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Posts tagged "out-of-state"

Out-of-State Trusts Can Now Participate in California Voluntary Disclosure Program

On September 25, 2017, Governor Brown signed S.B. 813 into law, which, effective January 1, 2018, expands the existing California state voluntary disclosure program to include out-of-state trusts with California beneficiaries and non-resident partners. Such taxpayers will now be eligible to use the voluntary disclosure program to bring non-California trusts into compliance with California state tax laws. In addition, the Franchise Tax Board (FTB) may waive late-filing penalties for certain types of entities and returns under the program.

IRS Data Indicates Taxpayers Leaving California - Be Certain to Exit Correctly

The IRS released its most recent State-to-State Migration Data which summarizes information gleaned from individual income tax returns. Trends indicate that taxpayers are migrating into states including Texas, Florida, Colorado, and South Carolina, whereas taxpayers are leaving New York, Illinois, California, New Jersey, and Pennsylvania. Conclusions regarding the reasons taxpayers move may vary; however, self-interest usually prevails. Not surprisingly, the trend indicates taxpayers are leaving states with higher income tax rates and moving into states like Texas, which has no individual income tax. If you are a California resident and plan to either permanently change your tax domicile to another state, or become a part-year resident, it is important to make sure you take the necessary steps to end your residency with California and that you understand any continuing tax obligations you may have in California. Taxpayers should consult a California tax professional for complete advice on California income tax obligations or if contacted by California in a tax residency audit.

California FTB Provides Non-California Businesses with Information on Income Apportioning

The complexity of California income tax laws for non-California businesses is not new. Whenever nonresident businesses have income sourced to California, California will assess income tax in many cases. Public Law (PL) 86-272 still exempts out-of-state businesses from California income tax if their California activities qualify. This generally means the business' only connection to California is that of soliciting orders for sales of tangible personal properties, in which the orders are sent outside of California for approval and filled from inventory maintained outside of California (and not shipped into California by the out-of-state business' own vehicles into California). Beginning with taxable years on or after January 1, 2013, all apportioning trades or businesses must assign sales of "other than tangible personal property" under the new market-based rules. Some industries will follow the special industry apportionment and allocation regulations. To read more, click here.

California FTB Provides Non-California Businesses with Information on Income Apportioning

The complexity of California income tax laws for non-California businesses is not new. Whenever nonresident businesses have income sourced to California, California will assess income tax in many cases. Public Law (PL) 86-272 still exempts out-of-state businesses from California income tax if their California activities qualify. This generally means the business' only connection to California is that of soliciting orders for sales of tangible personal properties, in which the orders are sent outside of California for approval and filled from inventory maintained outside of California (and not shipped into California by the out-of-state business' own vehicles into California). Beginning with taxable years on or after January 1, 2013, all apportioning trades or businesses must assign sales of "other than tangible personal property" under the new market-based rules. Some industries will follow the special industry apportionment and allocation regulations. To read more, click here.

BNA Article Argues that Quill Safe Harbor Extends to Sales of Intangibles Through the Internet.

The Bureau of National Affairs (BNA) has published an article which argues that the activities involved in selling intangible goods, such as songs and digital books, by means of the Internet are not sufficiently connected to states so as to permit states to tax them. The article confines its analysis to an explication of Commerce Clause "nexus," but it also asserts along the way that the selling of intangibles on the Internet may also be protected from taxation by the Due Process Clause.

Do you have an out-of-state corporation? Do you know your obligations?

If your out-of-state corporation conducts any business in California, your corporation may have an obligation to file and pay taxes in California. Additionally, California residents are taxed on world-wide income.
Therefore, California residents, who receive income from out-of-state corporations, regardless of whether the corporation conducts business in California, are taxed on the income. The Law Office of Williams & Associates can assist your corporation and /or you in resolving your California compliance obligations.

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