Taxation
Ca. Tax Lawyer 2016, VOLUME 25, NUMBER 4
Content
- A Proposal to Address the Improper and Unreasonable Fees Imposed by California Counties on Taxpayers When Exercising Their Rights to Appeal Assessed Property Taxes
- Bad Moon Rising? Proposed Section 2704 Regulations
- Bar Business
- Contents
- Editor's Note
- Masthead
- Message from the Chair
- Minutes from the 2016 Meeting of Eagle Lodge West
- Taxation Section 2015-2016 Leadership Directory
- The United States Income Tax Treatment of Australian Superannuation Funds Owned by U.S. Persons (Part 2 of 2)
- Visiting the Committees
- In Defense of Regulations: California, Market-Based Sourcing, and the Defense Industry
In Defense of Regulations: California, Market-Based Sourcing, and the Defense Industry1
By Shail Shah & Alexis Binazir2
EXECUTIVE SUMMARY
California enacted mandatory market-based sourcing rules for sales of other than tangible personal property for most taxpayers for taxable years beginning on or after January 1, 2013.
Relevant to this discussion are the market-based sourcing rules applicable to services. In general, the statute provides receipts from services are sourced to where the benefit of the services is received. The regulations define where the "[b]enefit of a service is received" as the location where the taxpayer’s customer received value from delivery of the service, either directly or indirectly.3 The market-based sourcing regulations require receipts from services performed for business-entity customers to be assigned based on the cascading rules provided in the regulations. The regulations are not meant to be a one-size-fits-all solution for most taxpayers but do provide general guidance for many diverse industries.