What's your favorite State Tax Conference (CPE)?

Here are a few SALT conferences I think are good.

Sales Tax Institute (http://www.salestaxinstitute.com) from my friend, Diane Yetter. The Institute offers live in person 3 day classes – Basics of Sales Tax and Advanced Sales Tax Workshop. These are highly rated and differ from the larger offers as they are much more intimate and provide an excellent learning opportunity. The Institute also offers monthly webinars that are not a sales pitch, but provide in depth educational content. They also have a self study online class with another coming soon.

Georgetown Advanced SALT Institute - https://www.law.georgetown.edu/continuing-legal-education/programs/cle/state-and-local-tax-institute/

Paul Hartman - http://www.hartmansaltforum.org/conference_registration

IPT has several - https://www.ipt.org/

NYU SALT conference - http://sps.nyu.edu/academics/departments/finance-tax-and-law/conferences-events/institute-on-state-and-local-taxation.html

Interstate Tax Corporation - http://www.interstatetaxcorp.com/seminars.htm

University of Milwaukee-Wisconsin SALT certificate program - https://uwm.edu/business/research/centers-institutes/deloitte-center-for-multistate-taxation/

DMA puts on several - https://www.dmainc.com/

COST and TEI have several, but only industry tax professionals are allowed to attend. 

http://www.cost.org/

https://www.tei.org/Pages/default.aspx

I would also look at the Big 4 firm websites (Deloitte, PwC, EY, KPMG), Grant Thornton, RSM, and BDO. They put on seminars and several webinars throughout the year. You can sign up for the e-mail list to be notified of free webinars.

What's your favorite? 

If yours isn't listed above, comment or send me an e-mail at strahle@leveragesalt.com.

What did you learn at the Georgetown Advanced SALT Conference?

If you attended the Georgetown Advanced State and Local Tax Institute this week, please leave a comment or send me an e-mail at strahle@leveragesalt.com to voice what you learned or what your key takeaways were.

Let's work together to fight the struggle for clarity.

State Tax Transfer Pricing - What's Next?

Recent media reports reflect that transfer pricing in the state tax area is gaining more scrutiny and attention due to international tax developments like OECD BEPS, but also the Multistate Tax Commission's Arms-Length Adjustment Service (ALAS) initiative, previous state litigation and growing interest in tax haven legislation. 

A nice presentation delivered by Michael Bryan, Karl Frieden, Jeff Friedman and Marshall Stranburg at the Federation of Tax Administrators Annual Meeting on June 13, 2016, provides good background information on the basics and importance of transfer pricing while describing the current environment.  

The presentation defines transfer pricing as "the pricing of transactions between related entities for goods, intangible assets, services, and loans." Transfer pricing is "designed to prevent tax avoidance among related entities by requiring pricing equivalent to prices available with an uncontrolled party:

• Transactions must (generally) be at arm’s length
• Non-arm’s length intercompany transactions can impact the clear reflection of income in states where income is reported on a separate or partial combination basis
• Tax evasion or avoidance generally not a pre-requisite for making a transfer pricing adjustment"

According to the presentation, the "key intercompany transactions subject to transfer pricing" are: 

• Transfer and licensing of intangible assets
• Providing and charging for common services
• Financing
• Factoring accounts receivables
• Sale of tangible goods that contain a trademark or other intangible
• Purchase and resale of tangible goods

WHAT'S NEXT?

The presentation ends with a question - "What's Next?" This is the most important question.

What should companies do now? How can companies plan? What path will states take to combat this perceived abuse? Will states piggyback off of BEPS? Will states get involved with the MTC initiative? Will states actually enact and enforce tax haven legislation? Or will states simply adopt worldwide combined reporting? Worldwide combined reporting seems to be a simpler approach. However, as I have noted before, making a simple general rule may not be beneficial to a state if applied to taxpayers across the board.

Consequently, it makes more sense for states to have discretionary authority and make case-by-case adjustments so they can better control the impact on revenue. Therefore, I think states will continue to use a combination of all of the tools that will allow them to retain discretionary authority and control. 

In the words of Dave Brunori, "when proving arm’s-length pricing, the side that can spend the most on good lawyers, accountants, and economists almost always wins." We shall see.

For more information, check out my previous post on the MTC ALAS program.

Should the Federal Government Pre-empt A State's Taxing Power?

I recently read an article by Shirley Sicilian from KPMG where she interviewed Greg Matson, the Executive Director of the Multistate Tax Commission. Good article. Recommended reading.

In the article, Ms. Sicilian asks Mr. Matson what he thinks will 'rock the tax world' in the next few years? Mr. Matson's response included the overturning of Quill, the ripple effect of BEPS on states, and states challenging congressional authority to pre-empt their taxing power.

With all of the court case challenges to Quill and the states trying to impose sales tax collection or reporting requirements on remote sellers, and the proposed federal legislation to reinforce Quill, I have been thinking about the battle between state sovereignty and federalism.

State sovereignty is the concept that states are in complete and exclusive control of all the people and property within their territory. State sovereignty also includes the idea that all states are equal as states.

Sovereignty is the power of a state to do everything necessary to govern itself, such as making, executing, and applying laws; imposing and collecting taxes; making war and peace; and forming treaties or engaging in commerce with foreign nations.

The individual states of the United States do not possess the powers of external sovereignty, such as the right to deport undesirable persons, but each does have certain attributes of internal sovereignty, such as the power to regulate the acquisition and transfer of property within its borders. The sovereignty of a state is determined with reference to the U.S. Constitution, which is the supreme law of the land.

I believe in state sovereignty and as much as I like uniformity and less complexity, I support a state's rights to make their own laws. However, when states overreach and attempt to enact unconstitutional taxes, that is when the federal government or the U.S. Supreme Court has to step in. 

When do you think the Federal government should step in?

Note: For more on federalism and state sovereignty, check out Federalism, State Sovereignty, and the Constitution: Basis and Limits of Congressional Power by Kenneth R. Thomas, Legislative Attorney.

NO REGULATION WITHOUT REPRESENTATION

The folks over at McDermott Will & Emery and the 'Inside SALT' blog made me aware of the "No Regulation Without Representation Act of 2016" (H.R. 5893). The bill was introduced by Congressman Jim Sensenbrenner (R-Wis.).   

The bill would require a person to have a physical presence in a state before the state can impose a sales or use tax collection or reporting requirement, an assessment, or treat the person as doing business (having 'nexus') in the state.

In essence, this bill is a glimmer of hope for remote sellers against the onslaught of state nexus expansion laws that have been enacted over the past few years, and the current litigation in South Dakota and Alabama where states are attempting to impose collection obligations on businesses without a physical presence.

The bill defines physical presence to include:

1. owning or holding a leasehold interest in, or maintaining real property such as a retail store, warehouse, distribution center, manufacturing operation or assembly facility;
2. leasing or owning tangible personal property (other than computer software) of more than de minimus value in the state;
3. having one or more employees, agents or independent contractors present in the state who engage in specific solicitations toward obtaining product or service orders from customers in that state, on behalf of the person;
4. having one or more employees or independent contractors present in the state who provide on-site design, installation, or repair services on behalf of the remote seller; 
5. maintaining an office in the state at which it regularly employs three or more employees for any purpose.

According to the bill, 'physical presence' does NOT include:

1. referral agreements with in-state persons who receive commissions for referring customers to the seller;
2. having a presence in the state for less than 15 days in a taxable year;
3. product delivery in-state by a third-party;
4. Internet advertising services not exclusively directed towards, or exclusively soliciting in-state customers.

If the Act gains traction and is actually enacted, it would apply to calendar quarters beginning on or after January 1, 2017.

It is too early to tell if this bill will actually go anywhere, but it is nice to see a bill like this get introduced.

GET THINGS DONE. MAKE THINGS HAPPEN.

You walk into a business, store, restaurant, service company, etc. You have a problem or need that requires help, a solution. If the problem is not straight forward or goes outside the 'normal operating procedure,' some employees would freeze. They would say they couldn't do it because 'the rules' tell them they can't or they don't have permission. Others may say, this isn't the norm, but let me see what I can do. A few minutes later, they have a solution, a work around, something that solves your problem without hurting the company. Something that will eventually help the company because the employee just showed me that common sense, ingenuity and the desire to help a customer trumps the 'way it must be done.' The personal ambition or motivation to actually do a good job, not just 'punch the clock.'

I call these people, 'get things done, make things happen' people. 

Any time I find these people, I shout for joy! They are my kind of people. Not working or living inside a box, but working to make the box bigger. Actually living each day with personal motivation to do the best, be the best and actually help others solve problems.

Today, I encourage you to be one of those people. 

GET THINGS DONE. MAKE THINGS HAPPEN.