The higher rate classification is on financial institutions. The lower rate is on all other businesses. The tax is reported and paid quarterly. In connection with the imposition of the commerce tax, the lower rate classification was raised from 1.17 percent of wages in excess of $62,500 per quarter to percent of wages in excess of $50,000 per quarter. The higher rate 43 S.B. 483, 21(3). One of any number of potential sources for controversy in this regard might be that an otherwise federally disregarded entity could have a different entity classification from its federally regarded parent company. 44 S.B. 483, Reports are due by the 45th day following the end of the tax year. S.B. 483, S.B. 483, 20(4). 47 Prior to S.B. 483, the modified business tax rate was scheduled to be reduced from 1.17 percent of wages in excess of $85,000 per calendar quarter to 0.63 percent beginning July 1, Nev. Rev. Stat. 363B.030, 363B S.B. 483, 68(4). 49 Nev. Rev. Stat. 612, et seq. 50 The tax base is the total amount of gross wages and reported tips paid and reported to the Employment Security Division on Nevada form NUCS

9 An Introduction to the Nevada Commerce Tax: Excise and Miscellaneous Taxes Exhibit 2: A generic services business with significant Nevada payroll that derives $100 million of Nevada gross receipts Nevada Gross Revenue $100,000,000 Less $4 Million Threshold ($4,000,000) Taxable Receipts $96,000,000 Unclassified NAICs Rate 0.128% Commerce Tax $122,880 Nevada Payroll $5,000,000 Quarterly Exemption Amount (Cumulative) ($200,000) Nevada Taxable Payroll $4,800,000 Payroll Rate 1.475% Payroll Tax Before the Commerce Tax Credit $70,800 Commerce Tax Credit, Lesser of: 50% of Commerce Tax or Total Payroll Tax ($61,440) Total Payroll Tax $9,360 Exhibit 3: A generic services business with nominal Nevada payroll that derives $100 million of Nevada gross receipts Nevada Gross Revenue $100,000,000 Less $4 Million Threshold ($4,000,000) Taxable Receipts $96,000,000 Unclassified NAICs Rate 0.128% Commerce Tax $122,880 Nevada Payroll $500,000 Quarterly Exemption Amount (Cumulative) ($200,000) Nevada Taxable Payroll $300,000 Payroll Rate 1.475% Payroll Tax Before the Commerce Tax Credit $4,425 Credit Limitation, Lesser of: 50% of Commerce Tax or Total Payroll Tax ($4,425) Total Payroll Tax $0 classification for financial institutions was not modified in connection with the imposition of the commerce tax and remains at 2 percent on all wages with a few exceptions. It should be noted that the way the mining industry is taxed has changed as well in connection with the imposition of the new tax. Beginning in the third quarter of 2016, Nevada payroll-based taxpayers will be entitled to a credit for the amount of commerce tax paid for the preceding taxable year (in this case from July 1, 2015, to June 30, 2016, and paid prior to Aug. 15, 2016). The credit is limited to 50 percent of the commerce tax paid. The credit is available for the next four calendar quarters following the payment of the commerce tax. Any unused credit will be carried forward to successive quarters and will not be permitted to be carried forward beyond the fourth quarter following the end of the tax year. Exhibits 2 and 3 include two simplified 51 examples of how the tax and credit apply to two presumably common situations. Based on the examples (and perhaps unsurprisingly), the credit mechanism provides a considerable benefit to a business with substantial Nevada payroll. Given the differences in the rate structures and composition of these tax bases, it reasonably might be expected that most, if not all, substantial Nevada employers that derive substantial receipts from within the state will bear less of a commerce tax burden than taxpayers that are not substantial Nevada employers. 51 For simplicity, the examples demonstrate the calculation on an annual basis and do not reflect the quarterly use of the credit for commerce tax paid and the related carryforward. 9

10 Crowe Horwath LLP Constitutional Issues Raised by the Payroll Tax Credit The question of whether this tax rises to the level of presumed constitutional discrimination in favor of Nevada employers is likely to remain untested for a number of years and, given the relatively modest amounts at stake on a per-taxpayer basis, may remain untested permanently. In general, although some favoring of in-state interests is permitted, taxing schemes that are facially discriminatory traditionally have been struck down without regard to the economic or fiscal effect of those taxing regimes, according to Jerome and Walter Hellerstein. 52 In Bacchus Imports, Ltd. v. Dias, Dir. of Taxation of the State of Hawaii, a leading state and local tax case in the area, the U.S. Supreme Court held that [a] cardinal rule of Commerce Clause jurisprudence is that [no] State, consistent with the Commerce Clause, may impose a tax which discriminates against interstate commerce... by providing a direct commercial advantage to local business. 53 In Maryland v. Louisiana, 451 U.S. 725 (1981), the Supreme Court struck down a discriminatory tax regime that involved two seemingly separate taxes. In the case, the so-called first-use tax was designed to be primarily imposed on out-of-state interests. The first-use tax was to be imposed on certain uses of natural gas imported into Louisiana that previously had not been taxed by any other state. One of the taxable uses was the transportation of gas through the state. At the time, a significant amount of this type of gas flowed from the federally controlled sections of the outer continental shelf. Louisiana law also provided a credit for the first-use tax on a Louisiana taxpayer s severance tax return. The practical effect of the credit mechanism was to protect local interests from the imposition of the first-use tax. In connection with its decision in this case, the court held as follows: Competitive users in other States are burdened with the Tax. Other Louisiana statutes, enacted as part of the First-Use Tax package, provide important tax credits favoring local interests. Under the Severance Tax Credit, an owner paying the First-Use Tax on OCS gas receives an equivalent tax credit on any state severance tax owed in connection with production in Louisiana. 47:647 (West Supp. 1981). On its face, this credit favors those who both own OCS gas and engage in Louisiana production. The obvious economic effect of this Severance Tax Credit is to encourage natural gas owners involved in the production of OCS gas to invest in mineral exploration and development within Louisiana rather than to invest in further OCS development or in production in other States. Finally, under the Louisiana statutes, any utility producing electricity with OCS gas, any natural gas distributor dealing in OCS gas, or any direct purchaser of OCS gas for consumption by the purchaser in Louisiana may recoup any increase in the cost of gas attributable to the First-Use Tax through credits against various taxes or a combination of taxes otherwise owed to the State of Louisiana Jerome R. Hellerstein and Walter Hellerstein, State Taxation, 4.13[1][a] (3d ed. 2014). See also, Walter Hellerstein, Commerce Clause Restraints on State Taxation: Purposeful Economic Protectionism and Beyond, 85 Mich. L. Rev. 758 (1987) U.S. 263, 268 (1984). See also, Boston Stock Exchange et al. v. State Tax Commission, 429 U.S. 318 (1977). Maryland v. Louisiana, 451 U.S. 725 (1981) U.S. 725, 756 (1981). 10

11 An Introduction to the Nevada Commerce Tax: Excise and Miscellaneous Taxes The analogy, although not perfect, appears to be close enough to bear some consideration. If a court were to find that Nevada s payroll tax credit, on its face, favors those businesses that both have Nevada employees and derive significant Nevada receipts, then it might reasonably follow that a court could reach the same conclusions regarding the commerce tax credit as those reached by the U.S. Supreme Court with the first-use tax credit. In Armco, Inc. v. Hardesty, 55 the U.S. Supreme Court suggested that the so-called internal consistency test, which it previously had applied in the context of evaluating the constitutionality of an apportionment method, similarly applied in the context of a tax that was alleged to be facially discriminatory. 56 Following professor (Walter) Hellerstein s formulation of internal consistency in the context of an unapportioned flat tax on a multistate business, the interstate business would pay the tax in each state in which it did business, whereas its intrastate competitor would pay but a single tax in the state in which it did business. 57 Based on this formulation of the test, it appears that Nevada s regime of providing a payroll tax credit for commerce tax paid would violate the internal consistency principle as intrastate competitors might have enough of a payroll-related tax liability in Nevada to fully absorb the commerce tax paid, while most, if not all, interstate competitors would not have enough of a payroll-related tax liability in Nevada to absorb the commerce tax paid U.S. 638 (1984). 56 See 467 U.S. at (1984) (brackets in original), quoting Container Corp. of America v. Franchise Tax Bd., 463 U.S. 159 (1983): [i]n Container... the Court noted that a tax must have what might be called internal consistency that is the [tax] must be such that, if applied by every jurisdiction, there would be no impermissible interference with free trade. In that case, the Court was discussing the requirement that a tax be fairly apportioned to reflect the business conducted in the State. A similar rule applies where the allegation is that a tax on its face discriminates against interstate commerce. 57 Hellerstein and Hellerstein, State Taxation, 4.16[1] [e] (3d ed. 2014). 58 See also, W. Hellerstein, Is Internal Consistency Foolish? Reflections on an Emerging Commerce Clause Restraint on State Taxation, 87 Mich. L. Rev. 138, (1988). 59 No (U.S. May 18, 2015). The U.S. Supreme Court s recent decision in Comptroller of the Treasury of Maryland v. Wynne 59 may also provide some ammunition for a dormant Commerce Clause challenge based on the internal consistency test. The issue in Wynne was that individuals living in the same state paid a different amount of tax based on the source of their income (whether it was from Maryland or another state). 60 The tax at issue in Wynne was a state personal income tax and a county income tax also administered by the state where a resident could receive a credit against the state portion of the tax but not the county portion. 61 Holding that the Maryland tax scheme failed the internal consistency test, the court s majority stated: The critical point is that the total tax burden on interstate commerce is higher, not that Maryland may receive more or less tax revenue from a particular taxpayer. 62 Although the Maryland tax involved a personal income tax with a credit against a portion of the tax for income tax paid to another state and Nevada s commerce tax is a gross receipts tax with a credit against it for taxes paid to the same state on a separate tax base the issue that raised the ire of the majority is arguably the same: If every state were to adopt a similar scheme to Nevada (and under Maryland v. Louisiana, one can look at two disparate taxes together if the practical effect is to protect in-state interests), then the tax burden on interstate commerce would be higher. 60 Id. 61 Id. 62 Id. 11

12 Crowe Horwath LLP Potential for Future Contingent-Fee Audits and Taxpayer Reimbursement of Nevada Government Expenses The commerce tax law includes a provision that permits the Department of Taxation to delegate its authority to examine the books, papers and records of any person who may be liable for the commerce tax. 63 This language appears to open the door for Nevada to use contingent-fee auditors to identify delinquent taxpayers. Given the increased revenue Delaware and certain other states have generated using thirdparty auditors to enforce their escheat laws, it would not be surprising to see Nevada s Department of Taxation adopt this practice. The commerce tax law also provides the Department of Taxation with the authority to invoice a taxpayer or a potential taxpayer that keeps any books, papers or records relevant to the Department of Taxation out of state for a travel stipend for each day or fraction of a day that an employee of the Department is engaged in examining those documents, plus any other actual expenses incurred by the employee while he or she is absent from his or her regular place of employment to examine those documents. 64 Because many taxpayers that will be subject to the commerce tax presumably keep their records outside of Nevada, it also would not be surprising to see the Nevada Department of Taxation begin invoicing taxpayers and potential taxpayers for certain costs of the state s audit program. Taxpayers may take some measure of comfort from the fact that the statutory reference to expense reimbursement appears to be limited to the travels of Nevada employees. A cursory review of the Nevada Department of Administration s policy statement on travel and per diem policy indicates to the authors that out-of-state travel is fairly well-regulated. Any taxpayer that might be concerned about receiving such an invoice in the future should review the guidelines, as there appears to be a mandate for state employees to use another means of conducting business (such as and calls) before out-of-state travel is considered S.B. 483, 18(1). 64 S.B. 483, 18(2). 65 See Nevada Document Policy 2.6.1: State of Nevada Department of Administration Policy Statement on Travel and Per Diem Policy, effective Nov. 26, 2013, signed by Jeff Mohlenkamp, director, Policies/#CHAPTER 2 - Personnel 12

13 An Introduction to the Nevada Commerce Tax: Excise and Miscellaneous Taxes Comparative Analyses of the Nevada Commerce Tax Gross receipts taxes often are considered by state legislatures or governors looking to raise revenue, but they rarely are enacted in the competitive interstate economic arena. The Commerce Tax Compared With Other Gross Receipts Taxes In fact, many states that have had gross receipts taxes either have repealed them or limited their applicability. For example, Michigan recently repealed the modified gross receipts portion of its business tax after only four years. New Jersey s taxes based on gross receipts are now limited to those entities maintaining P.L protection. And Kentucky s gross receipts and profits tax liabilities provide a credit against the income tax and act as a minimum tax. Three exceptions to this are the Ohio commercial activity tax (CAT), the Texas franchise tax (the Texas margins tax), and the Washington business and occupation (B&O) tax. Nevada s commerce tax appears to have borrowed elements from all three. The following section compares and contrasts the commerce tax with the other more established gross receipts taxes. 66 Nexus and Imposition of Tax The commerce tax, CAT, and B&O are imposed on the privilege of doing or engaging in business in their respective states. 67 The Texas margins tax is imposed on taxable entities doing business in the state. 68 As privilege taxes based on gross receipts, none of the taxes is subject to the restrictions under P.L The Texas margins tax does provide for some deductions and is treated as an income tax for financial accounting purposes but is substantially different enough from the typical corporate income tax to be included in this discussion. 67 Nevada S.B. 483, 20; Wash. Rev. Code (1); Ohio Rev. Code Ann (A). 68 Tex. Tax Code Ann (a). 69 Although the Texas margins tax is treated as an income tax for financial accounting purposes and does provide substantial deductions where it arguably should be subject to P.L , Texas currently maintains that P.L does not apply. 34 Tex. Admin. Code 3.586(e). Like many imposition statutes, the commerce tax definition is broadly worded: Business means any activity engaged in or caused to be engaged in with the object of gain, benefit or advantage, either direct or indirect, to any person or government entity. 70 Although the definition is broad, the $4 million filing threshold may limit questions of nexus or whether companies are doing business in Nevada. The definition of those entities subject to these gross receipts taxes also is broad. Unlike most income taxes, which are limited to corporate entities, the gross receipts taxes apply to a number of business formations. Nevada imposes the commerce tax on business entities doing business in the state, and a business entity may be a corporation, partnership, proprietorship, limited-liability company, business association, joint venture, limited-liability partnership, business trust, professional association, joint stock company, holding company and any other person engaged in a business S.B. 483, S.B. 483,

14 Crowe Horwath LLP This treatment is similar to the Texas margins tax, with the difference being that the Texas margins tax is imposed on a combined group. But the Nevada commerce tax, like the CAT and B&O, also imposes its tax on natural persons required to file a Schedule C, Schedule E, or Schedule F with that person s federal return. 72 Nevada does provide the most generous filing threshold imposing the commerce tax only on business entities with Nevada gross revenue exceeding $4 million. 73 The other gross receipts states have lower filing thresholds: CAT is not imposed on entities with less than $150,000 taxable gross receipts and has a $150 flat fee on sales in excess of that threshold but less than $1 million. The Texas margins tax does not require a filing if total revenue is less than $1 million or if a margins tax liability as calculated is less than $1,000. B&O filings are required by all those who have at least $12,000 in revenue taxable under the B&O. 74 Tax Rate Although Ohio and Texas take a simple approach with their tax rates, 75 the commerce tax appears to have borrowed from the B&O in that it employs a multitude of tax rates. The B&O has 50 different classifications based on the activity in which the taxpayer is engaged, with rates ranging from percent to 1.5 percent. Each B&O taxpayer may file returns with multiple revenue classifications. Nevada employs only 26 rate classifications, which are based on NAICS codes. The commerce tax rates vary from percent to percent. A big difference between the commerce tax and the B&O, however, is that while B&O taxpayers can have different rates apply if they engage in different activities, the commerce tax applies a single rate to each taxpaying entity. The commerce tax rate is determined by the classification in which the taxpayer is primarily engaged. Given the difference in rates, this is a critical determination and an area of potential audit controversies. Returns The frequency and timing of a commerce tax return resemble the Texas margins tax more than the CAT and B&O taxes. The latter are filed quarterly and monthly, respectively. The commerce tax is filed on an annual basis like the Texas margins tax and at a specified time regardless of the taxpayer s fiscal year. The commerce tax is filed based on a July 1 through June 30 tax year and is due 45 days after the period closes. It would appear that unlike the Texas margins tax, where all returns are filed on the same tax period but are based on the taxpayer s actual fiscal year, the Nevada commerce tax is based on gross revenue during the July 1 through June 30 time period, which may create recordkeeping complications for taxpayers not on that fiscal year. 72 S.B (2)(b). Ohio imposes the CAT on persons generally, not just those who file certain schedules with the federal return, and the B&O also is imposed on persons generally. Ohio Rev. Code Ann (A); Wash. Rev. Code S.B. 483, Wash. Rev. Code CAT has a tiered minimum tax for years beginning on or after Jan. 1, 2014: $150 flat tax on the first $1 million of taxable gross receipts; $800 for taxpayers with taxable gross receipts greater than $1 million but less than or equal to $2 million; $2,100 for taxpayers with taxable gross receipts greater than $2 million but less than or equal to $4 million; $2,600 for taxpayers with taxable gross receipts greater than $4 million; and 0.26 percent on taxable gross receipts greater than $1 million. Ohio Rev. Stat. Ann The Texas rate is 1 percent and 0.5 percent (wholesaler, retailer) for reports due before Jan. 1, 2016, and 0.75 percent and percent, respectively, for those reports due after Jan. 1, Tex. Tax Code Ann Note that Texas had temporary rates for reports due on or after January 1, 2014, and before Jan. 1, 2015, of percent and percent and for reports due on or after Jan. 1, 2015, and before Jan. 1, 2016, of 0.95 percent and percent. Tex. Tax Code Ann and

15 An Introduction to the Nevada Commerce Tax: Excise and Miscellaneous Taxes Comparison of Nevada Commerce Tax With Other Taxes in the Region Historically, Nevada has been a business-friendly location for companies West Coast operations. Nevada s low-tax environment and location near Pacific Ocean ports make it an attractive location for distribution centers and West Coast operations in general and for companies importing goods from Asia in particular. Comparing Nevada With its Neighbors: Arizona, California, and Oregon Exhibit 4 is a summary of corporate income, individual income, and retail sales taxes imposed by the states neighboring Nevada. Compared with its neighboring states, Nevada historically has been perceived as a low-tax location for both businesses and individuals. Nevada does not impose a corporate or individual income tax, and its state and local retail sales tax rate of 8.1 percent is approximately 0.5 percent higher than the national average sales tax rate. Exhibit 4: Comparison of tax rates State 2015 Corporate Income Tax Rate 2015 Individual Income Tax Rate 2015 Retail Sales Tax Rate* Arizona 6% 2.59%-4.54% 10.73% California 8.84% 1%-13.3% 10% Nevada N/A N/A 8.1% Oregon 6.6%-7.6% 5%-9.9% N/A * Washington Department of Revenue, Comparison of State/Local Retail Sales Taxes, Combined state and maximum local rate levied in the largest city in the state. Arizona and California, by comparison, impose both corporate income and individual income taxes and have sales tax rates that are in the top 20 percent nationally. Oregon also has individual and corporate income taxes but has the distinction of being the only neighboring state that does not impose a retail sales tax. 76 See U.S. Department of Transportation, Bureau of Transportation Statistics, America s Container Ports: Linking Markets at Home and Abroad (January 2011). Although California has the advantage of location, is home to the Port of Los Angeles and Port of Long Beach (both of which are ranked among the world s 20 largest container ports 76 ), and boasts a population estimated at 38.8 million as of July 1, 2014, 77 Nevada might have been an attractive location for businesses, in comparison with its neighbors, due to its low tax structure. 77 See U.S. Census Bureau, Annual Estimates of the Resident Population: April 1, 2010, to July 1, 2014, jsf/pages/productview.xhtml?pid=pep_2014_ PEPANNRES&prodType=table 15

16 Crowe Horwath LLP Example of Taxation of a Company Operating in Nevada, Oregon, and Arizona To answer the question of whether Nevada s enactment of the commerce tax will affect businesses looking to locate or expand in the state, consider a hypothetical C corporation manufacturer of equipment described in NAICS codes 31, 32, or 33 that is seeking to expand its presence on the West Coast and accelerate its distribution of goods to West Coast customers. The manufacturer wants to lease space in a distribution center in Oregon or Nevada and expects to have sales to Oregon and Nevada customers of $16 million and $14 million, respectively, total sales of $160 million, and taxable income of $5 million. For purposes of the example, assume that the taxpayer has not otherwise established nexus in either state prior to leasing the distribution center space. Exhibit 5 is an example of the respective taxes that would be imposed by each state. All other costs being equal, the manufacturer in the example in Exhibit 5 would appear to lower its expenses and tax burden by locating its distribution activities in Nevada instead of in Oregon. Although the company will incur approximately $12,000 in Nevada commerce tax, Nevada tax is not increased by shipping from the state as the commerce tax does not have a throwback provision. For this manufacturer, similar results would be expected if Nevada were compared with California, as California also has a throwback provision and Exhibit 5: Comparison of hypothetical taxes imposed by Oregon and Nevada Distribution from Oregon Distribution from Nevada Oregon ($) Nevada ($) Oregon ($) Nevada ($) Federal Taxable Income 5,000,000 5,000,000 5,000,000 5,000,000 Oregon & Nevada Gross Receipts Sales to customers within the state 16,000,000 14,000,000 16,000,000 14,000,000 Throwback (if applicable)* 24,000, ,000,000 14,000,000 16,000,000 14,000,000 Total Sales 160,000, ,000, ,000, ,000,000 Apportionment % 25% 10% State Taxable Income 1,250, ,000 Corporate Income/Gross Receipts Taxes Oregon Corporate Income Tax 6.6% 82,500 33,000 Nevada Commerce Tax 0.091% 12,740 12,740 Total Corporate Tax $82,500 $12,740** $33,000 $12,740 * For purposes of illustration, it is assumed that 15 percent of the manufacturer s sales are shipped from Oregon to states where the manufacturer is not subject to tax and are subject to throwback to Oregon. At this time, it is unclear whether filing and payment of the Nevada commerce tax are sufficient to exempt Nevada sales from Oregon s throwback requirements. As Oregon notes in its regulation, OAR ,555(2)-(A)(7), sales to other states are not subject to throwback if the other state imposes a net income tax or the seller is subject to tax under the U.S. Constitution or P.L The commerce tax is imposed on gross receipts and lacks substantial deductions; as such, it may not qualify as a net income tax for purposes of throwback rules. ** Note that actual total imposition of tax would be reduced by commerce tax credit applied to Nevada payroll tax for distribution center employees. Exhibit 6: Manufacturer example Sales Price ($)* Net Income ($) Commerce Tax Rate Gross Receipts Tax ($) Manufacturer Manufacturing and fabrication 12,000,000 2,000, % 10,920 Wholesale distribution 13,000,000 1,000, % 13,130 Retail sales 15,000,000 2,000, % 16,650 Total 40,000,000 5,000,000 40,700 Nevada commerce tax** effective tax rate on manufacturer 0.814% * Sales prices in the example have been simplified for purposes of illustration. However, in practice, as Nevada commerce tax is imposed on each entity or step in the manufacturing process, the sales price charged to the customers of each step would be increased for the amount of Nevada commerce tax paid to reflect the manufacturers, distributors, and retailers, increased cost of doing business. ** Note that actual total imposition of tax would be reduced by commerce tax credit applied to Nevada payroll tax for distribution center employees. 16

17 An Introduction to the Nevada Commerce Tax: Excise and Miscellaneous Taxes uses a single-sales factor apportionment percentage. A comparison with Arizona also would create an increased liability in Arizona were the distribution activities to be located within the state, as Arizona uses a three-factor apportionment formula that would include inventory located at the in-state distribution center. The manufacturer in the example appears to incur the lowest tax burden by locating its distribution activities in Nevada. However, the example does not consider the effect of tax pyramiding that is inherent in a gross receipts tax scheme. Comparing Apples and Oranges Gross Receipts Tax and Income Tax Effective Rates As Andrew Chamberlain and Patrick Fleenor note in their article Tax Pyramiding: The Economic Consequences of Gross Receipts Taxes, 78 under a gross receipts tax, every item with multiple steps (and companies) involved in transforming goods from raw materials to the ultimate product in the hands of the consumer will incur a gross receipts tax at each step in the process. This concept has been labeled tax pyramiding by economists and is noted by Chamberlain and Fleenor as an inherent flaw in gross receipts-based taxes. Tax pyramiding of gross receipts taxes disproportionately affects industries that are capital intensive, have multiple steps in a production process, and are unable to self-supply or vertically integrate their operations. 79 In contrast, those industries that use labor to produce their goods (service industries, for example) are favored by gross receipts taxes as a result of fewer steps in the production process and less reliance on capital to produce their goods. As a result of tax pyramiding, comparing total tax imposed on net income and a tax on gross receipts does not clearly reflect the whole tax burden imposed on the entities. Expanding on the previous example of the manufacturer, we can examine the impact that the Nevada commerce tax has on the cost of the goods as it moves from raw materials to the ultimate consumer. 78 Tax Foundation, Special Report 147 (December 2006), tax-pyramiding-economic-consequences-grossreceipts-taxes 79 John L. Mikesell, Gross Receipts Taxes in State Government Finances: A Review of Their History and Performance, Tax Foundation, Background Paper 53 (January 2007), article/gross-receipts-taxes-state-governmentfinances-review-their-history-and-performance Assume that the manufacturer purchases $10 million of raw materials that it fabricates into goods. The manufacturer then sells those goods to a wholesale distributor in Nevada for $12 million of gross receipts. The wholesale distributor sells the manufacturer s goods to Nevada retail stores for $13 million, and the retail stores in turn sell the goods to the ultimate consumer in Nevada for $15 million. This represents three steps in the process of converting raw materials to finished goods, and total Nevada commerce tax imposed on the manufacturer s goods is as indicated in Exhibit 6. As noted in the example in Exhibit 6, the total effective tax rate on the entire process of transforming raw materials to the ultimate goods purchased by the consumer is percent, which is much higher than the stated rate of percent imposed on manufacturers. Furthermore, the total Nevada commerce tax imposed of $40,700 is similar to the net income tax imposed by Oregon, which ranged between $33,000 and $82,500 on $5 million of net income. 17

18 Crowe Horwath LLP When comparing the Oregon net income tax and the total Nevada commerce tax imposed throughout a product s production process, the Nevada commerce tax appears to impose a similar tax burden to that of Oregon, albeit in a less transparent manner, to the ultimate customer. Comparing the manufacturer in the example in Exhibit 6 with a professional services provider that has a single step in its process also is illustrative. Assuming the service provider incurs $10 million in labor costs and receives $15 million for the provision of its services, its Nevada commerce tax liability is as indicated in Exhibit 7. Exhibit 7: Professional services provider example Cost of Wages ($) Sales Price ($) Net Income ($) Commerce Tax Rate Gross Receipts Tax ($) Professional Services Provider Labor 10,000,000 15,000,000 5,000, % 27,150 Nevada commerce tax effective tax rate on service provider 0.543% It should be noted that the service provider and manufacturer in the examples ultimately each generate $5 million of net income; however, the total tax burden on the service provider is only $27,150 compared with $40,700 for the manufacturer. With the current rate structure and imposition of the commerce tax on all business entities, Nevada appears to provide tax incentives (lower rates and fewer instances of tax imposition) to service industries. 80 Does Nevada Remain a More Attractive Business Location From a Tax Perspective? Although Nevada s commerce tax is attractive because of its apparent ease of administration and low stated rates, it does not appear to provide manufacturers or those engaged in businesses with multiple production steps with significant incentives to locate their operations within Nevada s borders when the main tax benefit of Nevada in comparison with its neighbors is the lack of a throwback provision. In contrast, a service provider may see Nevada as an attractive option when compared with its neighbors that impose between a 6 percent and 8 percent tax on net income. Given that Nevada s economy is dominated by leisure and hospitality, accommodations and food service, and government, 81 it might have been the intent of Nevada s legislature to craft the state s tax law such that it motivates those servicebased industries. However, it remains to be seen whether such an intent was wise or shortsighted and if it ultimately will result in reduced economic growth. 80 For further reference with respect to gross receipts taxes generally, see John L. Mikesell, Gross Receipts Taxes in State Government Finances: A Review of Their History and Performance, Tax Foundation (January 2007). 81 Nevada Legislative Counsel Bureau, Business Entities and Economic Development, Policy and Program Report (April 2014). 18

19 An Introduction to the Nevada Commerce Tax: Excise and Miscellaneous Taxes Conclusion It is apparent that Nevada has implemented a number of lessons learned from other states experiences in imposing generally applicable gross receipts taxes. The Nevada commerce tax is imposed at much lower rates than those imposed by other states with similar tax regimes and includes more meaningful provisions that limit tax pyramiding. Even with this new tax, Nevada appears to remain a relatively low-tax jurisdiction when compared with its neighbors and compared with the other jurisdictions that have adopted a generally applicable gross receipts tax on multistate businesses. The extent of the burden created by this new tax will depend largely on how the tax is implemented. For example, will Nevada require a return from all potential taxpayers, even those that do not have Nevada revenue exceeding $4 million? Will the state subcontract its collection responsibilities to third-party contingentfee auditors and, if so, on what terms? Under what, if any, conditions would the state invoice taxpayers to cover travel expenses of auditors? At the time of writing this article, Nevada has made significant progress in addressing the materials related to the imposition of the commerce tax in what appears to be a relatively open and thoughtful regulatory process. Hopefully, these and many other issues raised under the new tax will be addressed by the time the first returns become due in

20 Contact Information Sara Arvold is with Crowe Horwath LLP and can be reached at or Jonathan Cesaretti is with Crowe and can be reached at or Shawn Kane is a partner with Crowe and can be reached at or shawn.kane@crowehorwath.com. Dan Sieburg is with Crowe and can be reached at or dan.sieburg@crowehorwath.com Thomson Reuters/Tax & Accounting. All Rights Reserved. In accordance with applicable professional standards, some firm services may not be available to attest clients. This material is for informational purposes only and should not be construed as financial or legal advice. Please seek guidance specific to your organization from qualified advisers in your jurisdiction Crowe Horwath LLP, an independent member of Crowe Horwath International crowehorwath.com/disclosure TAX A

Nevada enacts Commerce Tax effective July 1, 2015

Nevada enacts Commerce Tax effective July 1, 2015 from State and Local Tax Services Nevada enacts Commerce Tax effective July 1, 2015 June 10, 2015 In brief Signed on June 10, 2015, and effective July 1, 2015, S.B. 483 imposes an annual commerce tax on

More information

State & Local Tax Alert

State & Local Tax Alert State & Local Tax Alert Breaking state and local tax developments from Grant Thornton LLP Nevada Enacts Budget Bill Including New Commerce Tax On June 9, 2015, Nevada Governor Brian Sandoval signed legislation

More information

2015 NEVADA TAX REFORMS. Commerce Tax, Modified Business Tax, Business License Fee

2015 NEVADA TAX REFORMS. Commerce Tax, Modified Business Tax, Business License Fee Joshua J. Hicks Attorney at Law 775.622.9450 tel 775.622.9554 fax jhicks@bhfs.com 2015 NEVADA TAX REFORMS Commerce Tax, Modified Business Tax, Business License Fee Current as of June 10, 2015 A. Commerce

More information

Department of Taxation

Department of Taxation Department of Taxation Commerce Tax Presentation Deonne E. Contine, Executive Director Sumiko Maser, Chief Deputy Executive Director Paulina Oliver, Deputy Executive Director What do I need to do to determine

More information

FAST FACTS. The current State annual business license is replaced by a quarterly State Business Licence Tax.

FAST FACTS. The current State annual business license is replaced by a quarterly State Business Licence Tax. DATE: March 16, 2015 TO: NTA Members The following five pages contain a section by section summary of SB 252, the Governor s major tax bill. The link to the bill is http://www.leg.state.nv.us/session/78th2015/bills/sb/sb252.pdf,

More information

Overview. Texas Tax Code Chapter 171. Teresa Bostick, Claire Jamal, Jerry Oxford, Martha Preston, Nat Robberson & Jennifer Specchio

Overview. Texas Tax Code Chapter 171. Teresa Bostick, Claire Jamal, Jerry Oxford, Martha Preston, Nat Robberson & Jennifer Specchio Overview Texas Tax Code Chapter 171 Presented by: Organizer: Panelists: Franchise Tax Policy Staff Janet Spies Teresa Bostick, Claire Jamal, Jerry Oxford, Martha Preston, Nat Robberson & Jennifer Specchio

More information

OREGON Multistate Taxation and E-Commerce. John H. Gadon

OREGON Multistate Taxation and E-Commerce. John H. Gadon OREGON Multistate Taxation and E-Commerce John H. Gadon Lane Powell Spears Lubersky LLP 601 S.W. Second Avenue, Suite 2100 Portland, Oregon 97204-3158 (503) 778-2100 www.lanepowell.com I. Oregon and the

More information

Tax Rates. For personal income tax purposes, for tax years beginning after 2014, the tax rates are as follows:

Tax Rates. For personal income tax purposes, for tax years beginning after 2014, the tax rates are as follows: October 2014 District of Columbia Reduced Tax Rates, Single Sales Factor, Other Changes Adopted Permanent District of Columbia budget legislation makes numerous significant changes to the corporation franchise

More information

2014 Texas Franchise Tax Report Information and Instructions

2014 Texas Franchise Tax Report Information and Instructions 2014 Texas Franchise Tax Report Information and Instructions Form 05-900 (Rev.12-13/2) Topics covered in this booklet: Amended Reports... 10 Annual Reports... 5 Annualized Total Revenue... 4 Change in

More information

SAN FRANCISCO S NEW GROSS RECEIPTS TAX AND BUSINESS REGISTRATION FEES

SAN FRANCISCO S NEW GROSS RECEIPTS TAX AND BUSINESS REGISTRATION FEES SAN FRANCISCO S NEW GROSS RECEIPTS TAX AND BUSINESS REGISTRATION FEES This summary provides basic information regarding San Francisco Business and Tax Regulations Code ( Code ), Article 12-A-1, Gross Receipts

More information

Adjusted Factor-Based Nexus Thresholds Announced, Other Matters Discussed

Adjusted Factor-Based Nexus Thresholds Announced, Other Matters Discussed January 2013 California FTB Contacting Nonfilers The California Franchise Tax Board (FTB) is contacting more than 1 million people who did not file a 2011 state income tax return. The deadline to file

More information

Tax Reform in Texas: Was it the Perfect Storm? Karey Barton Principal

Tax Reform in Texas: Was it the Perfect Storm? Karey Barton Principal Tax Reform in Texas: Was it the Perfect Storm? Karey Barton Principal December 15, 2008 Agenda The background: What was the emphasis driving tax reform? How did the process work? The basics: Who is subject

More information

Michigan Business Tax Frequently Asked Questions

Michigan Business Tax Frequently Asked Questions NOTICE: The MBT was amended by 145 PA 2007 on December 1, 2007. Act 145 imposes an annual surcharge to taxpayers' MBT liability, as well as makes other changes. Some of the FAQs below have revised answers

More information

SENATE BILL 526: Job Creation and Tax Relief Act of 2015

SENATE BILL 526: Job Creation and Tax Relief Act of 2015 SENATE BILL 526: Job Creation and Tax Relief Act of 2015 2015-2016 General Assembly Committee: Senate Re-ref to Finance. If fav, re-ref to Commerce Introduced by: Sens. Rucho, Rabon, Tillman Analysis of:

More information

THE MICHIGAN BUSINESS TAX

THE MICHIGAN BUSINESS TAX THE MICHIGAN BUSINESS TAX (MGFOA 2010 Fall Institute) Lance Wilkinson, Michigan Department of Treasury 1 A Brief History of Michigan Business Taxes 1953 BAT-income-type VAT 1967 Corporate income tax 1975

More information

Sales and Use Taxes: Texas

Sales and Use Taxes: Texas Jay M. Chadha, Fulbright & Jaworski LLP A Q&A guide to sales and use tax law in Texas. This Q&A addresses key areas of sales and use tax law such as tax scope, multi-state transactions and collecting taxes

More information

State of Wisconsin Department of Revenue Limited Liability Companies (LLCs)

State of Wisconsin Department of Revenue Limited Liability Companies (LLCs) State of Wisconsin Department of Revenue Limited Liability Companies (LLCs) Publication 119 (2/15) Table of Contents 2 Page I. INTRODUCTION... 4 II. DEFINITIONS APPLICABLE TO LLCS... 4 III. FORMATION OF

More information

San Francisco Voters Pass New Gross Receipts Tax; Current Payroll Expense Tax To Be Phased Out January 22, 2013

San Francisco Voters Pass New Gross Receipts Tax; Current Payroll Expense Tax To Be Phased Out January 22, 2013 Multistate Tax EXTERNAL ALERT San Francisco Voters Pass New Gross Receipts Tax; Current Payroll Expense Tax To Be Phased Out January 22, 2013 Overview The voters of San Francisco (the City ) recently approved

More information

INTERNATIONAL TAX COMPLIANCE FOR GOVERNMENT CONTRACTORS

INTERNATIONAL TAX COMPLIANCE FOR GOVERNMENT CONTRACTORS INTERNATIONAL TAX COMPLIANCE FOR GOVERNMENT CONTRACTORS Mark T. Gossart Alison N. Dougherty September 26, 2012 2012 All Rights Reserved 805 King Farm Boulevard Suite 300 Rockville, Maryland 20850 301.231.6200

More information

The Court further held that the tax is inherently discriminatory and operates as a tariff.

The Court further held that the tax is inherently discriminatory and operates as a tariff. from State and Local Tax Services US Supreme Court - Failure to provide a credit against Maryland s local portion of personal income tax for out-of-state income taxes paid is unconstitutional May 21, 2015

More information

BEFORE THE APPEALS DIVISION DEPARTMENT OF REVENUE STATE OF WASHINGTON.... ) Registration No...

BEFORE THE APPEALS DIVISION DEPARTMENT OF REVENUE STATE OF WASHINGTON.... ) Registration No... Det. No. 15-0251, 35 WTD 230 (May 31, 2016) 230 Cite as Det. No. 15-0251, 35 WTD 230 (2016) BEFORE THE APPEALS DIVISION DEPARTMENT OF REVENUE STATE OF WASHINGTON In the Matter of the Petition for Correction

More information

State and local tax update for law firms. Baker Tilly refers to Baker Tilly Virchow Krause, LLP,

State and local tax update for law firms. Baker Tilly refers to Baker Tilly Virchow Krause, LLP, State and local tax update for law firms Baker Tilly refers to Baker Tilly Virchow Krause, LLP, an independently owned and managed member of Baker Tilly International. 2010 Baker Tilly Virchow Krause,

More information

Illinois Department of Revenue Regulations. Title 86 Part 100 Section 100.9710 Financial Organizations (IITA Section 1501) TITLE 86: REVENUE

Illinois Department of Revenue Regulations. Title 86 Part 100 Section 100.9710 Financial Organizations (IITA Section 1501) TITLE 86: REVENUE Illinois Department of Revenue Regulations Title 86 Part 100 Section 100.9710 Financial Organizations (IITA Section 1501) TITLE 86: REVENUE PART 100 INCOME TAX Section 100.9710 Financial Organizations

More information

2007 Utah Corporate Income Tax Statistics

2007 Utah Corporate Income Tax Statistics 2007 Utah Corporate Income Tax Statistics The data in this publication give a fairly complete picture of the corporate franchise tax in Utah. Corporate income taxes are not only complicated by their logic,

More information

2015 Texas Franchise Tax Report Information and Instructions

2015 Texas Franchise Tax Report Information and Instructions 2015 Texas Franchise Tax Report Information and Instructions Form 05-902 (Rev.1-15/2) Topics covered in this booklet: Amended Reports... 10 Annual Reports... 4 Annualized Total Revenue... 3 Change in Accounting

More information

FEDERAL TAXATION OF INTERNATIONAL TRANSACTIONS

FEDERAL TAXATION OF INTERNATIONAL TRANSACTIONS Chapter 10 FEDERAL TAXATION OF INTERNATIONAL TRANSACTIONS Daniel Cassidy 1 10.1 INTRODUCTION Foreign companies with U.S. business transactions face various layers of taxation. These include income, sales,

More information

State taxation in a global environment factor presence nexus considerations for foreign companies. by Charlie Fischer, Deloitte Tax LLP

State taxation in a global environment factor presence nexus considerations for foreign companies. by Charlie Fischer, Deloitte Tax LLP State taxation in a global environment factor presence nexus considerations for foreign companies by Charlie Fischer, Deloitte Tax LLP Spring 2015 FEATURED ARTICLES ISSUE 121 MARCH 5, 2015 State Taxation

More information

III. Nexus Expansion Section 2 sets forth various provisions a state could use to expand a definition of doing business.

III. Nexus Expansion Section 2 sets forth various provisions a state could use to expand a definition of doing business. I. Introduction The attached model legislative language is a proposal for expanding sales/use tax collection requirements through state lawmaking. The proposal consists of three primary parts: 1. Nexus

More information

mystatetaxoffice A Washington National Tax Services (WNTS) Publication

mystatetaxoffice A Washington National Tax Services (WNTS) Publication www.pwc.com/salt mystatetaxoffice A Washington National Tax Services (WNTS) Publication November 30, 2012 New San Francisco gross receipts tax Authored by: Matthew Mandel, Eran Liron, Rakhal Bhalla, and

More information

UNIFORM DIVISION OF INCOME FOR TAX PURPOSES ACT. Drafted by the NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS.

UNIFORM DIVISION OF INCOME FOR TAX PURPOSES ACT. Drafted by the NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS. UNIFORM DIVISION OF INCOME FOR TAX PURPOSES ACT Drafted by the NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS and by it APPROVED AND RECOMMENDED FOR ENACTMENT IN ALL THE STATES at its ANNUAL

More information

SC REVENUE RULING #06-12. All previous advisory opinions and any oral directives in conflict herewith.

SC REVENUE RULING #06-12. All previous advisory opinions and any oral directives in conflict herewith. State of South Carolina Department of Revenue 301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214 Website Address: http://www.sctax.org SC REVENUE RULING #06-12 SUBJECT: Tax Rate Reduction

More information

Performance Marketing Ass n, Inc. v. Hamer, Illinois Supreme Court, No. 114496, October 18, 2013

Performance Marketing Ass n, Inc. v. Hamer, Illinois Supreme Court, No. 114496, October 18, 2013 October 2013 Illinois Provisions of Click-Through Nexus Law Held Void The Illinois Supreme Court held that the definition provisions in Public Act 96-1544 (H.B. 3659), Laws 2011, the sales tax click-through

More information

Congressional Impact on State Taxes

Congressional Impact on State Taxes Congressional Impact on State Taxes Presentation Before the 3 rd Annual New Mexico Tax Policy Conference March 9, 2006 Joe Huddleston, Executive Director Multistate Tax Commission 1 Agenda Background Past

More information

TENNESSEE DEPARTMENT OF REVENUE REVENUE RULING # 06-27 WARNING

TENNESSEE DEPARTMENT OF REVENUE REVENUE RULING # 06-27 WARNING TENNESSEE DEPARTMENT OF REVENUE REVENUE RULING # 06-27 WARNING Revenue rulings are not binding on the Department. This presentation of the ruling in a redacted form is information only. Rulings are made

More information

State & Local Tax Alert Breaking state and local tax developments from Grant Thornton LLP

State & Local Tax Alert Breaking state and local tax developments from Grant Thornton LLP State & Local Tax Alert Breaking state and local tax developments from Grant Thornton LLP Major Nexus Developments of 2010 Examined; States Follow Trend of Adopting Bright-Line Nexus Standards During 2010,

More information

2015 SENATE BILL 503

2015 SENATE BILL 503 0 0 LEGISLATURE 0 SENATE BILL 0 January, 0 Introduced by Senators MARKLEIN, GUDEX, OLSEN and ROTH, cosponsored by Representatives MACCO, KOOYENGA, KATSMA, JARCHOW, NOVAK, TAUCHEN, DUCHOW, KNODL, E. BROOKS,

More information

Revised SALT Alert! 2015-26: North Carolina Tax Reform Enacted

Revised SALT Alert! 2015-26: North Carolina Tax Reform Enacted Revised SALT Alert! 2015-26: North Carolina Tax Reform Enacted On September 18, 2015, North Carolina Governor McCrory signed the long-delayed budget bill (House Bill 97), which includes significant tax

More information

TAX FACTS 99-3. From the State of Hawaii, Department of Taxation CONTRACTORS AND. Revised July, 2007 THE GENERAL EXCISE AND USE TAXES

TAX FACTS 99-3. From the State of Hawaii, Department of Taxation CONTRACTORS AND. Revised July, 2007 THE GENERAL EXCISE AND USE TAXES TAX FACTS From the State of Hawaii, Department of Taxation CONTRACTORS AND 99-3 THE GENERAL EXCISE AND USE TAXES Persons doing business in Hawaii are required to register for and pay the State's general

More information

State & Local Tax Alert Breaking state and local tax developments from Grant Thornton LLP

State & Local Tax Alert Breaking state and local tax developments from Grant Thornton LLP State & Local Tax Alert Breaking state and local tax developments from Grant Thornton LLP San Francisco Voters Approve New Gross Receipts Tax On November 6, San Francisco voters approved Measure E, which

More information

Real Estate Leases And Margin Taxes: Who Pays?

Real Estate Leases And Margin Taxes: Who Pays? Real Estate Leases And Margin Taxes: Who Pays? Law360, New York (April 8, 2011) -- In May 2006, the Texas Legislature dramatically overhauled the Texas Franchise Tax[1] by expanding the tax base to include

More information

Instructions for 2013 Form 4A-1: Wisconsin Apportionment Data for Single Factor Formulas

Instructions for 2013 Form 4A-1: Wisconsin Apportionment Data for Single Factor Formulas Instructions for 2013 Form 4A-1: Wisconsin Apportionment Data for Single Factor Formulas Purpose of Form 4A-1 Corporations, partnerships, tax-option (S) corporations and nonresident estates, trusts, and

More information

2013 Ohio Small Business Investor Income Deduction

2013 Ohio Small Business Investor Income Deduction 2013 Ohio Small Business Investor Income Deduction Instructions for Apportioning Business Income Solely for Purposes of Computing the Small Business Investor Income Deduction hio Department of Taxation

More information

LAW OF BIOFUELS Tax Issues

LAW OF BIOFUELS Tax Issues LAW OF BIOFUELS Tax Issues Charles S. Lewis III Stoel Rives LLP 600 University Street, Suite 3600 Seattle, WA 98101 206-386-7688 cslewis@stoel.com Robert T. Manicke Stoel Rives LLP 900 SW Fifth Avenue,

More information

BEFORE THE APPEALS DIVISION DEPARTMENT OF REVENUE STATE OF WASHINGTON. ) No. 15-0026... ) ) Registration No...

BEFORE THE APPEALS DIVISION DEPARTMENT OF REVENUE STATE OF WASHINGTON. ) No. 15-0026... ) ) Registration No... Det. No. 15-0026, 34 WTD 373 (August 31, 2015) 373 Cite as Det. No. 15-0026, 34 WTD 373 (2015) BEFORE THE APPEALS DIVISION DEPARTMENT OF REVENUE STATE OF WASHINGTON In the Matter of the Petition for Refund

More information

Business Organization\Tax Structure

Business Organization\Tax Structure Business Organization\Tax Structure One of the first decisions a new business owner faces is choosing a structure for the business. Businesses range in size and complexity, from someone who is self-employed

More information

The State Board of Equalization Welcomes You to the Basic Sales and Use Tax Seminar

The State Board of Equalization Welcomes You to the Basic Sales and Use Tax Seminar The State Board of Equalization Welcomes You to the Basic Sales and Use Tax Seminar Welcome to the California State Board of Equalization s presentation on Basic Sales and Use Tax. 1 About This Presentation

More information

Chapter 6: Value Added Tax A Major Replacement Alternative

Chapter 6: Value Added Tax A Major Replacement Alternative Chapter 6: Value Added Tax A Major Replacement Alternative Introduction In its authorizing legislation, the Legislature required the Committee to be guided by the principle of neutrality in developing

More information

Willamette Management Associates

Willamette Management Associates Valuation Analyst Considerations in the C Corporation Conversion to Pass-Through Entity Tax Status Robert F. Reilly, CPA For a variety of economic and taxation reasons, this year may be a particularly

More information

Senate Bill No. 483 Committee on Revenue and Economic Development

Senate Bill No. 483 Committee on Revenue and Economic Development Senate Bill No. 483 Committee on Revenue and Economic Development CHAPTER... AN ACT relating to governmental financial administration; providing for the imposition, administration and payment of a commerce

More information

Florida Senate - 2011 SB 980

Florida Senate - 2011 SB 980 By Senator Bennett 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 A bill to be entitled An act relating to convention development taxes; amending s. 212.0305, F.S.; making

More information

20102011 SURVEY 2 STATE TAXATION OF STATE AND LOCAL OBLIGATIONS I. STATE INCOME TAXES OR TAXES THAT APPLY TO INTEREST AND DIVIDENDS

20102011 SURVEY 2 STATE TAXATION OF STATE AND LOCAL OBLIGATIONS I. STATE INCOME TAXES OR TAXES THAT APPLY TO INTEREST AND DIVIDENDS 20102011 SURVEY 2 STATE TAXATION OF STATE AND LOCAL OBLIGATIONS I. STATE INCOME TAXES OR TAXES THAT APPLY TO INTEREST AND DIVIDENDS Income Tax (41 states and the District of Columbia) Alabama Kansas* New

More information

ARTICLE 12-A-1: GROSS RECEIPTS TAX ORDINANCE

ARTICLE 12-A-1: GROSS RECEIPTS TAX ORDINANCE ARTICLE 12-A-1: GROSS RECEIPTS TAX ORDINANCE 950. 951. 952. 952.1. 952.2. 952.3. 952.4. 952.5. 952.6. 953. 953.1. 953.2. 953.3. 953.4. 953.5. 953.6. 953.7. 953.8. 953.9. 954. 954.1. 955. 956. 956.1. 956.2.

More information

Overview. Temporary Franchise Tax Rate Reduction. Tax Credit for Rehabilitation of Certified Historic Structures. June 17, 2013

Overview. Temporary Franchise Tax Rate Reduction. Tax Credit for Rehabilitation of Certified Historic Structures. June 17, 2013 Multistate Tax EXTERNAL ALERT Texas Enacts Franchise Tax Bills with Changes to the Tax Rate, Determination of Taxable Margin, and the addition of New Credits and Sales/Use Tax Exemption June 17, 2013 Overview

More information

2014 Ohio IT 1140. Pass-Through Entity and Trust Withholding Tax Return Instructions. hio. Department of Taxation. For taxable year beginning in

2014 Ohio IT 1140. Pass-Through Entity and Trust Withholding Tax Return Instructions. hio. Department of Taxation. For taxable year beginning in For taxable year beginning in 2014 Ohio IT 1140 Pass-Through Entity and Trust Withholding Tax Return Instructions hio tax. hio.gov Department of Taxation 2014 Ohio Form IT 1140 General Instructions Note:

More information

Effective Federal Income Tax Rates Faced By Small Businesses in the United States

Effective Federal Income Tax Rates Faced By Small Businesses in the United States Effective Federal Income Tax Rates Faced By Small Businesses in the United States by Quantria Strategies, LLC Cheverly, MD 20785 for Under contract number SBAHQ-07-Q-0012 Release Date: April 2009 This

More information

The MBT- Changing Business Taxes in Michigan

The MBT- Changing Business Taxes in Michigan The MBT- Changing Business Taxes in Michigan FTA Revenue Estimating Conference September 18, 2007 Howard Heideman Director, Tax Analysis Division Office of Revenue and Tax Analysis Michigan Department

More information

Considerations in the Health Care Company Tax Status Conversion from C Corporation to Pass-Through Entity

Considerations in the Health Care Company Tax Status Conversion from C Corporation to Pass-Through Entity Health Care Forensic Analysis Insights Considerations in the Health Care Company Tax Status Conversion from C Corporation to Pass-Through Entity Robert F. Reilly, CPA For a variety of economic and taxation

More information

1 HB49 2 171080-1. 3 By Representative Scott. 4 RFD: Ways and Means Education. 5 First Read: 04-AUG-15. Page 0

1 HB49 2 171080-1. 3 By Representative Scott. 4 RFD: Ways and Means Education. 5 First Read: 04-AUG-15. Page 0 1 HB49 2 171080-1 3 By Representative Scott 4 RFD: Ways and Means Education 5 First Read: 04-AUG-15 Page 0 1 171080-1:n:08/03/2015:KMS*/th LRS2015-2575 2 3 4 5 6 7 8 SYNOPSIS: This bill would establish

More information

2016 Texas Franchise Tax Report Information and Instructions Form 05-903 (11-15)

2016 Texas Franchise Tax Report Information and Instructions Form 05-903 (11-15) 2016 Texas Franchise Tax Report Information and Instructions Form 05-903 (11-15) Topics covered in this booklet: Amended Reports... 10 Annual Reports... 4 Annualized Total Revenue... 3 Change in Accounting

More information

AN OVERVIEW OF STATE INCOME TAXES ARKANSAS AND SURROUNDING STATES

AN OVERVIEW OF STATE INCOME TAXES ARKANSAS AND SURROUNDING STATES AN OVERVIEW OF STATE INCOME TAXES ARKANSAS AND SURROUNDING STATES A current topic of conversation among many who are concerned about economic development in Arkansas is how the State s taxation laws, particularly

More information

ENGROSSED HOUSE By: Deutschendorf of the House. ( revenue and taxation amending 68 O.S., Section. 1352 definitions - Sales Tax Code effective

ENGROSSED HOUSE By: Deutschendorf of the House. ( revenue and taxation amending 68 O.S., Section. 1352 definitions - Sales Tax Code effective ENGROSSED HOUSE BILL NO. 2736 By: Deutschendorf of the House and Robinson of the Senate ( revenue and taxation amending 68 O.S., Section 1352 definitions - Sales Tax Code effective date emergency ) BE

More information

JAN 2 2 2016. amended by adding a new section to be appropriately designated. costs of construction and operation incurred by a contractor

JAN 2 2 2016. amended by adding a new section to be appropriately designated. costs of construction and operation incurred by a contractor THE SENATE WENTY-EIGHTH LEGISLATURE, 0 STATE OF HAWAII JAN 0 S.B. NO. - A BILL FOR AN ACT RELATING TO TAXATION BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII: SECTION. Chapter, Hawaii Revised

More information

LOCATION OF OFFICES TOLL-FREE TELEPHONE NUMBER (DELAWARE ONLY) 1-800 - 292-7826 WILMINGTON. Division of Revenue

LOCATION OF OFFICES TOLL-FREE TELEPHONE NUMBER (DELAWARE ONLY) 1-800 - 292-7826 WILMINGTON. Division of Revenue STATE OF DELAWARE 2014 S Corporation Reconciliation 2014 And Shareholders Information Return INSTRUCTION HIGHLIGHTS CALENDAR YEAR 2014 AND FISCAL YEAR ENDING 2015 TAX YEAR Section 1158(a) of Title 30 of

More information

Q UANTITATIVE E CONOMICS & S TATISTICS AUGUST 25, 2005. Virginia Taxes Paid by Manufacturers

Q UANTITATIVE E CONOMICS & S TATISTICS AUGUST 25, 2005. Virginia Taxes Paid by Manufacturers Q UANTITATIVE E CONOMICS & S TATISTICS AUGUST 25, 2005 Virginia Taxes Paid by Manufacturers $16 $14 $12 $10 $8 $6 $12.5 $12.2 $10.7 $10.8 $4 $2 $0 19992000200120022003 Introduction This study provides

More information

Iowa s S Corporation Apportionment Tax Credit. Tax Credits Program Evaluation Study

Iowa s S Corporation Apportionment Tax Credit. Tax Credits Program Evaluation Study Iowa s S Corporation Apportionment Tax Credit Tax Credits Program Evaluation Study April 2016 By Angela Gullickson Tax Research and Program Analysis Section Iowa Department of Revenue Preface During the

More information

North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns

North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns June 3 2016 North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns Governor McCrory signed into law Session Law 2016-6

More information

DEPARTMENT OF REVENUE 50-5 Tax 2

DEPARTMENT OF REVENUE 50-5 Tax 2 DEPARTMENT OF REVENUE 50-5.94 Tax sheltered annuities. (s. 71.03 (2) (d), Stats.) (1) GEN- ERAL. (a) For many years members of the state teachers' retirement system have bad the privilege of paying in

More information

THE INCOME TAXATION OF ESTATES & TRUSTS

THE INCOME TAXATION OF ESTATES & TRUSTS The income taxation of estates and trusts can be complex because, as with partnerships, estates and trusts are a hybrid entity for income tax purposes. Trusts and estates are treated as an entity for certain

More information

BUSINESS ENTITIES AND ECONOMIC DEVELOPMENT

BUSINESS ENTITIES AND ECONOMIC DEVELOPMENT BUSINESS ENTITIES AND ECONOMIC DEVELOPMENT In support of business and economic development, the State of Nevada and its units of local government endeavor to maintain fair competition, promote growth,

More information

MTC APPORTIONMENT AND ALLOCATION RULES FOR FINANCIAL INSTITUTIONS

MTC APPORTIONMENT AND ALLOCATION RULES FOR FINANCIAL INSTITUTIONS MTC APPORTIONMENT AND ALLOCATION RULES FOR FINANCIAL INSTITUTIONS On the July 8, 2008 definitions working group conference call, states were asked to submit written comments outlining the issues that each

More information

Business Organization\Tax Structure

Business Organization\Tax Structure Business Organization\Tax Structure Kansas Secretary of State s Office Business Services Division First Floor, Memorial Hall 120 S.W. 10th Avenue Topeka, KS 66612-1594 Phone: (785) 296-4564 Fax: (785)

More information

Table of Contents FOR ADDITIONAL INFORMATION, PLEASE CONTACT:

Table of Contents FOR ADDITIONAL INFORMATION, PLEASE CONTACT: Important Information About This Summary This document briefly summarizes recent substantive changes to Arizona's tax laws. The bills addressed herein were approved by Arizona's Legislature and signed

More information

Reg. 1.5833-1 (Effective for tax years beginning on and after January 1, 1998) Allocation and apportionment of Vermont net income by corporations

Reg. 1.5833-1 (Effective for tax years beginning on and after January 1, 1998) Allocation and apportionment of Vermont net income by corporations Reg. 1.5833 ALLOCATION AND APPORTIONMENT OF INCOME Reg. 1.5833-1 (Effective for tax years beginning on and after January 1, 1998) Allocation and apportionment of Vermont net income by corporations (a)

More information

I Virginia retail sales and use tax or Federal and State excise tax on motor vehicle fuel Account Number Assigned by State:

I Virginia retail sales and use tax or Federal and State excise tax on motor vehicle fuel Account Number Assigned by State: EXCLUSION WORKSHEET FOR USE WITH THE FAIRFAX COUNTY BPOL (Tax Year) This worksheet should be used to identify all exclusions claimed on the business license applications to include forms: 8TA-FF, 8TA-E1,

More information

TENNESSEE DEPARTMENT OF REVENUE REVENUE RULING # 02-16 WARNING

TENNESSEE DEPARTMENT OF REVENUE REVENUE RULING # 02-16 WARNING TENNESSEE DEPARTMENT OF REVENUE REVENUE RULING # 02-16 WARNING Revenue rulings are not binding on the Department. This presentation of the ruling in a redacted form is information only. Rulings are made

More information

Virginia Requirement for Withholding Tax by Pass-through Entities

Virginia Requirement for Withholding Tax by Pass-through Entities Oct09VL 10/13/09 3:04 PM Page 30 Virginia Requirement for Withholding Tax by Pass-through Entities by Robert A. Warwick and Richard L. Grier The withholding tax requirement first applies to taxable years

More information

Letter of Findings: 06-0349 Individual Income Tax For the Year 2004

Letter of Findings: 06-0349 Individual Income Tax For the Year 2004 DEPARTMENT OF STATE REVENUE Letter of Findings: 06-0349 Individual Income Tax For the Year 2004 01-20060349.LOF NOTICE: Under IC 4-22-7-7, this document is required to be published in the Indiana Register

More information

Completing and Filing Schedule O

Completing and Filing Schedule O Department of the Treasury Instructions for Schedule O Internal Revenue Service (Form 1120) (Rev. December 2012) Consent Plan and Apportionment Schedule for a Controlled Group Section references are to

More information

Income/Franchise: New Jersey: General Guidelines Issued for Determining Whether Select Activities Create Corporation Business Tax Nexus

Income/Franchise: New Jersey: General Guidelines Issued for Determining Whether Select Activities Create Corporation Business Tax Nexus Multistate Tax State Tax Matters August 7, 2015 In this issue: Income/Franchise: New Jersey: General Guidelines Issued for Determining Whether Select Activities Create Corporation Business Tax Nexus...

More information

Leasing Taxes in Illinois and Chicago. Stan Cichowski Director Multistate Tax 111 S. Wacker Dr. Chicago, IL 321 486 9034

Leasing Taxes in Illinois and Chicago. Stan Cichowski Director Multistate Tax 111 S. Wacker Dr. Chicago, IL 321 486 9034 Leasing Taxes in Illinois and Chicago Stan Cichowski Director Multistate Tax 111 S. Wacker Dr. Chicago, IL 321 486 9034 Illinois Tax Structure No personal property tax; No tax on rental receipts, except

More information

North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns

North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns June 3 2016 North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns Governor McCrory signed into law Session Law 2016-6

More information

Tax Advantages of IC-DISCS. 2013 National Pecan Shellers Association / Annual Meeting

Tax Advantages of IC-DISCS. 2013 National Pecan Shellers Association / Annual Meeting Tax Advantages of IC-DISCS 2013 National Pecan Shellers Association / Annual Meeting WHAT IS A DISC???? Statutory Requirements - Formation The IC-DISC must be a U.S. Corporation Typically incorporated

More information

SALT Alert! 2015-14: Louisiana: Budget Agreement Includes Tax Increases Affecting Certain Returns Filed On or After July 1, 2015

SALT Alert! 2015-14: Louisiana: Budget Agreement Includes Tax Increases Affecting Certain Returns Filed On or After July 1, 2015 SALT Alert! 2015-14: Louisiana: Budget Agreement Includes Tax Increases Affecting Certain Returns Filed On or After July 1, 2015 On June 11, 2015, the Louisiana Legislature adjourned at 6pm, marking the

More information

State Tax Return. Josie Lowman Atlanta (404) 581-8703

State Tax Return. Josie Lowman Atlanta (404) 581-8703 October 2007 Volume 14 Number 10 State Tax Return Trick or Treat? The New Michigan Business Tax Rachel Wilson Dallas (214) 969-5050 Josie Lowman Atlanta (404) 581-8703 In July 2007, the Michigan Governor

More information

BRIEF OVERVIEW OF PENNSYLVANIA PERSONAL INCOME TAX

BRIEF OVERVIEW OF PENNSYLVANIA PERSONAL INCOME TAX CHAPTER 6: BRIEF OVERVIEW OF PENNSYLVANIA PERSONAL INCOME TAX TABLE OF CONTENTS I. OVERVIEW 2 II. TAX RATE...3 III. EIGHT CLASSES OF INCOME 3 A. Gross Compensation... 3 B. Interest... 4 C. Dividends...

More information

2 Business Income Tax

2 Business Income Tax 2 Business Income Tax 2 BUSINESS INCOME TAX PART A: GENERAL TAX PROVISIONS AND ADMINISTRATION OF CREDITS 1. FEDERAL TAX CONFORMITY South Carolina income tax laws conform substantially to the federal income

More information

II Enter Account Number Assigned by State:

II Enter Account Number Assigned by State: EXCLUSION WORKSHEET FOR USE WITH THE FAIRFAX COUNTY BPOL (Tax Year) This worksheet should be used to identify all exclusions claimed on the business license applications to include forms: 8TA-FF, 8TA-E1,

More information

TAX EXEMPTION FACT SHEETS. Office of Financial Management January 2014

TAX EXEMPTION FACT SHEETS. Office of Financial Management January 2014 TAX EXEMPTION FACT SHEETS Office of Financial Management January Eliminate preferential tax rate for resellers of prescription drugs This proposal eliminates the preferential business and occupation (B&O)

More information

TAX INFORMATION RELEASE NO. 99-4

TAX INFORMATION RELEASE NO. 99-4 BENJAMIN J. CAYETANO GOVERNOR MAZIE HIRONO LT. GOVERNOR RAY K. KAMIKAWA DIRECTOR OF TAXATION MARIE Y. OKAMURA DEPUTY DIRECTOR Tel: (808) 587-1540 Fax: (808) 587-1560 STATE OF HAWAII DEPARTMENT OF TAXATION

More information

Filing Claims for Refund of Sales or Use Tax

Filing Claims for Refund of Sales or Use Tax State of Wisconsin Department of Revenue Important Change The football stadium district tax in Brown County ends on September 30, 2015. Filing Claims for Refund of Sales or Use Tax Includes information

More information

LEX HELIUS: THE LAW OF SOLAR ENERGY Tax Issues

LEX HELIUS: THE LAW OF SOLAR ENERGY Tax Issues LEX HELIUS: THE LAW OF SOLAR ENERGY Tax Issues Charles S. Lewis, III 600 University Street, Suite 3600 Seattle, WA 98101-4109 206-386-7688 cslewis@stoel.com Kevin T. Pearson 900 SW Fifth Avenue, Suite

More information

ILLINOIS REGISTER DEPARTMENT OF REVENUE NOTICE OF PROPOSED AMENDMENT TITLE 86: REVENUE CHAPTER I: DEPARTMENT OF REVENUE

ILLINOIS REGISTER DEPARTMENT OF REVENUE NOTICE OF PROPOSED AMENDMENT TITLE 86: REVENUE CHAPTER I: DEPARTMENT OF REVENUE TITLE 86: REVENUE CHAPTER I: PART 320 REGIONAL TRANSPORTATION AUTHORITY RETAILERS' OCCUPATION TAX Section 320.101 Nature of the Regional Transportation Authority Retailers' Occupation Tax 320.105 Registration

More information

CHECK THE MATH ON THE TEXAS MARGINS KAREY W. BARTON PRINCIPAL RYAN, INC.

CHECK THE MATH ON THE TEXAS MARGINS KAREY W. BARTON PRINCIPAL RYAN, INC. CHECK THE MATH ON THE TEXAS MARGINS KAREY W. BARTON PRINCIPAL RYAN, INC. TEXAS MARGIN TAX A. Margin Tax Basics 1. Overview The margin tax applies to all entities that enjoy the privilege of liability protection,

More information

Choice of Entity. Paul E. Costantino, CPA, MST Costantino Richards Rizzo, LLP, Wakefield

Choice of Entity. Paul E. Costantino, CPA, MST Costantino Richards Rizzo, LLP, Wakefield Choice of Entity Paul E. Costantino, CPA, MST Costantino Richards Rizzo, LLP, Wakefield I. Overview of Entities The entity selection process is one of the first steps in the formation of any business,

More information

Texas Tax for the Oilfield Services Industry

Texas Tax for the Oilfield Services Industry Texas Tax for the Oilfield Services Industry 2012 This teaching manual provides information on general tax issues and is not intended to provide advice on any legal issue or set of facts. This manual and

More information

State Corporate Income Tax Rates As of December 31, 2006 (2006's noteworthy changes in bold italics)

State Corporate Income Tax Rates As of December 31, 2006 (2006's noteworthy changes in bold italics) State Corporate Income Tax Rates As of December 31, 2006 (2006's noteworthy changes in bold italics) State Tax Rates and Brackets Special Rates or Notes Alabama 6.50% Federal deductibility Alaska 1.0%

More information

PROPOSALS FOR REPLACEMENT OF THE SBT AND PERSONAL PROPERTY TAX RELIEF

PROPOSALS FOR REPLACEMENT OF THE SBT AND PERSONAL PROPERTY TAX RELIEF PROPOSALS FOR REPLACEMENT OF THE SBT AND PERSONAL PROPERTY TAX RELIEF Executive Summary The Michigan Chamber of Commerce supports replacement of the Single Business Tax (SBT), and a 50% personal property

More information

BUSINESS INCOME TAX RETURNS

BUSINESS INCOME TAX RETURNS BUSINESS INCOME TAX RETURNS This section describes the federal and state income tax returns that must be filed by various business entities. The business also may be liable for estimated tax payments,

More information

CHAPTER 241 TAXATION OF BANKS AND OTHER FINANCIAL CORPORATIONS

CHAPTER 241 TAXATION OF BANKS AND OTHER FINANCIAL CORPORATIONS TAXATION OF BANKS AND OTHER FINANCIAL CORPORATIONS 241-1 CHAPTER 241 TAXATION OF BANKS AND OTHER FINANCIAL CORPORATIONS Section 241-1 Definitions 241-1.5 Time of application of tax and other provisions

More information

An Overview of Florida s Insurance Premium Tax

An Overview of Florida s Insurance Premium Tax An Overview of Florida s Insurance Premium Tax Report Number 2007-122 October 2006 Prepared for The Florida Senate Prepared by Committee on Finance and Tax Table of Contents Summary... separate document

More information