Monday, March 8, 2010
GUEST POST: John Garcia, Tax Director at Targus Group International, Discusses Increased Scrutiny from States Due to Budget Deficits
We were fortunate enough to receive a guest post from John Garcia, Tax Director at Targus Group International. John is a well renowned CPA and MBA, professor and corporate tax veteran. John shared with us his recent concerns regarding the increased scrutiny from States due to budget deficits in the following illuminating blog post:
With imploding budgets and other fiscal woes, it is no secret that many states are hurting financially. To help solve these problems, states are formulating and implementing new innovative state tax regimes that spread their tax bases.
Interstate commerce that traditionally was protected from state income tax by federal legislation such as the Commerce Clause of the US Constitution and Public Law 86-272 are no longer valid. Already, Texas, Michigan and Ohio have enacted state tax measures which subjects multi-state enterprises to tax when there is only a minimal connection to the state.
The mere presence of consigned inventory, a sales person, and even a Website can subject taxpayers to multi state tax. Clearly, this is not a short term matter but a sign of things to come. So, if you are concerned, it might make sense to do a Nexus study and be prepared when that out of state auditor sends you that audit notification.
It also makes sense for business owners to consult your tax advisor to create strategies to mitigate fines and penalties associated with non-compliance with State legislation.