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State Income Tax Reporting for Non-U.S. Entities

Determining Nexus, Filing Requirements, and the Impact of U.S. Income Tax Treaties

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Monday, October 28, 2024

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This webinar will review state requirements for taxing inbound foreign income. Our panel of SALT experts will explain state nexus determinations and the impact of U.S. income tax treaties on state income and reporting requirements, as well as provide examples of the application of these rules in specific states.

Description

Post Wayfair, numerous states have enacted bright-line nexus requirements that are often satisfied when an express amount of sales or number of transactions is met or surpassed. Similarly, many states believe that nexus is created when a business is doing business or is deriving any income from the state. These thresholds usually replace the physical presence requirement in a state and are separate from applicable federal filing requirements.

U.S. income tax treaties with other countries do not govern state taxation. These agreements often incorporate permanent establishment guidelines to determine whether an entity is subject to federal tax. Some states do not tax treaty-protected income, other states clearly reserve the right to tax treaty-protected income, while still others do not directly address the application of U.S. income tax treaties to income in their state.

That being said, not knowing how a state's income and local tax rules apply to non-U.S. entities can result in substantial penalties for noncompliance. SALT professionals working with multinational companies need to understand how states tax foreign businesses.

Our panel will review state requirements for taxing inbound foreign income.

Listen as our panel of SALT experts explains state nexus determinations and the impact of U.S. income tax treaties on state income and reporting requirements, and provides examples of the application of these rules in specific states.

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Outline

  1. State taxation for non-U.S. corporations: introduction
  2. Nexus determinations
  3. Determining state taxable income
  4. Effectively connected income
  5. Income tax treaties
  6. Filing methods
  7. Structuring
  8. State-specific guidelines
    1. California
    2. New York
    3. Pennsylvania
    4. Other states
  9. Other considerations

Benefits

The panel will review these and other critical issues:

  • The impact of U.S. income tax treaties on state taxation of non-U.S. corporate income
  • How state nexus rules are applied to taxation and reporting requirements of foreign inbound income
  • The interaction of federal permanent establishment rules with state nexus requirements
  • Application of P.L. 86-272 to non-U.S. entities
  • Selecting appropriate filing methods including separate, unitary-combined and water's-edge requirements

Faculty

Damin, John
John Damin
Managing Director
BDO USA

Mr. Damin is a Managing Director whose primary focus is in state and local income/franchise tax. His state tax...  |  Read More

Lipin, Ilya
Ilya A. Lipin
Tax Principal, Mid-Atlantic Region State and Local Tax Practice Leader
BDO USA

Mr. Lipin provides clients with state tax advice in the area of multistate income taxes, sales and use taxes, tax...  |  Read More

McMonagle, Corey
Corey McMonagle
SALT Manager
BDO USA

Mr. McMonagle is a State and Local Tax Manager at BDO USA, LLP. He has several years of state and local tax...  |  Read More

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