The drastic shift to remote work has created a host of issues for multistate companies, but the main tax issues relate to nexus, apportionment, and withholding on compensation. Will the presence of an employee working from home create taxable nexus for the employer in that state? How do receipts from service businesses and digital products get sourced when the service provider is using telecommuting personnel to perform those services? And what are the withholding obligations of that employer?
The Supreme Court’s Wayfair decision may create nexus in additional states, and more states are evolving to single-factor apportionment regimes. So how corporations source receipts to the various states is more important now than ever before.
This course will guide you through the legal maze helping you identify the implications of remote work, what activities in the state might subject a company to nexus for sales tax, income tax, and other tax types, and how income should be sourced in those states where the company has nexus.
Publication Date: November 2022
Designed For
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Topics Covered
- Nexus Overview
- Sales and Use Tax Nexus
- Income/ Franchise Tax Nexus
- P.L. 86-272
- Telecommuting Nexus
- COVID-19 Nexus Exceptions
- Employer Withholding
- Apportionment Formulas
- Market-Based Sourcing of Receipts
Learning Objectives
- Identify the corporate, sales tax and withholding tax implications of having employees work in different states
- Recognize and gain a practical understanding of where (in which states) an employer may have sales and/or corporate income tax nexus
- Identify the states that have a "convenience rule" and the ramifications
- Describe the nationwide shift from cost of performance to market-based sourcing of receipts
- Recognize which states use market-based or cost of performance sourcing
- Identify the type of nexus that tests whether the taxpayer has enough of a connection within a jurisdiction to be subject to the jurisdiction's taxing authority
- Identify the Public Law that was passed in order to minimize the potential income tax burden of operating in numerous states
- Identify the state that has a hybrid withholding threshold of 12 days/year and gross income of $3,000
- Identify the type of rule that removes sales to non-nexus jurisdictions from the denominator of the sales factor
Level
Overview
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructors
Christopher L. Doyle
Chris is the firm's State & Local Tax (SALT) Practice Leader. He focuses primarily on New York State and New York City business taxes, including corporate income tax, unincorporated business tax, flow-through entity income taxation and sales and use taxes.
Chris provides counsel for tax-wise transaction structuring as well as tax controversy representation at every level, from audit representation to representation before New York's Court of Appeals. He frequently represents taxpayers before New York State and New York City tax agencies and administrative hearing institutions.
Chris’ primary goal is to have the members of the SALT practice deliver timely, creative, practical and otherwise excellent service to its clients. He also helps the practice's partners envision and adopt amendments to the practice's strategic plan, a plan that is rolled out to SALT’s internal stakeholders (both lawyers and non-lawyers) for implementation.
The Hodgson Russ SALT Practice is constantly increasing its geographic footprint as client’s require progressively less of our attorneys’ face-to-face time and revenue-starved states press progressively harder both in the enactment of constitutionally-questionable tax laws and in the over-zealous interpretation of those laws on audit.
Emma M. Savino
Emma Savino is an associate in the State and Local Tax Practice. She handles disputes involving the New York State and City Tax Departments and counsels businesses and individuals in a range of multistate, state and local tax issues. She advises clients on all aspects of state and local tax from planning and compliance, to audit and litigation.
Prior to joining Hodgson Russ, Emma served as a volunteer law clerk for United States District Judge William Skretny of the Western District of New York. She was also employed as a law clerk at a local firm for nearly two years. Prior to attending law school, Emma worked for TJX Canada as an allocation analyst.
Hodgson Russ LLP
Hodgson Russ has approximately 200 attorneys in offices in Albany, Buffalo, New York City, Rochester and Saratoga Springs, New York; Hackensack, New Jersey; Palm Beach, Florida, and Toronto, Canada.
We serve a wide range of clients, from multinational and privately held corporations to nonprofit organizations, governmental entities, and individuals. Our attorneys practice in every major area of law and use multidisciplinary work teams to serve the specific, often complex, needs of our clients.