“Will market-based sourcing affect you?”

By Terry Barrett, CPA, Tax Senior Manager

“Will market-based sourcing affect you?”

Terry Barrett, Keiter Tax Senior Manager and Leader in Keiter’s State and Local Tax team, shared her insights on revenue sourcing rules in the November/December 2017 issue of VSCPA’s Disclosures Magazine article, “Will market-based sourcing affect you?” This includes physical and economic nexus considerations as well as tax filing requirements according to individual state laws.


Year-end tax planning meetings are upon us, and a likely discussion item may be where a business should be filing income and/or franchise tax returns for 2017. Some of the key factors in that determination are (1) nexus, where there is sufficient connection with a state to create a filing requirement (think physical presence as well as economic presence), (2) revenue, and (3) the nature of the business(product- or service-oriented).

But one factor that may be overlooked is the revenue-sourcing requirement in those states where a company may have nexus, particularly if the company provides services. For sellers of tangible products, federal law (specifically Public Law 86-272) provides protections from state income tax to the extent that a business’s only activity in the state is the solicitation of sales of those tangible products. These protections, however, do not extend to franchise taxes (a topic for another article) or businesses that are providing services.

Questions on revenue sourcing rules that apply to your business? We can help. Contact your Keiter representative or Email | 804.747.0000

Share this Insight:

About the Author

Terry Barrett

Terry Barrett, CPA, Tax Senior Manager

Terry Barrett specializes in state and local tax concerns for her clients. She has over 30 years of experience working in the public and private accounting sector. She is a graduate of Virginia Commonwealth University.

More Insights from Terry Barrett

The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


Contact Us