State Tax Snapshot: 2013 BBNA State Tax Department Survey to Cover Additional Topics

 The 2013 Bloomberg BNA Survey of State Tax Departments will cover additional topics concerning state taxation. The annual survey aims to provide answers to certain gray areas for which state tax departments typically offer little guidance. Each year, new queries are added to the questionnaires that are sent to state tax department officials in the fall.

 The questionnaire for the survey that will be published in April asks revenue officials to provide more details regarding issues such as:

  •   Trailing income tax nexus (i.e., a substantial nexus determination resulting from an activity that a taxpayer ceased doing at some point during the taxable year). Each state will be asked whether trailing nexus will be found for the remainder of the year or longer.
    •   The income tax nexus consequences of telecommuting. For years, most states have indicated that income tax nexus will result for an out-of-state corporation with an employee that telecommutes from within the state’s borders. This year, we’re asking these states if they would reach the same determination if the employee was performing back-office administrative functions such as payroll.
      •   Income and sales tax nexus from occupying space on an in-state web server. Queries will seek to identify the specific types of activities with regard to servers that will create nexus. For example, is a corporation that owns a server in a state more likely to trigger nexus than a corporation that merely leases one?
        •   The burden of proof a taxpayer must satisfy in order to invoke a state’s alternative apportionment regime. Is it preponderance of the evidence or clear and convincing evidence?
          •   The state income tax treatment of non-U.S. entities. For instance, does the state extend the protections under Pub. L. No. 86-272 to non-U.S. entities?

             We look forward to sharing the state tax department officials’ answers to these and other questions when our survey is published in April.  

            By Steven Roll

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