Research Problems
Research Problem 1. Pick two of the following provisions that currently do not exist in your state. If your state does not levy an income tax on corporations, review the rules of a neighboring state. Send an e-mail to your instructor, listing pro and con arguments for the state to adopt the provisions.
a. Exempt computer and communications technology from the apportionment weight for the property factor.
b. Subject advertising expenditures to the sales/use tax.
c. Allow an income tax credit for 20% of the cost of in-state construction projects that are substantially completed within the next 18 months.
d. Tax the income of vendors who do not have a physical presence in your state but sell to in-state customers online.
e. Add a “nexus team” to find the taxpayers operating in your state, but based in
Ohio, Illinois, or Arizona.
f. Adopt the definitions and other rules of the Streamlined Sales Tax Project.
g. Allow an income tax credit for film and television producers equal to 30% of instate expenditures.
h. Apply a tax on S corporations operating in the state equal to 2% of the entity’s hypothetical
Subchapter C taxable income.
i. Convert the corporate income tax to a tax on gross receipts, in an effort to tax the profits of passive investment companies owned by in-state parent entities.
Research Problem 2. For your state and one of its neighbors, find the following income tax rules. Place your data in a chart, and e-mail your findings to your instructor.
a. To what extent does each state follow the rulings of the Multistate Tax Commission?
b. Does the state adopt pertinent changes to the Internal Revenue Code? If so, as of what date?
c. What is the highest tax rate for corporations?
d. Is the tax effectiveness of a passive investment company limited in some way? Has the state adopted the Geoffrey approach to the taxation of income from intangibles?
Explain.
e. Does the state apply entity-level income taxes for S corporations, partnerships, and LLCs? If so, what are the terms of those taxes?
f. Does the state levy a “minimum tax” or “alternative minimum tax”? If so, what are the terms and rates for the tax?
Research Problem 3. For your state and one of its neighbors, find the following sales/ use tax rules. Place your data in a chart, and e-mail your findings to your instructor.
a. What are the requirements for the occasional-sale rule as an exception to the sales/use tax? Who can use this rule?
b. Describe any exemptions from the sales/use tax base that are allowed for transactions involving groceries, school clothing and supplies, religious goods, and legal services.
c. What is the discount allowed, if any, when a vendor remits sales/use tax to the state in a timely manner?
d. Is manufacturing equipment exempt from the sales/use tax? Medical devices for a clinic? Medical devices for a consumer?
e. Can a vendor use an electronic funds transfer system to remit its sales/use tax collections? If so, when is it required to do so?
f. Has the state joined the Streamlined Sales Tax Project? If yes, what is the effective date?
Research Problem 4. Identify three states considered to be in the same economic region as your own. For each of the three states, answer the following questions.
Answers to most can be found at www.taxadmin.org.
• What is the overall tax burden per capita, and where does it rank among all states?
• What is the overall tax burden as a percentage of personal income, and where does it rank among all states?
• From what source(s) does it raise most of its revenues (e.g., sales/use tax, highway tolls)?
• What is the highest marginal tax rate on corporate income?
• What is its apportionment formula, including factors and weights?
What advice or insight might you provide to your state legislature regarding your state’s tax system, based on your responses to the above?
Research Problem 5. Read the “tax footnote” of five publicly traded U.S. corporations.
Find the effective state/local income tax rates of each. Create a PowerPoint presentation (maximum of five slides) for your instructor, summarizing the search and reporting the findings.
Research Problem 1. Pick two of the following provisions that currently do not exist in your state. If your state does not levy an income tax on corporations, review the rules of a neighboring state. Send an e-mail to your instructor, listing pro and con arguments for the state to adopt the provisions.
a. Exempt computer and communications technology from the apportionment weight for the property factor.
b. Subject advertising expenditures to the sales/use tax.
c. Allow an income tax credit for 20% of the cost of in-state construction projects that are substantially completed within the next 18 months.
d. Tax the income of vendors who do not have a physical presence in your state but sell to in-state customers online.
e. Add a “nexus team” to find the taxpayers operating in your state, but based in
Ohio, Illinois, or Arizona.
f. Adopt the definitions and other rules of the Streamlined Sales Tax Project.
g. Allow an income tax credit for film and television producers equal to 30% of instate expenditures.
h. Apply a tax on S corporations operating in the state equal to 2% of the entity’s hypothetical
Subchapter C taxable income.
i. Convert the corporate income tax to a tax on gross receipts, in an effort to tax the profits of passive investment companies owned by in-state parent entities.
Research Problem 2. For your state and one of its neighbors, find the following income tax rules. Place your data in a chart, and e-mail your findings to your instructor.
a. To what extent does each state follow the rulings of the Multistate Tax Commission?
b. Does the state adopt pertinent changes to the Internal Revenue Code? If so, as of what date?
c. What is the highest tax rate for corporations?
d. Is the tax effectiveness of a passive investment company limited in some way? Has the state adopted the Geoffrey approach to the taxation of income from intangibles?
Explain.
e. Does the state apply entity-level income taxes for S corporations, partnerships, and LLCs? If so, what are the terms of those taxes?
f. Does the state levy a “minimum tax” or “alternative minimum tax”? If so, what are the terms and rates for the tax?
Research Problem 3. For your state and one of its neighbors, find the following sales/ use tax rules. Place your data in a chart, and e-mail your findings to your instructor.
a. What are the requirements for the occasional-sale rule as an exception to the sales/use tax? Who can use this rule?
b. Describe any exemptions from the sales/use tax base that are allowed for transactions involving groceries, school clothing and supplies, religious goods, and legal services.
c. What is the discount allowed, if any, when a vendor remits sales/use tax to the state in a timely manner?
d. Is manufacturing equipment exempt from the sales/use tax? Medical devices for a clinic? Medical devices for a consumer?
e. Can a vendor use an electronic funds transfer system to remit its sales/use tax collections? If so, when is it required to do so?
f. Has the state joined the Streamlined Sales Tax Project? If yes, what is the effective date?
Research Problem 4. Identify three states considered to be in the same economic region as your own. For each of the three states, answer the following questions.
Answers to most can be found at www.taxadmin.org.
• What is the overall tax burden per capita, and where does it rank among all states?
• What is the overall tax burden as a percentage of personal income, and where does it rank among all states?
• From what source(s) does it raise most of its revenues (e.g., sales/use tax, highway tolls)?
• What is the highest marginal tax rate on corporate income?
• What is its apportionment formula, including factors and weights?
What advice or insight might you provide to your state legislature regarding your state’s tax system, based on your responses to the above?
Research Problem 5. Read the “tax footnote” of five publicly traded U.S. corporations.
Find the effective state/local income tax rates of each. Create a PowerPoint presentation (maximum of five slides) for your instructor, summarizing the search and reporting the findings.