Shaking things up in state and local tax
Shaking things up in state and local tax
By Ted Friedman and Andrew Appleby
The Indiana Department of Revenue determined that an audit correctly required a distribution and manufacturing subsidiary of a tobacco company to file a combined return with its corporate affiliates. The Audit Division concluded that the subsidiary’s income, as reported, did not fairly reflect its Indiana source income because of…
By Zachary Atkins and Timonthy Gustafson
The Indiana Department of State Revenue determined that a corporation that entered into a factoring arrangement with its parent did not have nexus for Indiana Financial Institutions Tax (FIT) purposes. The out-of-state corporation purchased accounts receivable from its parent and, thereafter, was responsible for servicing those accounts. The parent…
By Sahang-Hee Hahn and Timothy Gustafson
The Indiana Department of Revenue required an out-of-state clothing company and its subsidiary to file a combined Indiana corporate income tax return, determining that the taxpayer’s transfer pricing study was insufficient to establish that its intercompany transactions were conducted at arm’s length. The taxpayer was the parent of a…
By Ted Friedman and Prentiss Willson
The Indiana Department of Revenue determined that affiliated entities of an out-of-state manufacturing corporation were not unitary. The corporation conducted marketing operations as one business segment and production operations as a second business segment. The corporation included its marketing entities in its Indiana consolidated return. On audit, Department staff…
By Stephanie Do and Andrew Appleby
The Indiana Department of Revenue determined that an out-of-state wireless communications equipment wholesaler’s in-state business activities were protected by P.L. 86-272, and therefore, the wholesaler did not have nexus for Indiana corporate income tax purposes. The wholesaler’s in-state activities were limited to shipping products to Indiana customers by common…
By Zachary Atkins and Timothy Gustafson
The Indiana Department of State Revenue issued two letters of findings in which it concluded that a multistate corporation and its subsidiary were not entitled to source their receipts from franchise agreements based on costs of performance (COP) for corporate income tax purposes. The parent corporation entered into franchise…
By Jessica Kerner and Timothy Gustafson
The Indiana Department of Revenue determined that the storage of advertising catalogs in Indiana, for a taxpayer’s out-of-state clients, did not create sales tax nexus for such clients. The taxpayer stored the catalogs at its facilities in Indiana prior to distributing the catalogs to recipients throughout the United States.
By David Pope and Andrew Appleby
The Indiana Department of Revenue determined that storage of advertising catalogs in Indiana, for a taxpayer’s out-of-state clients, did not create corporate income tax nexus for such clients. The taxpayer, located in Indiana, stored and distributed catalogs for its clients. Indiana does not define “doing business” statutorily, but the…
The Indiana Department of Revenue determined that a taxpayer and its two affiliated entities were not required to report their income using a “separate accounting” method because the Department’s audit staff failed to prove the standard apportionment formula did not fairly reflect the taxpayer’s business activities in Indiana. The taxpayer, a manufacturer…
By Madison Barnett and Prentiss Willson
The Indiana Department of Revenue determined in a Letter of Finding that an out-of-state information service provider must apportion its receipts from sales to Indiana customers to Indiana in a market-sourcing-like manner, even though the majority of its costs were incurred outside Indiana. The taxpayer provided information services electronically…
