Multistate Practice and Procedure
Some questions do not belong to any one state: the mechanics that recur across jurisdictions, the federal changes that ripple into every state differently, and the disciplines of multistate compliance itself. This hub collects them, with the state hubs holding the answers where they diverge.
68Multistate articles
Income and franchise tax
35 articles- How does state and local tax fit into the ASC 740 income tax provision?Accounting Standards Codification Topic 740 covers state income-based taxes; sales, property, payroll and most gross receipts taxes fall under Topic 450.Law as of Oct 14, 2026
- Is the billing address a safe proxy for where a service customer receives the benefit?For a business customer, state market-sourcing cascades reach the billing address, if at all, only as the last step, after every other step fails.Law as of Oct 17, 2026
- Which group member must file a state's combined corporate return?Connecticut and the District of Columbia have a taxable common parent file; if not, Connecticut's group chooses and the District uses its most active member.Law as of Oct 13, 2026
- Can a cost-of-performance state end up sourcing service receipts to the customer's location?Sometimes: Oregon, Utah and Pennsylvania rulings read cost-of-performance rules to source service receipts by customer location; the result is not automatic.Law as of Oct 14, 2026
- How are service revenues sourced for state income tax: cost of performance or market?It depends on the state: most now source service receipts by market, as California does, while a minority, including Virginia, still uses cost of performance.Law as of Oct 14, 2026
- Where is self-mined cryptocurrency sourced for state tax purposes when the machines sit in one state and the owner in another?No state has published a sourcing rule for self-mined cryptocurrency: cost of performance favors the machines' state; market rules give it little or nothing.Law as of Oct 14, 2026
- When does a state tax an intercompany gain that the federal consolidated return defers?Separate-entity states tax a federally deferred intercompany gain at transfer; combined states adopting deferral, such as New York, defer it within the group.Law as of Oct 14, 2026
- Which state gets withholding and unemployment insurance when an employee works in more than one state?Income tax withholding follows where the work is done, with the home state as a second layer; unemployment insurance goes to one state under a four-step test.Law as of Oct 17, 2026
- When is a seller exempt from Georgia real property withholding, and can a disregarded LLC seller rely on its owner?A nonresident seller avoids Georgia's 3 percent real property withholding only by a listed exemption or by meeting all four deemed-resident conditions.Law as of Oct 17, 2026
- How does Georgia credit nonresident withholding passed up through tiers of partnerships, and why does real property withholding get stuck?Georgia moves nonresident withholding up tiers on Form G2-A; the buyer remits real property withholding on Form G2-RP, and a misnamed credit can get stuck.Law as of Oct 17, 2026
- Does an intercompany service charge to an affiliate in a separate-entity market state create apportionment for the provider?Usually yes: a separate-entity market state counts an intercompany service fee in the provider's receipts, sourced where the affiliate receives the service.Law as of Oct 15, 2026
- How does Pennsylvania tax an investment partnership and its corporate partner, and when does it impute 100 percent apportionment?Pennsylvania taxes individual partners by income class and corporate partners on apportioned business income, and reads an empty sales factor as 100 percent.Law as of Oct 22, 2026
- What belongs in an investment partnership's receipts factor: gross proceeds or net gains, interest, dividends and losses?Each state builds its own receipts factor: some count gross sale proceeds, some count only net gains, and several leave dividends or securities sales out.Law as of Oct 23, 2026
- Do a lower-tier partnership's apportionment factors flow up to its partners?A lower-tier partnership's factors flow up only in aggregate-method states; separate-entity states pass up a sourced amount and entity-level states nothing.Law as of Oct 15, 2026
- How do states decide whether to withhold on a nonresident partner's sale gain?Each state decides whether it withholds on nonresident partners at all, which partners, below what de minimis amount, and with what exemptions.Law as of Sep 28, 2026
- Does an opportunity zone investment get the same treatment in a state that does not conform?A state not conforming to IRC section 1400Z-2, like California, taxes opportunity fund rollover gain at sale and later taxes fund gain federal law excludes.Law as of Oct 13, 2026
- Which apportionment formula does a partnership use where a state offers a choice, keys the formula to an industry code, or meets a factor with a zero denominator?Each state's partnership rule sets the formula, which may differ from the corporate one; a corporate partner combining factors applies its own.Law as of Oct 23, 2026
- Whose employees are they when a professional employer organization runs payroll?Whether professional employer organization workers leave the client's payroll factor is contested; the model regulation's control test points to the client.Law as of Oct 12, 2026
- If a partnership elects a pass-through entity tax, does it still withhold for nonresident owners?Unless state law coordinates the two regimes, yes: a pass-through entity tax election does not by itself end the duty to withhold for nonresident owners.Law as of Oct 13, 2026
- Is gain from selling regulatory credits business income or nonbusiness income?Usually business income: regulatory credits generated by operations and sold meet the functional test (California Revenue and Taxation Code section 25120(a)).Law as of Oct 14, 2026
- Must a partnership withhold state income tax for its REIT partner, and how is each state's exemption claimed?Maryland and Utah exclude real estate investment trust partners, Kentucky and Ohio any corporate partner; New York and Illinois withhold absent a certificate.Law as of Oct 15, 2026
- How do states apportion REMIC excess inclusion income?Few states say how to apportion excess inclusion income of a real estate mortgage investment conduit; California Legal Ruling 2009-01 applies the percentage.Law as of Sep 28, 2026
- What does a revenue recognition change do to state apportionment and sales tax?A revenue recognition change affects state income tax only via federal taxable income, moves the sales factor directly, and sales tax only if invoices change.Law as of Sep 28, 2026
- How do states treat an S corporation's 338(h)(10) election?Conforming states tax a section 338(h)(10) deemed asset sale; New York City and Pennsylvania's personal income tax do not; Tennessee taxes the S corporation.Law as of Oct 12, 2026
- What happens to a state net operating loss when the loss company merges out of existence?States following IRC section 381 pass a merged corporation's net operating loss to the survivor; Tennessee and New Jersey (outside a combined group) do not.Law as of Oct 14, 2026
- When a partnership owns a controlled foreign corporation, which partner's state return carries the Subpart F and GILTI inclusion, and whose factor?Partners, not the partnership, include a controlled foreign corporation's Subpart F and section 951A amounts; none enters the partnership's receipts factor.Law as of Oct 23, 2026
- Can a state apportion the gain when a parent sells a subsidiary it runs separately?Generally not: a gain on stock of a subsidiary that was not unitary with its parent is usually allocated to the parent's commercial domicile, not apportioned.Law as of Oct 14, 2026
- How do apportionment factors roll up through tiers of partnerships, and what happens when a lower tier's data is late, partial or missing?Each tier passes its share of lower-tier apportionment factors up, using the lower tier's year that ends within the owner's year.Law as of Oct 23, 2026
- Who is taxed on a partner's distribution in excess of basis in a tiered structure, and whose apportionment factors apply?The partner whose basis the cash exceeds is taxed as on a sale of its own interest: fully by its home state, elsewhere only under interest-sale rules.Law as of Oct 15, 2026
- What makes two companies one unitary business, and why does it matter?Companies are unitary when functional integration, central management and economies of scale link them; a state may tax an apportioned share of their income.Law as of Oct 14, 2026
- Do receipts no state can source leave the denominator, go to commercial domicile, or dilute every state's factor?Each state answers for itself: some exclude unsourced receipts from the denominator, a few assign them by look-through or domicile, and others leave them in.Law as of Oct 15, 2026
- Who withholds state income tax on a vessel crew's wages?Federal law (46 U.S.C. section 11108) bars state withholding on a qualifying seagoing crew's wages; shipyard or shoreside work can fall outside the rule.Law as of Oct 12, 2026
- How does an upper-tier partnership apportion Virginia income when all it has is K-1 income from lower tiers?Virginia Department of Taxation rulings have an upper-tier partnership apportion with its share of each lower tier's property, payroll and sales.Law as of Oct 17, 2026
- Do nonresident withholding exemption certificates expire, who keeps them, and why will a tax-exempt partner not sign one?State withholding exemption certificates lapse by date, yearly or on changed facts; exempt partners resist certifying no unrelated business taxable income.Law as of Oct 17, 2026
- What happens when every apportionment factor is zero and a state imputes 100 percent?Imputing 100 percent when apportionment factors are zero usually misreads the return; Illinois allocates in full only income derived solely from Illinois.Law as of Oct 14, 2026
Procedure
5 articles- How does a lower-tier withholding credit reach the right partner, and what restores one a state has disallowed?States credit nonresident withholding to the taxpayer named on each tier's statement; a disallowed credit returns when the issuer supplies the right document.Law as of Oct 15, 2026
- Which states require a payment with a partnership's extension, how should a tiered partnership size it, and when are the penalties abated?California, New York, Georgia and Massachusetts extend a partnership's return but not its payments; Texas and New Jersey extend only with a payment.Law as of Oct 23, 2026
- Which states penalize an undisclosed reportable transaction on a partnership return, and who files the disclosure?A missing reportable transaction disclosure costs a fixed sum in New York, Illinois and Minnesota and a tax-based penalty with a floor in California.Law as of Oct 23, 2026
- What does a second review of state tax returns look for, and when is it worth doing?A second review of filed state returns, by someone who did not prepare them, looks for refunds and understatements, most usefully before refund periods close.Law as of Oct 12, 2026
- Entering voluntary disclosure? What a state-rate-only exposure estimate missesA state-rate-only sales tax exposure estimate for voluntary disclosure misses local and district taxes, understating the liability and hiding local returns.Law as of Oct 13, 2026
Residency and domicile
2 articles- Who taxes an opportunity zone deferred gain when the investor changes states before recognition?Ordinarily the state of residence at recognition taxes an opportunity zone deferred gain, but a source state may claim it; California taxed it at the sale.Law as of Oct 14, 2026
- Why does a residency audit look different in a statutory residency state than in a presumptive residency state?A statutory residency state can tax a nonresident as a resident on an abode and a day count alone, while other states weigh every connection.Law as of Oct 13, 2026
Sales and use tax
8 articles- Does buying a business's assets trigger sales tax, and can the buyer inherit the seller's unpaid sales tax?Asset-sale equipment often bears sales tax; California, New York, Texas and Washington make a buyer skipping withholding and clearance liable for unpaid tax.Law as of Oct 14, 2026
- Are dietary supplements and meal replacements taxed as food for sales tax purposes?It depends on the state: several tax supplements more heavily than food, and a Supplement Facts or Nutrition Facts label usually decides which a product is.Law as of Oct 15, 2026
- How is a software license sourced for sales tax when its users sit in several states?It depends on the state: some let a business buyer certify multiple points of use and apportion tax by users, and others source the whole sale to one place.Law as of Oct 14, 2026
- Does a seller owe use tax on items it gives away with a purchase?California treats a premium given with a purchase as sold; New York, Tennessee and Massachusetts make the seller the consumer, generally taxed on its cost.Law as of Oct 14, 2026
- What is the true object test, and when does a service become a taxable sale?The true object test asks if a buyer sought the property or the service; if the service, no sales tax applies; if the property, the whole charge is taxed.Law as of Oct 14, 2026
- Who owes the sales tax a seller failed to collect, the seller or the buyer?The seller stays liable for tax it was required to collect, and the buyer is often liable too, unless the state imposes the tax on the seller alone.Law as of Oct 14, 2026
- What use tax is owed on equipment bought from a related company that charged no tax, and how is the exposure estimated?A buyer of equipment from an affiliate that charged no tax owes use tax on the price paid in California, Texas and Washington, sized from the asset register.Law as of Oct 15, 2026
- How does US sales tax differ from VAT and GST?Unlike a value added tax, US sales tax is a single-stage retail tax with no input credit, imposed separately by 45 states and the District of Columbia.Law as of Oct 14, 2026
Local and district taxes
2 articles- Which states tax the transfer of a controlling interest in an entity that owns real estate, and at what threshold?A transfer of 50 percent or more of an entity owning real estate is taxed in Washington and New York, over 80 percent in Maryland, 90 percent in Pennsylvania.Law as of Oct 14, 2026
- Does contributing real property to a wholly owned LLC trigger real estate transfer tax?Washington and New York exempt a deed to the owner's wholly owned LLC; Florida taxes it, counting any mortgage; Washington and Florida look back three years.Law as of Oct 15, 2026
Nexus and registration
12 articles- Whose physical presence counts as the company's?Since Scripto v. Carson (1960), contractors building a company's market in a state count as its presence there; a courtesy registration can signal nexus.Law as of Oct 14, 2026
- Where did economic nexus come from?Economic nexus grew from Complete Auto (1977), Quill (1992) and state cases like Geoffrey; Wayfair (2018) then overruled Quill's physical presence rule.Law as of Oct 14, 2026
- Does an equipment lessor have income tax nexus wherever its lessees take the equipment?Usually yes: equipment located in a state is the lessor's own property there, and the major taxing states treat owned property alone as nexus.Law as of Oct 13, 2026
- When must a marketplace facilitator collect tax on third-party sellers' sales, and when is it relieved?A marketplace facilitator collects tax on facilitated sales once it meets a state's definition and threshold, and is relieved only for seller-caused errors.Law as of Oct 13, 2026
- What happens in a multistate nexus study?A nexus study compares a company's activity in each state with what that state taxes, income and sales tax separately, and prices exposure and opportunity.Law as of Oct 10, 2026
- Does Public Law 86-272 protection reach a state's minimum franchise tax?No. Public Law 86-272 limits only net income taxes, so a protected company can still owe a state's flat minimum franchise tax; California takes that position.Law as of Sep 28, 2026
- Which sales rep activities break P.L. 86-272 protection?Public Law 86-272 protection is lost when sales staff do work beyond solicitation, such as repairs, installation, collections or complaint handling (Wrigley).Law as of Oct 8, 2026
- Does a website's interactivity strip a seller's P.L. 86-272 protection?A site that only shows goods, holds a cart and takes payment keeps Public Law 86-272 protection; regular post-sale chat or data-gathering cookies can lose it.Law as of Oct 13, 2026
- Should a company protected by P.L. 86-272 still file state returns?A Public Law 86-272 protected seller may file a no-tax return to start the limitation period, but filing can trigger minimum taxes; the choice is per state.Law as of Oct 14, 2026
- Can a receivables company have nexus where it has no office?Increasingly yes: under economic nexus, a receivables entity with no office or employees can be taxable beyond its state of formation, depending on the state.Law as of Oct 14, 2026
- When does a remote seller's duty to collect start after one large sale crosses the threshold?A remote seller generally owes no collection on the sale that crosses a state's threshold; each state's own rule sets the later date collection begins.Law as of Oct 13, 2026
- What did South Dakota v. Wayfair actually decide?South Dakota v. Wayfair (2018) ended the physical presence rule for sales tax nexus but did not approve any economic nexus threshold as safe.Law as of Oct 14, 2026
Unclaimed property
4 articles- Must a state finish an unclaimed property audit within the statute of limitations?Not in Michigan: per Dine Brands (2025), an unclaimed property audit need only start within the limitation period; Washington sets a deadline for the result.Law as of Oct 14, 2026
- Which balance sheet items become unclaimed property, and when?Uncashed vendor and payroll checks and customer credits become unclaimed property after each state's dormancy period, such as five years for most in Delaware.Law as of Sep 25, 2026
- What is unclaimed property, and why is it not a tax?Unclaimed property is intangible property held for an owner gone silent; states take custody rather than tax it, so nexus and Public Law 86-272 do not apply.Law as of Oct 14, 2026
- Which state can claim a company's unclaimed property?Under Texas v. New Jersey (1965), unclaimed property goes to the state of the owner's last known address or, absent one, the holder's state of incorporation.Law as of Oct 14, 2026
Nothing here matches that yet.
The full library search on the Practice and Procedure page looks inside every article.