Articles Posted in Market-Based Sourcing

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The Pennsylvania Governor signed H.B. 1342 to enact changes to the state’s corporate income tax.[1]  Pennsylvania-PA-State-SealThe legislation modifies the corporate income tax in three ways: (1) adopts a bright-line economic nexus standard; (2) adopts market sourcing for receipts from intangibles; and (3) reduces the corporate tax rate and gradually continues to reduce the rate over the next eight years. Continue Reading ›

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Pillsbury SALT attorneys Carley RobertsRobert P. Merten IIIJeff Phang, and Lexi Louderback recently published “How to Be Reasonable When Reasonably Approximating the Market: Part II”  in Tax Notes State. Read more here.Tax-Notes-logo

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Pillsbury SALT attorney Zachary Atkins will present

“Market-Based Sourcing, the Continuing Conundrum” during the 28th Annual Paul J. Hartman State and Local Tax Forum on October 28. The Professor Paul J. Hartman Memorial State and Local Tax (SALT) Forum, sponsored in conjunction with the Vanderbilt University Law School, provides industry, practitioners and state revenue employees the opportunity to participate in a quality forum exploring significant national developments and trends in state and local taxation.

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In One Technologies LLC v. Franchise Tax Board, an out-of-state California corporate taxpayer filed suit in California trial court challenging the state’s mandatory single sales factor apportionment formula on the basis its passage in 2012 via voter initiative Proposition 39 unconstitutionally violated the “single subject rule.”

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Five years and six interested parties meetings later, California is finally ready to proceed with the formal rulemaking process to adopt substantial amendments to its market-based sourcing rules.  At the Franchise Tax Board’s September 9, 2021 meeting, FTB staff requested permission and received approval from its three-member Board to commence the formal regulatory process under California’s Administrative Procedure Act (APA) to amend California Code of Regulations, Title 18, section 25136-2 (Regulation 25136-2). https://seesalt.pillsburylaw.com/files/2020/05/250px-Seal_of_California.svg_.png Continue Reading ›

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Partner Carley Roberts and counsel Robert Merten III authored Part 1 of a multi-part series in Tax Notes State’s SeeSALT Digest to review the landscape of market-based sourcing rules and provide an in-depth focus on various states’ use of reasonable approximation.

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Pillsbury SALT partner Annie Huang will present during COST’s 51st Annual Meeting on October 22. cost-300x90Partnering with Robert Johnson (Crowe), Eran Liron (PwC) and Ruben Sislyan (Greenberg Traurig), Annie will present “Market Sourcing through Alternative Apportionment or Creative Characterizations of Activity,” moderated by Stephanie Do (COST). Few issues have created greater angst or spawned more litigation than state efforts to impose market sourcing of services on out-of-state taxpayers. As the service sector has grown, so has single-sales factor apportionment, which often makes market sourcing an all-or-nothing proposition to both states and taxpayers. Although many states have modified UDITPA to move from COP to market sourcing, many have not and are using tools such as Sec. 482, forced combination, and creative characterizations of benefits received. And states that changed are trying to stanch the revenue outflow from in-state service companies as well. This session will provide an overview and discussion of some of the more bizarre and inconsistent approaches taken by states on this issue.

COST’s 51st Annual Meeting offers sessions of interest to every state tax professional in industry, whether a COST member or otherwise, as well as in the consulting, accounting and legal profession. The program covers all types of state and local taxes that business taxpayers are confronted with today and provides updates on key SALT issues.

For more information and to register, please click here.

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