UCF Tax 6065

1
UCFTax 6065

• State Tax Services
• Text Chapter Nine

2
State Taxes

• Overview
• Legal Perspective
• Nexus
• State of Florida

3
Importance of State Local Taxes

• State Taxes
• 2008 781 billion
• 2007 750 billion
• Local Taxes
• 2007 519 billion
• Federal Taxes
• FY 2008 Actual 2.52 Trillion (deficit-458mil)
• FY 2009 Estimate 2.15 Trillion
  (deficit-1.8tril)
• FY 2010 Estimate 2.33 Trillion
  (deficit-1.3tril)
• State and Local Taxes make up over 1/3 of the
  total Tax Burden

4
Sources of State and Local Taxes

• State Taxes - 2008
• 46 Sales Tax (general and selective)
• 42 Income Taxes (mostly from individuals)
• 6 Licenses
• 1 Documentary and Stock Taxes
• 2 Property tax
• 3 Other
• Local Taxes 0607
• 71 Property Tax
• 17 Sales Tax
• 6 Income Taxes
• 6 Other

5
State of Florida
6
Legal Perspective

• Both Federal and State Constitutions must be
  followed
• Federal law is the supreme law of the land
• Federal Commerce Clause
• Congress has power to regulate interstate
  commerce
• Nexus must be established for a state to tax
  business
• Due Process Clause

7
Nexus

• More than a de minimis existence in state
• Nexus established when corporation
• Derives income from sources within state
• Owns/leases property in state
• Employs personnel in state OR
• Has physical or financial capital in state
• Nexus is not established merely from solicitation
  of orders that are approved and shipped from
  another state
• If nexus established in a state, income must be
  apportioned to state
• What about sales tax?

8
State Tax Structure

• States model the federal government
• Legislative, executive, and judicial branches
• Most states piggyback on Federal income tax
  system
• Administrative
• State Revenue Agencies interpret and enforce tax
  laws
• Judicial
• States have two or three court levels
• The name for each level is not consistent among
  states
• Multistate Tax Commission (MTC)
• 45 states are members

9
State of Florida

• Florida Department of Revenue
• Statutes
• Title XIV Taxation and Finance
• Corporate Income Tax is Chapter 220 of Florida
  Statutes
• F.S. Sec. 220.42
• Florida Administrative Code Rules and
  Regulations
• Similar to Federal Regulations
• Rule 12-19.002
• Technical Assistance Advisement TAAs
• Similar to IRS Private Letter Rulings
• TAA No. 06A-046
• Tax Forms are also considered primary authority
  for state tax purposes

10
State of Florida

• Judicial System
• Supreme Court
• District Court of Appeals
• Circuit Courts and County Courts