State Corporate Income Tax: E-Commerce Study 2018
Multistate companies increasingly sell purely electronic products and services to customers all over the country but have a physical footprint limited to one or two states. In fall 2017, Thomson Reuters sent a survey to state taxing agencies asking how these “pure e-commerce transactions” affect nexus and apportionment for state corporate income tax purposes. Thomson Reuters experts Rebecca Newton-Clarke and Emily Porter have analyzed these survey results and created a detailed study based on their findings. Read on for a look at the results.
Taxpayers engaged in pure e-commerce transactions must navigate an uncertain state income tax landscape. Most states lack guidance on the complex nexus and apportionment issues that arise in the context of these transactions. This special report covers the responses received from the 17 states that participated in this survey, as well as insights from our Checkpoint Catalyst™ experts.
- Declined to participate
- Did not reply
- Did not respond in time
We asked, "Does selling purely electronic products and services — such as music downloads, cloud computing, or genealogical research services — to customers in a state establish nexus?"13 of 17 states indicated that engaging in a purely electronic transaction may — on its own — create corporate income tax nexus4 of 17 states indicated that engaging in a purely electronic transaction will not — on its own — create corporate income tax nexus
We also asked, "If an out-of-state company does have nexus in the state, which pure e-commerce sales are sourced to the state?" For the answer to this question and more, read the full special report below.