Apportioning Service Revenue in Corporate Tax Compliance

Navigating the Latest State Laws and Regulations

Recording of a 110-minute CPE/CLE webinar with Q&A


Conducted on Thursday, March 15, 2012

Recorded event now available

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Program Materials

This teleconference will provide tax executives a detailed briefing on the most recent state legislative, regulatory and court developments affecting multi-state companies' apportionment of revenue from service sales. The panel will offer compliance strategies on decoding and adjusting to these developments.

Description

Change is constant when it comes to state income tax laws and policies governing companies that sell services, either exclusively or in tandem with physical products. California's passage in recent months of much-awaited new rules on sourcing of services under single-sales apportionment offers just one example.

But, there have been others in recent months, like Michigan's decision to keep the Finnigan approach with its new corporate income tax. The Multistate Tax Commission is working on a recommended, narrowed definition of "sales," and on-point laws and regs were adopted or vetoed in Utah, Arizona and Alabama.

Corporate taxpayers must adapt state tax compliance and planning in response to an array of material new laws, regulations and standards involving sourcing of service revenue and apportionment changes, plus proposals before legislatures. Constant vigilance and analysis is needed from tax advisors and executives.

Listen as our panel of veteran tax advisors suggests strategies for fine-tuning your company's tax compliance and planning in response to the dynamic and varying treatment of service revenue by state tax authorities.

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Outline

  1. Sales-sourcing approaches: cost of performance vs. market-based
    1. Examples of states currently using each approach
    2. Service performance and service benefits examples and alternatives
    3. Tax planning issues and alternatives to consider in this area
  2. Trend in state apportionment formulae
    1. States that already have shifted to single-sales or heavier sales-weighting
    2. Service performance and service benefits examples and alternatives
    3. Tax planning issues and alternatives to consider in this area
    4. Recent developments
      1. California Amended Reg. 25136
      2. Multistate Tax Commission revision of model, narrowed definition of "sale"
      3. Alabama House Bill 434 on market performance
      4. Utah Amended Rule R865-3C-1 on greatest benefit
      5. Arizona veto of Senate Bill 1552 on greatest benefit
      6. Microsoft loss in California court on software license royalties
      7. Other state examples
    5. Treatment of specific industries
    6. Recent litigation of note
  3. Implications in states with non-income taxes
    1. E.g: Texas margin tax, Ohio CAT
    2. These states’ approaches to apportioning services
  4. Practical implications for corporate taxpayers

Benefits

The panel will bring you current on these and other critical areas:

  • Evolving implications for service businesses under the new state tax schemes.
  • Responding when a state alters its approach to sourcing sales.
  • Tax-planning structures and alternative apportionment proposals that you should consider now.

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Michael Wynne
Michael Wynne

Partner
Reed Smith

He works on state and local taxation and tax planning issues. Previously, he led the SALT practice for the...  |  Read More

Mark Siegel
Mark Siegel
Senior Tax Manager
BDO USA

He leads the firm's Southeast State and Local Tax Practice and has more than 15 years of SALT experience. He has...  |  Read More

Peter Stathopoulos
Peter Stathopoulos

Managing Director, State and Local Tax Group
Bennett Thrasher

He has practiced in the areas of state and local taxation and economic development incentives since 1993. He previously...  |  Read More

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