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California began as a Joyce state, changed to a Finnigan state, reverted back to a Joyce state, and then back again to being a Finnigan state. If you find that [...]

I. Introduction One of the nagging problems in state corporate taxation is whether gross receipts should be excluded from the sales factor in the apportionment formula. Taxpayers often want to [...]

Florida Apportionment Rules Florida requires corporations to apportion income using a three-factor property, payroll, and sales apportionment formula that double-weights the sales factor. (1) The term "sales" means all gross [...]

In 2000, only a handful of states (Illinois, Iowa, Nebraska, and Texas) used a single-factor sales formula as their general-purpose apportionment formula. By 2022, most states had adopted a single-factor [...]

For the 2022 tax year, of the forty-five states (plus the District of Columbia) that impose a corporate income tax, more than thirty require the use of a single sales [...]

This is the third part of a three-part series of articles that discuss the general rules for computing the sales factor. Part I discussed the types of gross receipts included [...]

I. Sales Factor Primer, Part I A corporation that is doing business in more than one state has the right to apportion its business income among the taxing states. Most [...]

Introduction Two cases from 2021 and a third from 2018 deal with issues regarding the state tax treatment of proceeds from commodity hedging transactions. The question in all three cases [...]

A corporation that is doing business in more than one state has the right to apportion its business income among the taxing states. Most states use a single-factor sales formula [...]

Introduction The Uniform Division of Income for Tax Purposes Act (1) ("UDITPA"), promulgated by the National Conference of Commissioners of Uniform State Laws in 1957, and subsequently adopted by the [...]

During the past 20 years, two major trends in state taxation are the use of a single-factor sales apportionment formula and the use of market-based rules for sourcing sales other [...]

Michael Schadewald analyzes the growing trend of states adopting market-based sourcing rules to source the income of corporations that sell services. The vast majority of states that impose a corporate [...]

The Uniform Division of Income for Tax Purposes Act (1) (UDITPA), promulgated by the National Conference of Commissioners of Uniform State Laws in 1957 and subsequently adopted by the Multistate [...]

In 2015, the rubber met the road, and states began to accelerate the adoption of detailed regulations to accompany what is often vague statutory language to source receipts from the [...]

Apportionment Methods Constitutional Requirements A corporation that is taxable in more than one state has the constitutional right to have its business income fairly apportioned among the taxing states. (1) [...]

Traditional UDITPA Definition of Business Income Under Uniform Division of Income for Tax Purposes Act (UDITPA), business income is apportioned among the states in which the taxpayer has nexus, whereas [...]

Introduction A corporation that is doing business in more than one state is allowed to apportion its business income among the taxing states. Most states use either a single-factor sales [...]

I. Introduction In December 2012, the Multistate Tax Commission (MTC) Executive Committee approved a public hearing for proposed model amendments to Article IV of the Multistate Tax Compact ("Compact"). The [...]

The Uniform Division of Income for Tax Purposes Act (UDITPA) was promulgated in 1957. Consequently, many of its provisions are outdated. In July 2014, at its 47 th Annual Conference [...]

2013 is now over, and we take this opportunity to review a few of the state and local tax ("SALT") milestones and major stories covered last year, many of which [...]

Uniformity in state income taxation has been an issue since at least 1957, when the Uniform Law Commission developed the Uniform Division of Income for Tax Purposes Act (UDITPA) to [...]

Background A major trend in state apportionment is for states to replace the cost-of-performance rule for sourcing sales of services with a market-based rule. This trend reflects the original purpose [...]

Amajor trend in state corporate income taxes is the adoption of market-based rules for sourcing sales of services in lieu of the traditional Uniform Division of Income for Tax Purposes [...]

This is the first of a three-part series of articles which summarize the special rules for computing apportionment percentages for businesses in certain industries. Part I provides an overview and [...]

Cronin: Welcome everyone. We have some new faces around the table and some old friends. Jim Eads is an old buddy. Jim and I used to work in the retail [...]

The Multistate Tax Commission (MTC) approved amendments to key provisions of Article IV of the Multistate Tax Compact at its annual meeting on July 30, Article IV concerns the division [...]

On August 16, 2007, Illinois Governor Blagojevich signed S.B. 1544, (1) which changed the Illinois rules for sourcing sales of services. Five months later, on January 11, 2008, S.B. 783 [...]

Cronin: Welcome to everybody. It's great to be here. I'd like to welcome back Sylvia Dennen, a charter member of this group, and Joe Garrett, our special guest from the [...]

TEI's technical committees have had a busy spring, preparing comments on issues as diverse as a federal law to provide a uniform standard for taxing out-of-state workers, Alabama's add-back statute, [...]

On September 25, 2007, the U.S. Supreme Court agreed to review an Illinois case involving the state's attempt to classify as business income a $1 billion gain realized by MeadWestvaco [...]

Introduction The Uniform Division of Income for Tax Purposes Act (UDITPA) is turning 50 years old during 2007, which makes this a good time to reflect on the current state [...]

Introduction Corporations that are taxable in two or more states use apportionment formulas to determine the percentage of their business income that is taxable in each state. These formulas generally [...]

Increasingly, states are invoking alternative apportionment provisions to assert tax based on an apportionment formula that is not mandated by the state taxing statute. For example, multiple recent cases and [...]

Past items in TTA have discussed state taxation of service providers. However, with the advent of telecommuting and the explosion of electronic commerce, "sourcing" a taxpayer's receipts to a particular [...]

Overview Under Uniform Division of Income for Tax Purposes Act (UDITPA) §1 3, the payroll factor is a fraction, the numerator of which is the total amount of compensation paid [...]

Place of Delivery or Ultimate Destination Under UDITPA § 16(a), for purposes of computing the sales factor, sales of tangible personal property other than sales to the U.S. government are [...]

In recent months, the Multistate Tax Commission (MTC) has intensified its efforts to adopt significant changes to Article IV of the Multistate Tax Compact incorporating the Uniform Division of Income [...]

An argument for abolishing the distinction between business and nonbusiness income, as set out in the Uniform Division of Income for Tax Purposes Act, is presented. Topics include tests for determining type of income, the uncertainty and confusion in administering current law, the lack of clear policy for the distinction, and the advantages of eliminating the distinction and creating a standard of apportionability based on the Constitution.

A major trend in state income taxation is for states to replace the UDITPA cost of performance rule for sourcing sales of services with a market-based rule. This trend reflects [...]

Seventeen states have adopted double-weighted sales formulas (DWSF) for taxation of interstate businesses' income, discriminating in favor of in-state businesses by placing multiple taxation of out-of-state competition. Although US Supreme Court decisions permit states to create individualized apportionment formulas under the Uniform Division of Income for Tax Purposes Act (UDITPA), the Court has not looked at the discrimination inherent in DWSF, relying instead on the fair apportionment prong of the Commerce Clause in determining constitutionality. The Court should instead recognize that DWSF is actually a discriminatory sales tax incentive.

Tax executives of multistate corporations are no doubt aware that many state income tax controversies relate to formulary apportionment. Often, the central issue in these disputes is the computation of [...]

I. Introduction When the assets of a corporate business are sold, the resulting gain or loss is either apportioned among the various States in which the corporation does business or [...]