Exam 23: State and Local Taxes

Which of the following is not one of the Complete Auto Transit's criteria for whether a state can tax nondomiciliary companies?

The throwback rule requires a company,for apportionment purposes,to include all sales of inventory sold into a state without income tax nexus rather than from the state from where the inventory was shipped.

Most services are sourced to the state where the services were performed.

Mighty Manny,Incorporated,manufactures and services deli machinery and distributes it across the United States.Mighty Manny is incorporated and headquartered in New Jersey.It has product sales in all 50 states.New Jersey is the only state in which Mighty Manny exceeds the Wayfair sales thresholds.Mighty Manny's service employees work in Connecticut,New Jersey,New York,Pennsylvania,and Rhode Island.Mighty Manny also has an executive training seminar each year in South Carolina.Determine the states in which Mighty Manny has sales tax nexus.

Which of the following isn't a requirement of Public Law 86-272?

Separate-return states require each member of a consolidated group with income tax nexus to file their own state income tax return.

Which of the following is not a general rule for calculating the sales factor?

State tax law is comprised solely of legislative authority.

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.The shop sells,manufactures,and customizes tennis racquets for serious amateurs.Virginia has a 5 percent sales tax.Assume that a District of Columbia customer picks up a $2,000 racquet order in the Blacksburg store and drives it back to the District of Columbia (where the sales tax rate is 8.5 percent).Determine the sales and use tax liability of the customer.(Assume the shop has no sales personnel or property in District of Columbia,and District of Columbia sales don't exceed the Wayfair thresholds.)

Mahre,Incorporated,a New York corporation,runs ski tours in a several states.Mahre also has a New York retail store and an Internet store,which ships to out-of-state customers.Assume sales transactions in all states,except New York,are under 200 and that all states have adopted Wayfair legislation.The ski tours operate in Maine,New Hampshire,and Vermont,where Mahre has employees and owns and uses tangible personal property.Mahre has real property only in New York.Mahre has the following sales: Assume the following sales tax rates: Alaska (0 percent),Colorado (7.75 percent),Maine (8.5 percent),New Hampshire (0 percent),New York (8 percent),and Vermont (5 percent).How much sales and use tax must Mahre collect and remit?

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.The shop sells,manufactures,and customizes tennis racquets for serious amateurs.Virginia has a 5 percent sales tax.Arizona has a 6 percent sales tax,but Arizona sales thresholds don't exceed the Wayfair limits.Determine the sales tax liability that the shop must collect and remit if it sells a $1,000 racquet order to an Arizona customer (assume the shop has no sales personnel or property in Arizona)that purchases the merchandise from the Virginia store over the internet?

Which of the following law types is not a primary authority source?

Sales personnel investigating a potential customer's creditworthiness generally are deemed to exceed protected boundaries of solicitation.

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.Tennis Pro has sales as follows: Assume that Tennis Pro's other sales include $150,000 of sales to a federal government entity that were shipped from Virginia to Maryland.What is Tennis Pro's Virginia sales numerator and sales factor? (Round the sales factor to two decimal places.)

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.Tennis Pro decides to expand into Pennsylvania during the current year and try some new sales techniques.Tennis Pro advertises on local radio and television as well as in national tennis magazines sent into Pennsylvania.Salespeople give away promotional materials and occasionally sell demonstration models to local shop employees to build goodwill for Tennis Pro.Tennis Pro holds sales meetings at rented space in local hotels.Personnel occasionally fix minor problems such as tape and strings without charge.One employee performed a credit check for a major account that needed merchandise immediately.Each salesperson is allowed an allowance for a car and office equipment to be maintained in an in-home office.Do any of Tennis Pro's activities have the potential to create income tax nexus?

Most state tax laws adopt the federal tax law as of a specific date in time.

Giving samples and promotional materials without charge is a protected solicitation activity.