How California’s Tax Collector Collects From Out-Of-State Businesses
The post How California’s Tax Collector Collects From Out-Of-State Businesses appeared on BitcoinEthereumNews.com. Book with California taxes on a desk. Getty If you run a business outside of California, you might not think much about California income taxes. However, even if you never set foot there, if you have customers in the golden state, you might be surprised at how aggressive California can be about collecting taxes. California’s Franchise Tax Board (FTB) often takes aggressive positions about residency, income allocation, and apportionment, with a particularly aggressive position what it means to carry on or conduct a business in California. In In re Bindley, the FTB claimed that a self-employed screenwriter working exclusively from his home in Arizona was subject to business income apportionment in connection with screenwriting fee income he received from a California studio. The screenwriter challenged the FTB’s interpretation of what it means to carry on or conduct a business in California, since it did not make very much sense to him that he could be considered as carrying on a business in California when he worked exclusively from Arizona. But the FTB said that since the screenwriter’s client was in California, he carried on his business at least partially within California. The FTB said he was subject to the apportionment rules, and since his client received the benefit of his screenwriting in California, the compensation from the California studio was subject to California income tax. On appeal to California’s Office of Tax Appeals, the OTA sided with the FTB and the screenwriter lost. The OTA could find no authorities that held that the terms “carrying on” or “conducting” a business for the California’s business apportionment rules were limited to the physical location of the taxpayer. Also, the OTA felt it was obligated to give deference to FTB rulings. In effect, the screenwriter was out of luck because he could not…
The post How California’s Tax Collector Collects From Out-Of-State Businesses appeared on BitcoinEthereumNews.com.
Book with California taxes on a desk. Getty If you run a business outside of California, you might not think much about California income taxes. However, even if you never set foot there, if you have customers in the golden state, you might be surprised at how aggressive California can be about collecting taxes. California’s Franchise Tax Board (FTB) often takes aggressive positions about residency, income allocation, and apportionment, with a particularly aggressive position what it means to carry on or conduct a business in California. In In re Bindley, the FTB claimed that a self-employed screenwriter working exclusively from his home in Arizona was subject to business income apportionment in connection with screenwriting fee income he received from a California studio. The screenwriter challenged the FTB’s interpretation of what it means to carry on or conduct a business in California, since it did not make very much sense to him that he could be considered as carrying on a business in California when he worked exclusively from Arizona. But the FTB said that since the screenwriter’s client was in California, he carried on his business at least partially within California. The FTB said he was subject to the apportionment rules, and since his client received the benefit of his screenwriting in California, the compensation from the California studio was subject to California income tax. On appeal to California’s Office of Tax Appeals, the OTA sided with the FTB and the screenwriter lost. The OTA could find no authorities that held that the terms “carrying on” or “conducting” a business for the California’s business apportionment rules were limited to the physical location of the taxpayer. Also, the OTA felt it was obligated to give deference to FTB rulings. In effect, the screenwriter was out of luck because he could not…
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