State and Local

Who Is the Customer?
The ins and outs of market-based sourcing

Compared to the complexity of cost-of-performance (COP) sourcing of services for income tax purposes, a market-based approach to apportionment sounds downright simple. Instead of comparing the location of all payroll and material costs of generating revenue as in a COP calculation, for market-based sourcing one looks only to the location… Read more »

State and Local Tax Implications for a Remote Workforce
As remote work becomes more common, withholding and nexus are among key considerations

State and local tax issues related to remote workforces have existed for many years. However, the pandemic—with the attendant drastic increase in employees working from home or elsewhere—has intensified these issues and brought them to the forefront of taxpayers’ attention. The remote work trend continues even as we emerge from… Read more »

Sales Tax and the M&A Process
Understanding the entire journey—from diligence through post-transaction

Mergers and acquisitions (M&As) play an active role in the corporate landscape, facilitating growth, consolidation, and strategic realignment among businesses. Companies often include M&A activity in their short-term and long-term strategies. To successfully navigate M&As, tax directors and chief financial officers identify areas that tend to present pitfalls that can… Read more »

The SALT Team of the Future
An income tax perspective on the evolution of work environments

To respond to rapidly changing state and local tax (SALT) developments, this article envisions how a well-balanced SALT team can serve the needs of a large multistate business. It is instructive to look at how things, from a tax perspective, used to run in office settings back in the day,… Read more »

State Tax Policy Takes Center Stage
In a time of burgeoning deficits, what is the status of SALT?

In an informative session on the first day of the 75th Anniversary Celebration and Annual Conference in October, experts addressed the topic “SALT Tax Policy: As Deficits Turn, Will the Tide Change?” The panel included Mo Bell-Jacobs, senior manager in the Washington, D.C., office of RSM, who specializes in state… Read more »

Administrative Challenges Multistate Businesses Face—and Potential Solutions
Sales and use taxes impose idiosyncratic—but fixable—burdens on businesses

Since the beginning of time, multistate taxpayers have faced significant administrative challenges to complying with all the variations in state and local tax laws. If “the beginning of time” may be a bit of a stretch, those challenges are a reality today. And any business that operates in multiple states… Read more »

TEI Roundtable No. 43: Separate, Combined, and Worldwide Unitary State Filings
Some practical advice for making these key decisions

One of the most talked-about education sessions at this year’s Midyear Conference in March was the session titled “Separate, Combined, and Worldwide Unitary State Filings—What’s New?” We thought this very important state and local tax topic deserved more discussion, so we convened a roundtable in May to take a deeper… Read more »

Market Sourcing or Bust: The Kitchen Sink Approach of COP-Sourcing States
The binary nature of the determination makes COP sourcing controversial

The division of multistate business income among the states is accomplished through formulary apportionment. State formulary apportionment provisions increasingly rely on the receipts factor to divide income, sharpening the focus on the sourcing of receipts. Although many states have transitioned to a market-sourcing (also known as destination sourcing) approach, historically… Read more »

How Remote Workforce Programs Trigger Myriad Tax Problems—Part One
What’s triggered? How about fringe benefits, federal and state tax withholding, and information-reporting issues?

Editor’s note: Given the complexity of this topic, this will be a two-part article. This first part addresses fringe benefits, federal and state tax withholding, and information reporting. The second part, which will appear in the May-June issue of Tax Executive, will address 1) tax reporting and withholding under remote-work… Read more »

Apportionment: Normal Formulas Are Unfair and Can Be Challenged
Let’s acknowledge that companies’ advantages in the market arise partly from their human capital and use of assets—both tangible and intangible

For the 2022 tax year, of the forty-five states (plus the District of Columbia) that impose a corporate income tax, more than thirty require the use of a single sales factor normal apportionment formula; and, when we also consider states that put additional weight on the sales factor, that number… Read more »