Over the past week I have been preparing to deliver a state income tax presentation in Richmond, Virginia and Norfolk, Virginia on May 23th and May 24th. My agenda includes:
- Major legislative developments
- Combined reporting
- Discretionary authority
- Tax base
- Allocation and apportionment
- Miscellaneous developments
As I have prepared the material, a few main thoughts stick in my mind:
- State income taxes remain to be deceptively simple and endlessly complicated
- The 6 most used words in the state income tax consulting world are: "generally" and "it depends on the state"
- In the world of state income tax, there are many battles in the never ending war; meaning, you win some, you lose some (i.e., tug of war, musical chairs)
- The states are focused on increasing taxes on "out-of-state" taxpayers
- Economic presence is enough to create nexus in some states
- Combined reporting continues to be popular
- Market-based sourcing of sales other than sales of tangible property continues to spread like wildfire
- The burden of proof regarding changing apportionment methods, forcing combined returns, and ultimately, tax assessments switches between the taxpayer and the state like a "teeter-totter"
- The add-back of intangible expenses paid to related parties is still scrutinized, but exceptions may apply
- Single-sales factor apportionment will soon be the only apportionment method??
- State amnesty programs still exist, but may not be better than a good old Voluntary Disclosure Program
What do you think of when you think of multistate income taxes?
(I know, I am assuming that you think about multistate income taxes)