Multistate-Income Tax Basics and Hot Topics (Currently Unavailable)
Author: Monika Miles
||2 hours for CPAs
2 hours Federal Tax Law for CTEC
2 hours Federal Tax Related for EAs and OTRPs
As the company’s CPA, do you know exactly where your clients are doing business? If a client receives a notice from a state asserting nexus and possibly retroactive income tax liability, the CPA might be in a defensive situation. This class gives you the tools to be back on the offense!
States are becoming more aggressive in asserting taxable presence (nexus), as well as claiming that more revenue be taxed within their borders via additional income apportionment. Today, taxpayers need to navigate whether they are taxable in a state, and then how to properly apportion revenue into the various states. And it varies – depending on whether the company engages in the sales of physical goods versus service revenues. This course will help navigate where, when and how a company should report for state income tax purposes.
This course will provide the basics of income tax as well as the identification of common pitfalls, and current hot topics that will assist client service professionals identify areas of potential exposure and potential planning.
Publication Date: December 2016
CPAs and other professionals who deal with their clients on federal tax matters, those who know their clients are transacting business across state lines, or those whose clients are undergoing an income tax audit (whether in their home state or in another state).
- General state income tax concepts — history (UDITPA and the MTC)
- Nexus — history, physical presence, differences between income tax and sales tax nexus
- Economic and Factor Presence Nexus
- Public Law 86-272
- Apportionment and allocation, including discussion of 3 factor reporting (property, payroll, and sales) as well as alternative methods, throwback, and sales of services
- Special emphasis on the sales factor (including cost of performance vs. market based sourcing) - a combination can lead to double counting of certain revenues.
- Group filing options — unitary principles, combined reporting
- Tax Credits & Incentives
- Audit issues
- Remedies for income tax non-compliance — voluntary disclosure agreements and amnesty programs
- Income tax compliance issues
- How to talk to your clients about multistate tax issues
- Describe the history of how today's multistate tax laws came to be
- Recognize nexus, physical presence, and economic nexus, including the nuances of P.L. 86-272
- Identify various apportionment methods, including an emphasis on the sales factor and distinguishing between cost of performance states and those moving toward a market based sourcing system
- Differentiate between and nuances of voluntary disclosure agreements and amnesty programs
- Identify various state tax credits and incentives, including those based on research, investment in property, plant & equipment, and those based on employment and/or enterprise zones
- Recognize how to deal with a notice from the state; or an audit
- Recognize the proper forms to file regarding federal and state corporate income tax returns
- Differentiate between corporate tax credits and incentives
- Describe how multi-state income tax effects business
- Calculate in-state sales factors utilizing performance for apportioning services
- Identify how to establish out-of-state nexus for a company
- Differentiate Public Law 86-272 and how it applies to sales
- Differentiate federal and state corporate income tax returns and how to conform to federal tax law
- Recognize why nexus and taxability reviews are helpful to multistate corporations
NASBA Field of Study
Taxes (2 hours)