Business Tax Quarterly - Summer 2017 - Suggested Reading

Published: Aug 15, 2017
Topics: Tax
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“No Regulation without Representation Acts”:

Legislation introduced by Rep. James Sensenbrenner (R-Wis.) in both the 2016 and 2017 congressional sessions would require a business to have a physical presence in a state before that state could impose tax or regulatory obligations on that business. On its “Inside SALT” blog, McDermott, Will & Emory provides a synopsis of both bills, comparing their provisions and explaining the potential impact of the legislation.

MTC Guidelines to Know and Love:

Since the issuance of the uniform law in 2002, nine states have adopted the law in some fashion, and may be adopted by more. This article posted on the website of the Journal of Accountancy explains why.

Trending: Market-Based Sourcing:

According to an article from the Tax Adviser, the confluence of factor presence nexus standards and market-based sourcing could present a “significant trap” for service providers, because businesses may find themselves facing competing nexus claims from multiple states, resulting in double taxation.

Ohio, Washington Expanding Nexus:

On June 30, 2017, Gov. John Kasich (R-Ohio) signed the state’s budget bill, which included a provision that internet sellers that have more than $500,000 in annual Ohio gross receipts and install “cookies” on an Ohio user’s computer or employ a system of servers in the state must collect Ohio sales tax. On July 1, Washington followed suit with a comprehensive economic nexus law requiring virtually all online retailers making sales in the state either to collect Washington sales tax or comply with reporting and notice requirements regarding Washington sales. The legislation represents the latest efforts by states to extend their taxing power, as explained in this article from Reed Smith LLP.

The Nexus Question Everyone Asks:

The concept of state tax nexus represents a fascinating academic inquiry, encompassing esoteric legal concepts such as the U.S. Constitution’s due process and commerce clauses, and state sovereignty. But in the end, a tax professional really wants to know, “Is my business subject to tax in this state?” The Tax Executives Institute has provided a straightforward discussion of the practicalities such professionals must negotiate in determining business strategies around nexus questions.