ch23 - ch23 Student: 1. The primary purpose of state and...

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Unformatted text preview: ch23 Student: 1. The primary purpose of state and local taxes is to raise revenue to finance state and local government. True False All states employ some combination of sales and use tax, income or franchise tax, or property tax. True False State tax law is comprised solely of legislative authority. True False Commercial domicile is the location where a business is headquartered and directs its operations from. True False Nondomiciliary businesses are subject to tax everywhere they do business. True False Use tax liability accrues in the state where purchased property will be used when the seller is not required to collect sales tax. True False Businesses engaged in interstate commerce are subject to tax in every state where they operate. True False The state tax base is computed by making adjustments to federal taxable income. True False Businesses subject to income tax in more than one jurisdiction have the right to apportionment. True False Business income is allocated to the state of commercial domicile. True False All 50 states impose a sales and use tax system. True False Purchases of inventory for resale are typically exempt from sales and use taxes. True False The sales and use tax base varies from state to state. True False Many states are expanding the types of services subject to sales tax. True False Businesses must collect sales tax only in states where it has sales and use tax nexus. True False Failure to collect and remit sales taxes often results in a larger tax liability than failure to pay income taxes. True False Physical presence does not always create sales and use tax nexus. True False 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. The National Bellas Hess decision held that an out-of-state mail-order company did not have sales tax collection responsibility because it lacked physical presence. True False The Quill decision reaffirmed that out-of-state businesses must have physical presence within a state before the state may require the collection of sales taxes from in-state customers. True False Wyoming imposes an income tax on corporations. True False Businesses must pay income tax in their state of commercial domicile. True False In Complete Auto Transit the court determined eight criteria for determining whether a state can tax a nondomiciliary company. True False Public Law 86-272 protects certain business activities from creating nexus. True False Public Law 86-272 was a congressional response to Northwestern States Portland Cement . True False Public Law 86-272 protects only companies selling tangible personal property. True False Delivery of tangible personal property through common carrier is a protected activity....
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