Navigating Conflicting State Nexus Regulations, Reconciling the Two for Taxpayer Benefit
A live 110-minute CPE webinar with interactive Q&A
Thursday, June 8, 2023
1:00pm – 2:50pm EST, 10:00am-11:50am PST
This course will explain nexus as outlined in PL 86-272, the sometimes conflicting nexus regulations established by individual states, and how to reconcile the two for the benefit of the taxpayer.
PL 86-272 is still alive and well; for sellers of tangible personal property post-Wayfair, more so than ever. But the Multistate Tax Commission (MTC) and the state of California have adopted controversial expanded interpretations to capture more internet-based activities.
Most states have or are in the process of adopting bright-line tests for sales tax nexus. The effects of Wayfair are seeping into the determination of state income tax nexus as well. In response, businesses are increasingly relying on the protection of PL 86-272 to circumvent the broadening reach of economic nexus and avoid out of state taxation.
PL 86-272 prohibits a state from taxing an out of state company’s net income if its only activity is the solicitation of orders for the sale of tangible personal property within the state. Wayfair clearly states that physical presence is not necessary to establish nexus; having “substantial economic nexus” is sufficient. Additionally, SCOTUS did not hear challenges from companies required to remit tax in states that had implemented non-physical presence nexus standards before Wayfair.
Many states are taxing entities based on gross receipts or similar thresholds. Oregon joined as many as eight other states in taxing gross receipts with its Commercial Activity Tax effective in 2020. Reassessing tax liability impacts more than tax liability: Companies must update financial statement provisions, including current and deferred taxes, uncertain tax benefits, and related disclosures. SALT advisers and companies must reevaluate prior nexus determinations for both sales and state income tax liability.
Listen as our panel of experts explains which companies come under the umbrella of PL 86-272, which states are narrowly interpreting PL 86-272, and how to assess potential liability in states in this continually changing post-Wayfair environment.
- Nexus before Wayfair
- Falling under PL 86-272
- States’ responses
- Reevaluating nexus for state sales and income tax
- Financial statement adjustments
The panel will review these and other critical issues:
- When can a business rely on PL 86-272?
- What conflicts exist between PL 86-272 and economic nexus?
- How are states interpreting PL 86-272 in light of Wayfair?
- What steps should be taken when determining state nexus considering Wayfair and PL 86-272?
Stacey L. Roberts, CPA
State and Local Tax Director
Ms. Roberts finds the singular state and local tax (SALT) area fascinating and is energized by the daily challenges to design solutions that improve business tax outcomes. With 20+ years of public and private sector accounting experience, both practical and in management, she’s gained the essential business acumen necessary to be a key advisor to clients. Ms. Roberts works closely with business clients managing all compliance issues related to state income/franchise, state and local sales and use, real and personal property and unclaimed property taxes for flow through entities and C corporations; identifying planning opportunities and state and local credits and incentives; and, mitigating state and local tax controversy issues with auditors and taxing jurisdictions.
Stacey began her career with Andersen Worldwide/Andersen LLP, where she began to hone her state and local tax experience. She added stints at KPMG and Deloitte before moving in-house with Ball Corporation as their manager of State and Local Tax Administration. An interlude with a regional tax firm followed before Stacey joined TaxOps. Ms. Roberts is a frequent speaker and author on SALT issues for industry and professional organizations including the Denver Tax Institute, Product PowerUp, NowCFO and more.
Judith B. Vorndran, JD, CPA, MSBA
Ms. Vorndran helps clients and tax professionals navigate the morass of state and local tax issues with the goal of making it less “taxing!” She is a nationally recognized thought leader and award-winning instructor with a steady focus on finding ways to simplify complex state and local tax issues and resolve areas of state tax controversy.
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