PL 86-272 applies in determining when a state may impose net
income tax on a business that generates revenue from sales of tangible personal
property. This 1959 law has become outdated because for the past several years,
many companies generate revenues from other than sales of tangible personal property. While
efforts have been made in Congress to update PL 86-272 - with legislation
proposed every session of Congress since the 106th Congress (we are now in the
112th Congress), it may not look like updating is going to occur anytime soon
(note though that the House Judiciary Committee voted favorably on
H.R. 1439 in July 2011).
Meanwhile, states apply constitutional principles to determine what activity of
a business in a state makes that business subject to state income taxes. The
results have not been consistent from state to state.
The chart below attempts to list what each state is doing or has
done to address a nexus guideline or rule when PL 86-272 does not apply.
Generally, these approaches involve some angle on "economic nexus" which is why
the term is used in the heading. This chart is not intended as legal guidance
but instead to serve as a comparison of what states are doing in today in
determining when a business has income tax obligations in the state. The chart
also includes some links to a state's guidance on income/franchise tax nexus
even though it might not apply "economic nexus."
If you know of a state action missing from the chart, please let
me know - I appreciate it (annette.nellen@sjsu.edu).
Thank you.
| State |
Reference |
Standard |
| Alabama |
Rev Rul
05-001 |
"The licensing of trademarks by Parent is similar to
the rental of the films in Paramount. In both cases intangible
property, i.e. the trademarks and the programming, constitute intangible
property. However, the intangible property can only be utilized through
its embodiment on a tangible medium. In Paramount, the medium was
the film. In the case of the Parent, the tangible property is the
printed or otherwise displayed trademark of the Parent. Whether the
trademark is viewed as intangible or its physical display is viewed as
tangible property, the fact remains that it is actually utilized for
display in a physical form.
There is no compelling reason to distinguish between the ownership of
tangible property and the ownership in the state of intangible property
for purposes of establishing presence or nexus. Both Paramount
and the federal cases cited previously indicate that Parent has nexus
with Alabama. Retail and Developer’s proposed activities in Alabama will
increase Parent’s nexus with Alabama, which is already sufficient to
support the imposition of corporation income taxes and business
privilege taxes by Alabama." |
| Alaska |
|
|
| Arizona |
DOR Decision
200700083-C
Pub 623 -
Nexus in Arizona
Corporate Tax Ruling (CTR) 99-5 -
Application of Public Law 86-272 |
In
200700083-C (3/27/08), the Department of Revenue applied the
economic nexus rule of Geoffrey, Inc. v. South Carolina Tax Comm’n,
437 S.E.2d 13 (1993), to find that a company headquartered out-of-state
that received franchise fees and royalties from franchisors in Arizona
was subject to corporate income tax in AZ because it had substantial
nexus. The taxpayer's agreements with the franchisees also stated that
the franchisor would visit annually. Taxpayer purposefully directed
business to AZ, so no due process clause problems. And per Geoffrey
case and fact taht physical presence is only required for sales tax
nexus, the DOR found that the substantial nexus required by Complete
Auto Transit existed. "Like the taxpayers in Geoffrey, by
licensing its trade names and trademarks to the Arizona Franchisees,
Taxpayer “contemplated and purposefully sought the benefit of economic
contact” with Arizona. Geoffrey, 437 S.E.2d at 16. In addition,
Arizona provided “an orderly society” for which the Franchisees could
conduct business, and thereby “make it possible for [Taxpayer] to earn
income pursuant to the [franchise] agreement.”" |
| Arkansas |
|
|
| California |
R&T Section 23101 (2/09)
FTB information
FTB Notice
2011-06 – Chief Counsel Rulings for “Doing Business” |
Effective for tax years beginning after 2010, nexus exists (a taxpayer is "doing business" in the
state) if: (R&T
Sec. 23101)
- taxpayer organized or domiciled in CA
- sales in CA exceed lesser of $500K or 25% of
taxpayer's total sales
- taxpayer's real and tangible personal property in
CA exceeds lesser of $50K or 25% of taxpayer's total of such
property
- compensation paid by taxpayer in state exceeds
lesser of $50K or 25% of total compensation paid
The above dollar amounts are to be indexed for
inflation annually by the FTB. Despite what looks like an objective
measure, the
guidance from FTB indicates that even if the above thresholds are
not met, an out-of-state business might still be considered "doing
business" in California. Here is the FTB comment: "Partnership A is
considered doing business in California even if the property, payroll
and sales in California fall below the threshold amounts. Partnership A
is considered doing business in California through its employees because
those employees are "actively engaging" in transactions for profit on
behalf of Partnership A."
FTB summary. |
| Colorado |
Regulation (39-) 22-301.1 -
factor presence approach |
"Doing business"
Regulation (39-) 22-301.1 modified to adopt factor presense approach
(for when PL 86-272 does not apply) [CCH
Newsletter with more information] |
| Connecticut |
9/8/09 -
HB
6802 became law (Public Act No. 09-3)
Q&A on
Economic Nexus (IP 2010 (29.1))
Public Act 11-61, §55 changed an "or" to an "and"
and provides that the rule is n/a to foreign corp that has no income
effectively connected with a US business - see page 100 |
Adds an economic nexus standard effective for tax
years beginning after 2009. Replaces a physical presence standard.
Per Sec. 90 of the new law: "Any company that derives income from
sources within this state, or that has a substantial economic presence
within this state, evidenced by a purposeful direction of business
toward this state, examined in light of the frequency, quantity and
systematic nature of a company's economic contacts with this state,
without regard to physical presence, and to the extent permitted by the
Constitution of the United States, shall be liable for the tax imposed
under chapter 208 of the general statutes." Also see Sec. 91 which makes
changes to Section 12-726 of the general statutes to use an economic
nexus standard for partnerships and S corporations.
NOTE - legislation in 2011 changed the "or" in the
second line above to "and". (see links to PA 11-61 in cell to the
left) |
| Delaware |
|
|
| Florida |
Florida Technical Assistance Advisement 07C1-007 (10/17/07) |
The Florida Dept of Revenue held that a financial
services firm providing various services to retailers in Florida had
nexus for income tax purposes even though it had no physical presence in
the state. T is licensed with the Florida Dept. of Financial Services
under Florida law. The license indicates that T has a number of
authorized retailers in the state and T paid a fee for each one. The
retailers bind T because if a retailer does not pay for any transaction,
T is liable to the service provider.
P.L. 86-272 does not apply to T because it is
not selling tangible personal property. In analyzing due process, the
DOR stated: “the U.S. Supreme Court has said
that the “simple but controlling question is whether the state has given
anything for which it can ask return.” See Wisconsin v. J. C. Penney
Co., 311 US 435, 444 (1940). In this
case, Florida has provided the Taxpayer with a license, and with an
orderly and regulated marketplace. Florida is also providing the
Taxpayer with access to its courts. Therefore, Florida meets the
requirements of the Due Process Clause.”
In analyzing commerce clause concerns using Complete
Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977)., the DOR also
found no problem with imposing tax. “Florida has provided the Taxpayer
with a license, and with an orderly and regulated marketplace. Florida
is also providing the Taxpayer with access to its courts and police and
fire protection for its authorized agents/representatives. Therefore,
Florida’s corporate income tax has a fair relation to the services
Florida provides.”
In analyzing any physical presence requirement, the DOR
noted that cases in other states have found that the Quill
physical presence standard does not apply for income tax purposes. The
DOR also noted that the US Supreme Court had declined to hear a state
case on this issue. It found these cases to be “persuasive,
especially given the fact that the U.S. Supreme Court declined to
hear the cases.”
The DOR found that T had substantial nexus in the state. |
| Georgia |
Ga. Code
Ann. §48-7-31 Reg 560-7-7-.03 |
Reg. 560-7-7-.03 Corporations: Allocation and
Apportionment of Income - (1)
doing
business - a fairly broad standard |
| Hawaii |
|
|
| Idaho |
|
|
| Illinois |
|
Borden Chemicals and Plastics, L.P. v. Zehnder, 726 N.E.2d 73
(Ill. App. Ct. 2000), appeal denied, 731 N.E.2d 762 (Ill. 2000)
|
| Indiana |
MBNA
America Bank v. Indiana Dept. of Revenue
(Cause No. 49T10-0506-TA-53, 10/08) |
The Indiana Tax
Court held that MBNA was liable for Indiana’s financial institutions tax
because while it did not have a physical presence in the state, it had
an economic presence. MBNA had no employees or facilities in Indiana and
only contacted credit card customers and potential customers there by
phone or mail. At issue was whether economic presence is sufficient to
meet the substantial nexus requirement under the commerce clause of the
US Constitution. The court concluded: “The Commerce Clause does not
require MBNA to have a physical presence in Indiana to be subject to the
FIT – its economic presence is enough.” |
| Iowa |
KFC Corp. vs. Iowa Department of Revenue - see
note to right 4/11 -
writ filed with US Supreme Court
Policy Letter
10240041 (12/16/10) |
KFC Corp. vs. Iowa Department of Revenue - this case where
the DOR and District Court found economic nexus based on royalties
received from Iowa franchisees was heard by the Iowa Supreme Court in
May 2010. In late December 2010, the court issued its
ruling finding that KFC has nexus in Iowa due to generating
royalties in the state from its arrangements with franchisees in the
state. The opinion has a lengthy review of the dormant commerce clause
and why the Quill physical presence standard does not apply beyond sales
tax. Click
here for a story on the issue posted at the International Franchise
Association website. Click
here for a Grant Thornton news alert on the Administrative Law
Judge's earlier ruling. October 2011 - the US
Supreme Court denied cert in the KFC case (No.
10-1340)
Policy Letter 10240041 -
"LLC is subject to Iowa income tax since physical presence is not
required to assert nexus for Iowa, and you are exploiting the Iowa
market. In addition, any receipts received where the benefit of the
service is received in Iowa would be considered an Iowa receipt." LLC
had no payroll or property in Iowa; it was registered with the Iowa
Secretary of State's office. |
| Kansas |
|
|
| Kentucky |
|
|
| Louisiana |
Bridges, Secretary of the Dept of Revenue, State of
Louisiana v. Geoffrey, Inc., 984 So 2d 115 (Ct App, 2008) |
The court ruled that the physical presence standard
of Quill does not apply to income tax. The court used an economic
nexus approach to find that the taxpayer was subject to income tax for
royalties generated from a company in the state.
"[T]he facts in this case establish that Geoffrey entered
into a licensing agreement with Toys “R” Us-Delaware, whereby the
parties agreed that Toys “R” Us-Delaware would pay Geoffrey a royalty
fee based on three percent of Toys “R” Us-Delaware's net sales in its
Toys “R” Us stores and two percent of net sales its Kids “R” Us stores
in over forty states, including Louisiana, in exchange for Geoffrey
granting Toys “R” Us-Delaware the exclusive right to use those
trademarks. Those trademarks were admittedly used by Toys “R”
Us-Delaware in approximately eight to eleven stores in Louisiana and
Geoffrey admittedly received significant royalty income from the use of
its trademarks in this state. Accordingly, we find that based on the
facts in the record, Geoffrey has a substantial nexus with Louisiana
sufficient to satisfy the Commerce Clause." |
| Maine |
|
|
| Maryland |
Licensing of intangibles can create nexus. |
Comptroller
of the Treasury v. SYL, Inc., and Comptroller of the Treasury v.
Crown Cork & Seal Co. (Delaware), Inc., 825 A.2d 399 (Md. 2003),
cert. denied, 124 S.Ct. 961 (2003) - nexus from trademark (no
physical presence) [analysis
from Blank Rome LLP (6/03)]
Nordstrom v. Comptroller of the Treasury (MTC No.
07-IN-OO-0317; 2008) - Maryland Tax Court found that two subsidiaries
formed outside of Maryland to own Nordstrom trademarks did not have
economic substance. Thus, any activities of the subsidiaries should be
treated as activities of the parent corporation, an entity that had
income tax nexus in Maryland. Nordstrom paid about $200 million in
royalties to one of the subs which then loaned back about two-thirds of
that amount to the parent. Nordstrom paid interest, but not much
principal. The sub had very little expenses. It did have a full-time
paralegal overseeing management of the intangibles. Per the court:
“Fundamentally, the subsidiaries did not act independently, although the
financial structure creates an illusion of substance.” [ http://www.txcrt.state.md.us/pubs/PDF/NordstromOct2008.pdf]
[Grant Thornton
commentary on Nordstrom case] |
| Massachusetts |
Capital One Bank, , 453 Mass 1, 899 NE2d 76 (2009)
Geoffrey, Inc., 453 Mass 17, 899 NE2d 87 (2009) |
solicitation of credit card customers in the state = nexus
licensing trademark = nexus |
| Michigan |
MCL 208.1200(1) Dept. of Treasury,
Revenue Administrative Bulletin 2007-6 (12/07) - add'l guidance on
nexus for the Michigan Business Tax
MBT Nexus Standards -
Revenue Administrative Bulletin 2008-4 |
Under the Michigan Business Tax (MBT)
a business is liable for the tax if it has a physical presence in
Michigan for over 1 day or it "actively solicites sales" in the state
and its unapportioned gross receipts sourced to the state are $350,000
or more. "Although the Department recognizes
that some states have reached the opposite conclusion, the Department
concludes that MBNA best summarizes the current state of Commerce
Clause jurisprudence" (RAB 2007-6) |
| Minnesota |
Business Activity Questionnaire Nexus and in-state repairs -
Revenue Notice 96-16 |
Sales tax nexus -
Revenue Notice 00-10 |
| Mississippi |
|
|
| Missouri |
|
|
| Montana |
|
|
| Nebraska |
|
|
| Nevada |
|
|
| New Hampshire |
|
|
|
New Jersey |
TAM-6 (1/10/11) - foreign corporations subject to NJ Corporate
income tax
Lanco, Inc v Director, New Jersey Div of Taxation, 879 A2d 1234
(NJ Sup Ct App Div, 2005), cert den 127 S Ct 2974 (2007) -
summarized in next column.
Also see
AccuZip case of 8/09 of the NJ Tax Court. The court held that
software sales on CD-Roms by AccuZip and Quark were of tangible personal
property, and did not derive a substantial economic benefit in NJ. It
found that Quark was doing business in NJ but its activities were de
minimis under PL 86-272 so it only owed the minimum tax. See case
for discussion of Lanco. |
TAM-6 (1/10/11) - "Applying the principles of
the statute as amended and the above-referenced court decisions,
taxpayers performing services and domiciled outside the State that
solicit business within the State or derive receipts from sources within
the State must file a Corporation Business Tax return and pay the
applicable tax to New Jersey. This principle applies to all
corporations, including financial corporations." Effective for periods
beginning on and after 1/1 02.
Lanco - The New Jersey Supreme Court, in a per curium opinion,
upheld the holding of the appellate court in finding that the Quill
nexus standard only applies for sales and use tax (A-89-05; 10/12/05).
In Lanco, Inc. v. Director, Division of Taxation, N.J. App. Div.,
No. A-3285-03T1 (Aug 2005), the court reversed the lower court decision
to find that the Quill decision only applies to sales and use tax
matters. Lanco licenses trademarks and similar intangibles to a related
retailer in New Jersey – Lane Bryant. Lanco has no physical property in
New Jersey. The “minimum contacts” and fairness considerations of the
Due Process clause were not at issue. Instead, the “substantial nexus”
consideration of the Commerce Clause was.
The Director argued that “there is no principled reason
why the Commerce Clause should require a corporation’s physical presence
to justify State taxation … provided the State can establish that the
corporation derives significant benefits from the continued and
deliberate economic activity in the taxing State.” The Director also
noted that Quill’s connection with customers was via the U.S. mail or
common carrier whereas Lanco’s connection with its customer (Lane
Bryant) was a long-term contractual one designed to increase Lane
Bryant’s sales and the parties were affiliated corporations. The
Director noted that there is an increased burden to NJ from such
increased retail sales activity relative to Quill mailing catalogs and
products to customers.
The appellate court agreed with the Director that
Quill was inapplicable to the case. |
| New Mexico |
K-Mart Properties v Taxation & Revenue Dept of the State
of New Mexico, 131 P3d 27 (2006)
Suggestions from Dept. of Tax and Revenue to Governor's Budget
Balancing Task Force (11/16/09) - includes economic nexus for GRT (slide
2) |
nexus from a trademark
Summary from Jones Day (2006)
Information from the NM Taxation and Revenue Department
|
| New York |
|
A 7/09
report on Corporate Tax Reform from the NY Dept of Taxation and
Finance recommends an economic nexus standard. |
| North Carolina |
A&F Trademark, Inc v North Carolina, 605 SE2d 187 (NC Ct App,
2004), cert den 546 US 821 (2005) |
Economic nexus |
| North Dakota |
|
|
| Ohio |
"Bright line" nexus standard used for Commercial
Activity Tax (CAT), also known as a factor presence standard |
http://www.tax.ohio.gov/divisions/communications/information_releases/CAT/CAT200502.stm
Challenge to the
CAT nexus standard by Overstock.com -
9/21/09 KPMG Tax Watch
|
| Oklahoma |
Geoffrey, Inc. v.
Oklahoma Tax Commission,
2006 OK CIV APP 27, ___ P.3d ___ 2005 |
Held
that G was subject to income tax in the state on royalties received from
the licensing of intangible property. G, domiciled in Delaware, has no
property or employees in Oklahoma. Its licensee operates stores (TRU)
there and pays license fees to G. TRU pays income taxes in Oklahoma and
deducts the license fees it pays to G. The Oklahoma Tax Commission (OTC)
found no due process or commerce clause issue with assessing tax on G
because it had substantial nexus because the use of the trademarks in
Oklahoma to generate substantial income shows a connection between the
income and the interests of the state in imposing its income tax. OTC
also noted that G “purposefully directed its activities toward
residents” and “availed itself of the benefits of Oklahoma’s economic
market.”
The court agreed
with the Lanco decision (879 A.2d
1234 (N.J.Super.A.D., 2005)) that the physical presence required in
the Quill sales and use tax case (504 U.S. 298 (1992)) for
commerce clause purposes does not apply to income tax. The court also
found no due process clause problem because G had purposefully directed
its activities at residents of the state – it was a willing party.
It was also held
that G was a unitary business and its royalty income should be
apportioned (rather than allocated to Delaware) using a “modified
one-factor apportionment formula” based on G’s sales factor with such
approach serving as an “accurate reflection of the business done” in the
state.
|
| Oregon |
Oregon Department of Revenue (DOR) adopted
Rule (OAR) 151-317.010
(5/08) |
“Substantial nexus exists where a taxpayer regularly takes advantage of
Oregon’s economy to produce income for the taxpayer and may be
established through the significant economic presence of a taxpayer in
the state.”
To
determine if substantial nexus exists the DOR may look at the regularity
of contacts in the state, deliberateness of marketing to Oregon
customers, and significant gross receipts from Oregon customers or from
the use of intangible property in Oregon. Also relevant is whether the
business is protected by Oregon laws, has court access, uses state
roads, benefits from Oregon’s educated workforce, or receives “police
and fire protection for property in Oregon that displays taxpayer’s
intellectual or intangible property.”
http://arcweb.sos.state.or.us/rules/OARS_100/OAR_150/150_317.html |
| Pennsylvania |
|
|
| Rhode Island |
|
|
| South Carolina |
Geoffrey, Inc. v.
South Carolina Tax Commission, 437 SE2d 13 (Sup Ct), cert denied 510
US 992 (1993) |
Holding company licensing use of trademark
in the state = nexus |
| South Dakota |
|
|
| Tennessee |
America Online v. Johnson,
M2001-00927-COA-R3-CV (2002) |
CDs in the state might create nexus |
| Texas |
Texas Margin Tax |
Query - what type of tax is it? A notice issued
by the California Franchise Tax Board (2009-06)
implied that it wasn't always clear depending on the taxpayer and the
calculation of the margin tax (there are 3 ways to calculate the tax
base). PL 86-272 only applies to net income
taxes.
There seems to be little information available at the
Texas website - click
here for some of it. |
| Utah |
Publication 37 and
R865-6F-6 |
|
| Vermont |
|
|
| Virginia |
|
|
| Washington |
SB 6143 (enacted 4/10) + various guidance from the Dept of Revenue (here)
Watch the video - tutorials from the Washington DOR on nexus and
apportionment -
here
Also see
Lamtec Corp., No. 35716-811 (WA Ct App Div II, 8/4/09);
affirmed 2011, Supreme Court of Washington
|
SB 6143: This legislation enacted in April 2010 creates a
factor presence nexus standard (see
page 2 of the Act for the reasons why Washington expanded its nexus
standard). The new rule also provides that if nexus is established in
one year, it will also exist for the subsequent year. The factor
presence nexus standard is different that what the MTC proposes and what
most states have adopted in that instead of $500,000 of receipts in the
state creating nexus, it is $250,000 or more.
Lamtec - "Lamtec's business activities in Washington
significantly contributed to its ability to
establish and maintain its market in the
state. Given Lamtec's business
strategy-maintaining long-term relationships
with a small number of customers-its
in-person customer visits were critical to
maintaining its existing Washington
customers. And, as the Department
suggests, when one is maintaining a customer
relationship, it is establishing its market
for future sales. While in Washington,
Lamtec employees provided information,
listened to concerns about and answered
questions concerning Lamtec products,
participated in telephone calls that the
customers placed to Lamtec's technical and
customer service departments in New Jersey,
fielded questions concerning potential price
increases and new products, and maintained
general client relations."
"Lamtec's distinction that
its employees solicited no sales during
their visits to Washington is of no
consequence. See Tyler Pipe, 483 U.S. at
249, 107 S.Ct. 2810; Gen. Motors, 107
Wash.App. at 52, 25 P.3d 1022 (stating that
substantial nexus has never turned on
whether an out-of-state company engages in
direct selling activities); see also Orvis
Co. v. Tax Appeals Tribunal of New York, 86
N.Y.2d 165, 630 N.Y.S.2d 680, 654 N.E.2d
954, cert. denied sub nom. Vermont
Information Processing, Inc. v. Dep't of
Taxation and Finance, 516 U.S. 989, 116 S.Ct.
518, 133 L.Ed.2d 426 (1995) (holding that
there is no requirement under Quill and
commerce clause jurisprudence requiring that
an out-of-state company's sales
representative be engaged in solicitation of
sales or in sales transactions to satisfy
the substantial nexus requirement).
Likewise, Lamtec's distinction that it has
no permanent employees in Washington is of
no consequence. The test is whether Lamtec's
in-state activities were significantly
associated with its ability to establish and
maintain its market in Washington, not
whether it employed people within the state.
See Tyler Pipe, 483 U.S. at 250, 107 S.Ct.
2810. See also Orvis, 86 N.Y.2d at 178, 180,
630 N.Y.S.2d 680, 654 N.E.2d 954 (finding a
sufficient nexus based on the “slightest
presence” of an out-of-state corporation's
out-of-state employees visiting the state as
many as 19 wholesale customers an average of
four times a year)."
|
| West Virginia |
Tax
Commissioner of WV v MBNA, 640 SE2d 226 (2006), cert denied 127 S.
Ct. 2997 (2007) |
Economic nexus as evidenced by direct mail and phone
solicitation in WV that was regular and generated a substantial amount
of revenues, all of "which indicate[s] a significant economic presence
sufficient to meet the substantial nexus prong of
Complete Auto." Per the
court: "[W]e simply wish to acknowledge the great challenge in applying
the Commerce Clause to the ever-evolving practices of the marketplace.
James Madison, Benjamin Franklin, and the other Framers at the
Constitutional Convention who adopted the Commerce Clause lived in a
world that is impossible for people living today to imagine. The
Framers' concept of commerce consisted of goods transported in
horse-drawn, wooden-wheeled wagons or ships with sails. They lived in a
world with no electricity, no indoor plumbing, no automobiles, no paved
roads, no airplanes, no telephones, no televisions, no computers, no
plastic credit cards, no recorded music, and no iPods. Likewise, it would have been impossible for the Framers to
imagine our world. When they fashioned the Commerce Clause, they could not possibly
have foreseen the complex and varied ways that commerce is conducted today, especially
via the internet and electronic commerce. It would be nonsense to suggest that they could
foresee or fathom a time in which a person's telephone call to his or her local credit card
company would be routinely answered by a person in Bombay, India, or that a consumer
could purchase virtually any product on a computer with the click of a mouse without
leaving home. This recognition of the staggering evolution in commerce from the Framers'
time up through today suggests to this Court that in applying the Commerce Clause we must
eschew rigid and mechanical legal formulas in favor of a fresh application of Commerce
Clause principles tempered with healthy doses of fairness and common sense. This is what
we have attempted to do herein." |
| Wisconsin |
In 2009, an economic nexus approach was adopted with
specific language describing what can constitute "doing business" when
PL 86-272 does not apply.
Guidance will be needed on the meaning of "regularly." (see right) |
2009 legislative change - summary from Dept. of Revenue (WI
Tax Bulletin, 7/09): "Definition
of “Doing Business in This State” Revised
(2009 Act 28, amend sec.
71.22(1r), as affected by 2009 Act 2, effective for taxable years
beginning on or after January 1, 2009, and to any period for which the
statute of limitations has not expired.)"
"Two
provisions are added to the definition of “doing business in this
state.” The definition as revised is provided below with the additional
provisions shown in
bold. The definition
of “doing business in this state” provides that “doing business in this
state” includes,
except as prohibited under P.L. 86−272,
issuing credit, debit, or travel and entertainment cards to customers in
this state; regularly selling products or services of any kind or nature
to customers in this state that receive the product or service in this
state; regularly soliciting business from potential customers in this
state; regularly performing services outside this state for which the
benefits are received in this state; regularly engaging in transactions
with customers in this state that involve intangible property and result
in receipts flowing to the taxpayer from within this state; holding
loans secured by real or tangible personal property located in this
state; owning, directly or indirectly, a general or limited partnership
interest in a partnership that does business in this state, regardless
of the percentage of ownership; and owning, directly or indirectly, an
interest in a limited liability company that does business in this
state, regardless of the percentage of ownership, if the limited
liability company is treated as a partnership for federal income tax
purposes. A
taxpayer doing business in this state for any part of the taxable year
is considered to be doing business in this state for the entire taxable
year."
"The
statutory language relating to P.L. 86-272 is effective for taxable
years beginning on or after January 1, 2009. The statutory language
relating to the non-recognition of part-year nexus applies to any period
for which the statute of limitations has not expired." |
| Wyoming |
|
|