Economic Nexus and State Income Taxes: Responding to Latest Developments

Description

Tax professionals at multi-state companies must be vigilant about states' economic nexus standards for corporate income taxes. The West Virginia high court recently invalidated assessments against a company with nationwide licensing of trademarks and no other presence in the state.

In addition, Tennessee lawmakers decided to require state pre-approval of any subtraction of inter-company intangible expenses. An Oklahoma court held no nexus for an affiliate that just held trademarks, while a Virginia ruling found nexus based on the presence of a Web server in the state.

As the ranks of economic nexus states swell, tax pros must understand regulatory subtleties, state law variations, and impact of case law to ensure full, accurate compliance. You need a proactive approach to identify where and how nexus is triggered in order to avoid penalties and unexpected tax burdens.

Listen as our panel of experienced state tax advisors thoroughly examines the latest federal and state developments in economic nexus and explains how those changes affect corporate income tax compliance.

Outline

1. Recent court developments
   1. W.Va. Supreme Court of Appeals No. 11-0252, Griffith v. State Tax Commissioner
      1. Company with no physical presence did not trigger nexus based on royalty income from licensing trademarks nationwide
   2. Okla. Supreme Court No. 108943, In re: Scioto Insurance Co.
      1. Affiliate in different industry didn't create nexus by holding the taxpayer's trademarks
   3. Minn. Tax Court Decision No. 8168-R, Skagen Designs Ltd. v. Commissioner
      1. Use of in-state merchandisers who made reports and trained customers triggered nexus
   4. Va. Tax Commissioner's Ruling No. 12-36
      1. Virginia server for marketing website triggered nexus
   5. Others
2. Recent legislative and regulatory developments
   1. Tenn. Senate Bill 2234,
      1. State pre-approval required for any subtraction of inter-company intangible expenses
   2. Others
3. Related issue: extent to which non-resident partners and LLC members create nexus
   1. Court interpretations
4. Actions to consider by corporate tax departments
   1. Nexus reviews
   2. Voluntary disclosure agreements
   3. Amnesty program participation
5. Developments on the horizon in key states and Congress

Benefits

The panel will provide an in-depth analysis of these and other developments and trends:

• What you need to know about federal and state court decisions and legislative and regulatory developments.
• How combined reporting, addback and throwback laws indirectly widen states' economic nexus nets.
• Whether voluntary disclosure or amnesty programs offer opportunities to mitigate penalties.

Upon completing this seminar, you will be more familiar with recent court, legislature and revenue agency actions imposing or revising economic nexus in states where your company has different types of activity. You will be better positioned to evaluate and make decisions about voluntary disclosure agreements, amnesties and internal nexus reviews.

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