Presenting a live 110 ‐ minute teleconference with interactive Q&A Nexus Reviews: Uncovering State Sales or Income Tax Obligations Sales or Income Tax Obligations Designing an Effective Internal Process to Identify Potential Tax Exposures WEDNESDAY, AUGUST 1, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Mark Loyd, Partner, Bingham Greenebaum Doll , Louisville, Ky. y , , , , y g Mark Yopp, Attorney, McDermott Will & Emery , New York Merrill Barter, Tax Senior Manager, Baker Newman Noyes , Portland, Maine For this program, attendees must listen to the audio over the telephone. Please refer to the instructions emailed to the registrant for the dial-in information. Attendees can still view the presentation slides online. If you have any questions, please contact Customer Service at1-800-926-7926 ext. 10 .
Conference Materials If you have not printed the conference materials for this program, please complete the following steps: Click on the + sign next to “Conference Materials” in the middle of the left- • hand column on your screen hand column on your screen. Click on the tab labeled “Handouts” that appears, and there you will see a • PDF of the slides for today's program. Double click on the PDF and a separate page will open. Double click on the PDF and a separate page will open. • Print the slides by clicking on the printer icon. •
Continuing Education Credits FOR LIVE EVENT ONLY Attendees must listen to the audio over the telephone . Attendees can still view the presentation slides online but there is no online audio for this program. Attendees must stay on the line for at least 100 minutes in order to qualify for a full 2 credits of CPE. Attendance is monitored as required by NASBA. Please refer to the instructions emailed to the registrant for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 . at 1 800 926 7926 ext. 10 .
Tips for Optimal Quality S S ound Qualit y d Q lit For this program, you must listen via the telephone by dialing 1-866-873-1442 and entering your PIN when prompted. There will be no sound over the web co connection. ect o . If you dialed in and have any difficulties during the call, press *0 for assistance. You may also send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. Viewing Qualit y To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again press the F11 key again.
N Nexus Reviews: Uncovering State Sales R i U i St t S l or Income Tax Obligations Seminar Aug. 1, 2012 Mark Loyd, Bingham Greenebaum Doll Mark Yopp, McDermott Will & Emery mloyd@bgdlegal.com myopp@mwe.com Merrill Barter, Baker Newman Noyes mbarter@bnncpa.com
Today’s Program Constitutional Nexus Issues In A Multi-State Perspective C tit ti l N I I A M lti St t P ti Slide 7 – Slide 17 Slid 7 Slid 17 [Mark Loyd] Special Situations With Sales Corporate Income Taxes Special Situations With Sales, Corporate Income Taxes Slide 18 Slide 45 Slide 18 – Slide 45 [Mark Y opp] Slide 46 Slide 55 Slide 46 – Slide 55 Translating Nexus Awareness Into Practical Nexus Reviews Translating Nexus Awareness Into Practical Nexus Reviews [Merrill Bart er] Slide 56 – Slide 57 Slide 56 Slide 57 Outsourced Nexus Reviews Outsourced Nexus Reviews [Merrill Bart er] Slide 58 – Slide 61 Implementing Action Items From Nexus Reviews Implementing Action Items From Nexus Reviews [Mark Loyd, Mark Y opp and Merrill Bart er]
Mark Loyd, Bingham Greenebaum Doll CONSTITUTIONAL NEXUS CONSTITUTIONAL NEXUS ISSUES IN A MULTI ‐ STATE PERSPECTIVE
Nexus Requirements And Limitations In Nexus Requirements And Limitations In The U.S. Constitution And Federal Law Commerce Clause • D Due process • P L 86 272 P .L. 86-272 • • 8
Commerce Clause Requirements For Nexus Complet e Aut o test requires “substantial nexus ” Complet e Aut o test requires substantial nexus. • What is substantial nexus? • ― Quill Corp. v. Nort h Dakot a (1992) (sales tax): Physical presence is required required. ― State court case examples (income tax, etc.) ― State courts tend to opine that physical presence is not required, b t SCOTUS has not so opined but SCOTUS has not so opined. ― Tax Comm’ r of W.Va. v. MBNA America Bank, N.A. (W.Va. 2006): Continuous and systematic in-state solicitation and promotion are significant economic presence sufficient to create nexus significant economic presence sufficient to create nexus. ― Griffit h v. ConAgra Brands, Inc. (W.Va. 2012) (income tax): Placement of trademarks and trade names, in the stream of commerce via licensees’ products, is insufficient to create nexus. p , 9
D Due Process Clause Nexus P Cl N Due process requires a “minimum connection.” • What is a minimum connection? • ― General vs. specific jurisdiction G l ifi j i di ti ― General: Continuous and systematic general business contacts ― Goodyear Dunlop Tires Operat ions, S .A. v. Brown (2011) ― Specific: Purposeful availment (“targeting” the forum required?) ― J McInt yre Machinery Lt d V Nicast ro (2011) . Nicast ro (2011) J. McInt yre Machinery, Lt d. V 10
Due Process Clause Nexus (Cont.) l ( ) Distinctions between Commerce Clause and Due Process nexus • ― Availability of Congressional override - Quill ― C Congress can override dormant Commerce Clause id d t C Cl requirements. ― Congress can’t override Due Process Clause g requirements. ― Does the Due Process Clause require more, the same or less of a connection than does the Commerce Clause? less of a connection than does the Commerce Clause? 11
Common Nexus: Triggering Business Activities State tax statutorily defined nexus requirements – subject to • Constitutional Constraints ― Doing business (co-extensive with constitutional Doing business (co extensive with constitutional standards) ― Bright-line factor nexus ― Based on defined level of property ( e.g. , $50k or 25%); payroll ( e.g. , $50k or 25%); or sales ( e.g. , $500k or 25%) 25%) ― Examples: Ohio (CAT), Michigan, California, Colorado, Connecticut, Oklahoma (BAT), Washington (B&O) 12
Common Nexus: Triggering Business Activities (Cont.) State tax administrators can assert certain activities create nexus State tax administrators can assert certain activities create nexus. • • Physical presence - Quill • ― Property ― Real property – land, building, etc. ― Leased property – office, etc. ― P Payroll (employees) – unemployment wages, withholding wages, ll ( l ) l i hh ldi etc. Attributional nexus via in-state representatives, e.g. , independent • contractors who help to maintain a market – S cript o; Tyler Pipe ― Click-through nexus statutes (so-called “Amazon statutes”) Affiliate nexus Affiliate nexus • • Economic nexus • 13
D Mi i De Minimis Exceptions i E i De minimis property, e.g. , software – Quill • P L 86 272 P .L. 86-272 • 14
P.L. 86 ‐ 272 (Income Tax Exception From Nexus) P .L. 86-272, enacted by Congress in 195, provides an exception from , y g , p p • nexus (15 U.S.C. §§ 381 to 384). Response to Nort hwest ern S t at es Port land Cement Co. v. Minnesot a , • upholding imposition of income tax on out-of-state corporation that upholding imposition of income tax on out of state corporation that solicited orders and maintained an in-state office Restricts a state from imposing an income tax when a business’ only • activity is the solicitation of orders for tangible personal property in activity is the solicitation of orders for tangible personal property in the state that are approved and filled from outside of the state Protection does not extend to: • ― Imposition of tax by state of incorporation ― Sales of services ― Income from Intangibles Income from Intangibles ― Taxes other than income taxes 15
P.L. 86 ‐ 272 (Income Tax Exception From Nexus), Cont. What constitutes solicitation? – Wrigley • Examples of sales representatives’ protected activities • ― C Carrying samples and promotional materials gratis i l d ti l t i l ti ― Furnishing display racks gratis ― Providing automobiles Providing automobiles ― Checking inventories for re-order (but not quality control) ― Recruiting, training, evaluating sales personnel (using Recruiting, training, evaluating sales personnel (using homes, hotels, etc.) ― Indirect solicitation of orders ( e.g. , from retailers that order from wholesaler customers of manufacturer) d f h l l f f ) 16
P.L. 86 ‐ 272 (Income Tax Exception P.L. 86 272 (Income Tax Exception From Nexus), Cont. Examples of activities that may not be protected • ― Repairs ― I Installation t ll ti ― Collections ― Repossessing Repossessing ― Picking up damaged goods 17
Mark Yopp, McDermott Will & Emery SPECIAL SITUATIONS WITH SPECIAL SITUATIONS WITH SALES, CORPORATE INCOME TAXES
19 Sales And Use Taxes www.mwe.com
Sales And Use Tax Nexus 1. Direct presence: The taxpayer’s own physical presence 2. Attributional nexus: Activities of third parties Representative Alter ego Unitary www.mwe.com 20
Recommend
More recommend
