Nexus in the Era of Telecommuting and Market-Based Sourcing
Author: Christopher L. Doyle, Emma M. Savino, Hodgson Russ LLP
| CPE Credit: |
2 hours for CPAs |
The drastic shift to remote work has created a host of issues for multistate companies, but the main tax issues relate to nexus, apportionment, and withholding on compensation. Will the presence of an employee working from home create taxable nexus for the employer in that state? How do receipts from service businesses and digital products get sourced when the service provider is using telecommuting personnel to perform those services? And what are the withholding obligations of that employer?
The Supreme Court’s Wayfair decision may create nexus in additional states, and more states are evolving to single-factor apportionment regimes. So how corporations source receipts to the various states is more important now than ever before.
This course will guide you through the legal maze helping you identify the implications of remote work, what activities in the state might subject a company to nexus for sales tax, income tax, and other tax types, and how income should be sourced in those states where the company has nexus.
Publication Date: November 2022
Designed For
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Topics Covered
- Nexus Overview
- Sales and Use Tax Nexus
- Income/ Franchise Tax Nexus
- P.L. 86-272
- Telecommuting Nexus
- COVID-19 Nexus Exceptions
- Employer Withholding
- Apportionment Formulas
- Market-Based Sourcing of Receipts
Learning Objectives
- Identify the corporate, sales tax and withholding tax implications of having employees work in different states
- Recognize and gain a practical understanding of where (in which states) an employer may have sales and/or corporate income tax nexus
- Identify the states that have a "convenience rule" and the ramifications
- Describe the nationwide shift from cost of performance to market-based sourcing of receipts
- Recognize which states use market-based or cost of performance sourcing
- Identify the type of nexus that tests whether the taxpayer has enough of a connection within a jurisdiction to be subject to the jurisdiction's taxing authority
- Identify the Public Law that was passed in order to minimize the potential income tax burden of operating in numerous states
- Identify the state that has a hybrid withholding threshold of 12 days/year and gross income of $3,000
- Identify the type of rule that removes sales to non-nexus jurisdictions from the denominator of the sales factor
Level
Overview
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
