Sales taxes are imposed by all but five states. While the types of sales that are subject to tax vary significantly by state, virtually all sales tax states look to the actual consideration paid by the buyer to the seller to determine the sales price. Despite this long-standing and almost uniform measure of the sales tax base, some states have recently attempted to artificially inflate the sales price by imputing additional consideration over the amount paid by the buyer to the seller.

Using California as an example, Eversheds Sutherland attorneys Tim Gustafson, Eric Tresh and Liz Cha discuss recent attempts by states to artificially inflate the sales price and why these attempts are likely to fail in their recent article for Tax Notes State.