Thomson Reuters has released the second annual Checkpoint Catalyst special report, State Corporate Income Tax: E-Commerce Study 2018, an important examination of which states impose corporate income taxes on out-of-state companies that sell purely digital products and services to in-state customers.
Much of the debate surrounding pure e-commerce transactions centers on sales and use taxes, but experts agree that the corporate income arena poses equally urgent issues and fewer answers. This yearly report is based on a survey of states’ approaches.
In an effort to assist lawyers, accountants, and businesses in navigating this uncertain landscape, the Checkpoint Catalyst editorial team sent a detailed survey to state taxing agencies seeking guidance on how they approach a variety of pure e-commerce transactions, including cloud computing, digital products, and many others. The survey focuses on the fine points of corporate income tax nexus and apportionment; whether a state can impose tax on a seller whose only contact with the state is engaging in purely digital transactions and, if so, how the state sources the receipts.
“Thomson Reuters is proud to launch the results of its second annual survey, illuminating a relatively unexplored area of state income tax, but one which is sure to take on greater importance for companies that sell to multiple states,” said Salim Sunderji, managing director, Checkpoint, with the Thomson Reuters Tax & Accounting business.
“This year’s results continue to reflect a broad range of state responses to questions involving corporate income tax nexus and apportionment for pure e-commerce. Tax and accounting professionals whose clients engage in these types of transactions will benefit from the high-level overview,” he added.
The report summarizes the survey results, which include responses from states that were unable to provide detailed blueprints of their digital tax plans, those that impose corporate income taxes on out-of-state sellers making pure e-commerce sales but lacking a physical presence in the state, and those that do not impose corporate income taxes on out-of-state sellers making pure e-commerce sales.
Checkpoint Catalyst is a collection of multijurisdictional analyses of specific tax issues and business transactions from a practical workflow perspective, covering implications at the federal, state and US international levels. Related topics in the Checkpoint Catalyst library include:
The free report is available for download here.
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