One Telecommute Employee Can Subject a Business to Corporate Income Tax in More States
One Telecommute Employee Can
Subject a Business to Corporate Income Tax in More States
The sudden shift to remote
work for many corporations in response to Covid-19 may lead to costly
compliance burdens as 36 state tax departments indicate that having just one
employee telecommuting from their state will create nexus for ...
Jul 16th, 2020
The sudden shift to remote
work for many corporations in response to Covid-19 may lead to costly
compliance burdens as 36 state tax departments indicate that having just one
employee telecommuting from their state will create nexus for corporate income
tax.
This is just one of the key
findings from the 20th annual Bloomberg Tax & Accounting Survey of
State Tax Departments, which incorporates input on income and sales tax issues
that matter most to corporations from senior state tax department officials
from all 50 states, Washington, D.C., and New York City. An executive summary
of the survey is available at http://onb-tax.com/WnbC50AwM3k.
The 2020 survey focuses on
the impact of the Covid-19 pandemic on compliance, nexus issues, state sourcing
provisions, the taxation of pass-through entities, the transition to economic
nexus, and state tax policy for marketplace facilitators. The survey also
explores how states are implementing their economic nexus rules post-South
Dakota v. Wayfair, with a focus on economic nexus threshold calculations.
“The 2020 survey sheds light
on how state tax departments are responding to the unique challenges posed by
the Covid-19 pandemic and provides guidance for corporate tax professionals
looking to navigate these murky waters,” said Christine Boeckel, director, state
tax analysis and content, Bloomberg Tax & Accounting. “For decades, tax
professionals have relied on Bloomberg Tax to help them know, understand, and
take decisive action in arenas such as state tax that are fraught with
variation, complexity, confusion and ambiguity. This survey is a resource our
subscribers turn to for clarity given states’ lack of clear guidance on the
types of activities that trigger nexus and taxability.”
“The Bloomberg Tax &
Accounting State Tax Survey is indispensable in providing quick state tax
guidance,” said Bruce P. Ely, partner, Bradley. “I can almost always find an
answer to the question I’m researching and I’ve found the survey to be the most
comprehensive, easy-to-search resource of its kind.”
Additional survey findings
include:
Thirty-six states, more than
double the number of pre-Wayfair responses in 2018, said they have an
economic nexus standard for sales tax nexus.
Sixteen states said that a
third-party vendor is obligated to collect sales tax on delivery or errand services
that are arranged by the third-party vendor, such as Postmates, Grub Hub, and
Task Rabbit, while only five said this obligation was imposed on the delivery
or errand person.
Twenty-seven states said that
marketplace facilitators such as eBay and Etsy are required to collect sales
and use tax on sales made via their platforms by marketplace sellers, provided
they have nexus with the taxing jurisdiction. Twenty-three of these states said
that marketplace sellers are relieved of liability for tax that is supposed to
be collected by a marketplace facilitator.
Thirteen states said they
make adjustments, determine imputed tax, and assess and collect tax at the
entity level for partnerships, while 25 states said they do so at the owner
level. Nine states said they do so at both levels.
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