Bloomberg BNA’s 16th Annual Survey of State Tax Departments Highlights Pass-Through Entities, Reporting Federal Changes and Industry-Specific Sourcing


The state tax arena is more complex and ambiguous than ever. For the 16th consecutive year, the Bloomberg BNA Survey of State Tax Departments seeks to clarify tax positions for all 50 states, plus the District of Columbia and New York City. 

The Survey of State Tax Departments provides vital guidance on the gray areas of state taxation, with a focus on nexus and income sourcing policies. The survey also offers subscribers the ability to compare and contrast states’ answers, providing a valuable multistate perspective.

New portions of the survey address the taxation of pass-through entities, reporting federal changes, and sales tax refunds and qui tam cases. The survey also features new sections for special industry sourcing rules, including airlines, radio and television broadcasting companies, and oil and gas. 

Key takeaways from the survey include:

  • As the need for tax revenue increases, states are becoming more aggressive with their nexus determinations. For example, 20 states said that an employee flying into the state for businesses purposes would create nexus.
  • States continue to vary in their income tax nexus standards, with fewer states applying physical presence nexus. The number of states indicating that they follow Quill for income tax purposes has fallen to an all-time low of five, while the number of states indicating that they follow a factor presence standard has risen to a total of six.
  • States are often split in their treatment of pass-through entities, or they have little to no guidance in areas such as apportionment and combined reporting. For example, states gave conflicting answers regarding the apportionment of guaranteed payments to nonresident partners, and many states had no answer at all.
  • The shift towards market-based sourcing continues, especially for cloud computing, where 18 states indicated they use a market-based method. States are still unable to agree on how to source receipts from services and sales of other than tangible personal property.
  • States are increasing their focus on remote sellers by developing new click-through nexus policies, or by imposing sales tax nexus on activities essential to remote sales. For example, 14states indicated the use of a contract carrier to deliver goods into the state was sufficient to trigger nexus. 

For more information about other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.