Join Stacey Roberts and Meredith Smith as they prepare multistate tax practitioners and businesses for potential state apportionment audits during this CPE program at Strafford.
Handling State Apportionment Audits
Defending Methods and Throwback/Throwout Distributions
A live 110-minute CPE webinar with interactive Q&A
Monday, February 26, 2024 | 1:00 PM EST | 11:00 AM MST
This webinar will prepare multistate tax practitioners and businesses for potential state apportionment audits. Our panel of state income tax veterans will review the latest developments in apportionment audits in particular states, explain differences in state sourcing methods, and discuss the application of throwback/throwout and the Joyce/Finnigan rules. They will offer concrete suggestions on selecting, documenting, and supporting apportionment allocations in anticipation of a state examination.
The number of state tax audits continues to escalate. California’s Franchise Tax Board’s website states that for assessments finalized during its 2022 fiscal year-end, “For corporation income and franchise taxes, the largest dollar amount in proposed assessments resulted from allocation and apportionment audits, which involves corporations doing business within and outside of California.” The lucrative nature of these audits and the complexity and varying nature of state guidelines for apportionment dictate that the number of these examinations will continue to increase.
Apportionment is the act of attributing income by state for multistate entities. More and more states are adopting the sales factor as the only, or highest weighted factor, for assignment of income. Sales sourcing methods vary by state, with a majority favoring market-based sourcing while some use a cost of performance or another method. Some states have throwback rules insisting that sales not taxed by a state are allocated to the state where the sale originated. SALT practitioners and businesses must determine the most appropriate methodology for computing sales by state and be able to support and document this method in the event it is challenged by a state or state(s).
Listen as our panel of SALT experts explains best practices for calculating, documenting, and defending state apportionment methods.
- State Apportionment Audits – Introduction
- Apportionment methods
- Sourcing sales
- Tangible property
- Remote employees
- Reviewing income tax returns
- Apportionment workpapers
- Defending throwback and throwout allocations
- Joyce and Finigan rules
- Other considerations
The panel will cover these and other critical issues:
- The status of state apportionment examinations in certain states
- Preparing apportionment workpapers with potential audits in mind
- Reviewing prior income tax returns for apportionment issues
- Defending throwback and throwout allocations
Stacey Roberts, CPA
Director, State and Local Tax
Stacey Roberts, CPA, is State and Local Tax Director at TaxOps in Denver. She works closely with business clients managing all compliance issues related to state income/franchise and sales and use tax for flow through entities and C corporations across various industries; identifying planning opportunities and state and local credits and incentives; and mitigating state and local tax controversy issues with auditors and taxing jurisdictions. Her 25 years of experience in state and local tax also includes three of the Big Four accounting firms and a Fortune 500 company. She is a member of the Colorado Legislative Tax Policy Task Force through 2026 and a frequent speaker and author on SALT issues including the Journal of State Taxation, Strafford Publishing, and more.
Meredith Smith, CPA
Senior Manager, State and Local Tax
Meredith Smith, CPA, expertly weaves real-life examples into why business taxpayers, tax professionals, and tax providers should care about complex state and local tax (SALT) issues. This knowledge comes from expertly navigating the web of tax laws governing SALT issues for 15 years. From working with clients inside their business, she knows the questions, issues and strategies for resolution that keep businesses on the tax compliance track. Ms. Smith combines technical knowledge and in-depth industry understanding in performing nexus studies, identifying areas of risk, and designing sustainable planning opportunities for achieving tax-specific business goals. Her practice covers state income tax, property tax, sales and use tax, and business incentives and credits. Prior to TaxOps, Ms. Smith was a member of the SALT practice at KPMG, serving large, multi-jurisdictional corporations and multi-tier partnerships across industries.
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