Income is derived from within state rhombus6 Property is owned or leased in

Income is derived from within state rhombus6 property

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Income is derived from within staterhombus6Property is owned or leased in staterhombus6Persons are employed in state8rhombus6Physical or financial capital is located in statesquare6No nexus if only “connection” to state is solicitation for sale of tangible personal property, with orders sent outside state for approval and shipping to customer (Public Law 86-272) square6Sales tax can still apply
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Special Issues in State Taxation of E-commercesquare6Should states be permitted to tax Internet access, or would such taxes discourage people from using the Internet?square6Should states be permitted to require out-of-state vendors to collect sales and use tax from purchases made by state residents?square6Should states be permitted to tax income from e-commerce, or would such taxes stifle the growth of e-commerce?would such taxes stifle the growth of e-commerce?square6How do the nexus rules apply to e-commerce?square6E.g., in 2013 the State of Washington adopted a new rule to impose sales tax on the sale of digital products to Washington residents.Chapter 25, Exhibit 44
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ExampleComplexity of Relationships in E-commerceInformation stored on server in the District of ColumbiaSeller in VirginiaWeb site developed and of ColumbiaWarehouse in Connecticutmaintained in CaliforniaCustomer in New YorkChapter 25, Exhibit 46
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Washington State TaxationWashington State TaxationChapter 25
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Washington State Taxessquare6No personal income taxsquare6Business & Occupation Tax (from 0.471% to 1.5%)square6Sales/Use Tax (from 7.0% to 20.5%)square6Special digital goods sales taxesUnemployment Insurance Taxes (from 0.14% to 5.82%)square6Unemployment Insurance Taxes (from 0.14% to 5.82%)square6Excise Taxes (real estate transactions, cigarette, syrup, timber, oil spills, rental cars, natural gas, litter, 911 service, carbonated beverages, aircrafts, etc).square6Real estate property taxes are assessed by local governments, not by the stateChapter 25, Exhibit 20
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Washington Nexus Rulessquare6/Industry/OnlineSalesofGooods/default.aspx
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International TaxationInternational TaxationChapter 25
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When a Country Can Tax a Person A country has power to tax a person when the “person:”rhombus6Is a citizen or resident of that countryrhombus6Receives income sourced in that countryrhombus6Possesses property in that countryChapter 25, Exhibit 50
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U.S. International Tax Provisionsrhombus6Outbound taxation pentastar2Refers to the U.S. taxation of foreign-source income earned by U.S. taxpayersrhombus6Inbound taxation 18rhombus6Inbound taxation pentastar2Refers to the U.S. taxation of U.S.-source income earned by foreign taxpayers
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Sources of Lawsquare6U.S. laws:rhombus6Federal law: The Internal Revenue Code rhombus6State and local lawssquare6International laws:rhombus6Tax Treaties: Tax treaty provisions generally override the 19rhombus6Tax Treaties: Tax treaty provisions generally override the treatment otherwise called for under the Internal Revenue Code or foreign tax statutes
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United States General Rulesquare6The U.S. taxes U.S. taxpayers on “worldwide” incomerhombus6U.S. taxpayers means U.S. citizens, permanent residents, or other persons with “substantial presence” in the U.S.
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  • Fall '14
  • fabioambrosio
  • Accounting, Taxation in the United States

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