Some big state tax issues arose in 2004 that will continue into 2005 as states struggle to raise revenues and expand their tax bases by adding more businesses to their tax rolls. The editors of Sales & Use Tax Alert and State Income Tax Alert talked to leading practitioners in state taxes and pulled together what they saw as the top issues from 2004 along with their predictions on how those issues will play out in 2005. The top issues on both sales and use taxes and state corporate income taxes came down to the states’ efforts to force businesses onto the tax rolls. On the sales and use tax side, this involves states forcing business to register to collect sales and use taxes in order to do business with the state. So even businesses that clearly have no physical presence in a state might have to choose between forgoing state business or collecting sales and use taxes on all sales in that state. On the corporate income tax side, states continue to press for “economic nexus” rulings from courts. Simply put, states are asking courts to say a business that has any presence—not just a physical one—must file income tax returns and pay taxes in any state where they do business. Some states have won these cases while others saw this argument shot down when courts found physical presence was necessary for income taxes just as it is for sales and use taxes. These are just a few of the issues that CCH editors highlight in year-end review articles in Sales & Use Tax Alert and State Income Tax Alert. For the rest of the hottest issues of 2004 in state taxes, click the links below for the full articles.
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This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.
Read this article from CCH’s Journal of Taxation of Financial Products.