Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Multi State Taxation 1. Taxpayer is incorporated in one

Multi State Taxation1. Taxpayer is...
Multi State Taxation1. Taxpayer is incorporated in one State and also has certificate of authority to work in another state. However, entity has employees and processes and files payroll tax return in other states besides the two states. The employees works for the benefit of the taxpayer from his state where employer has no legal incorporation or authority.1Q. What is the law for filing the state tax return in the states where they process payroll without having been incorporated or certificate of authority?2. How do you allocate if filing requires i.e. only payroll if no sales in those states?3. The states involved here are IL, Nebraska, NY, OH and IA?4. Are there any local taxes in OH and IA for a pass thru entity filing as S Corp or Partnership?Please provide the statutes?2.
Show More
Show Less
Ask Your Own Tax Question
Answered in 21 minutes by:
9/4/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,973
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Payroll taxes (becasue these employees are residents of that state and must pay income tax there) and your DOING BUSINES in a given state are two entirely different things.

...

If you are DOING BUSINESS IN the state, you'll possibly have sales tax liabilities (if you are selling goods to that state's residents or entities), and either you (if a passthrough such as partnership, sole proprietor or S-Corp) or your entity will have some income tax liability for income earned while doing business in that state (C-Corp) MAYBE S-Corp depending on the state.

...

Then there's the corporate law issue, of needing to register in a state (Secretary of state's office, corporation division) if you're doing business there. (have a physical presence other than remote employees) in that state ... AND whether the employees themselves constitute presence for income or state sales tax purposes is a state by state issue.

Ask Your Own Tax Question
Customer reply replied 3 months ago
What is the law for filing the state tax return in the states where they process payroll without having been incorporated or certificate of authority?2. How do you allocate if filing requires i.e. only payroll if no sales in those states?
I understand that you can have remote employees. But please answer questions 3 and 4?
3. The states involved here are IL, Nebraska, NY, OH and IA?4. Are there any local taxes in OH and IA for a pass thru entity filing as S Corp or Partnership?Please provide the statutes?

Again, you're confusing the issues.

...

State income tax liabilities come from having nexus in those states. Having payroll there ( may or may not - typically is) be one of the things that creates nexus for THAT purpose. I'm not going to look at the state income tax code for five different states ... that's far beyond he scope of this Q&A venue.

...

So again, you don't allocate state income taxes to your entity if you have a payroll UNLESS that constitutes nexus FOR that particular state. Then the way you allocate is to look at the definition of SOURCE income for that state file a non-resident return, pay the tax, and then get a credit from your resident state for the taxes paid TO that other state.

...

Same thing for 4, you have to have a business presence IN the state to have to pay state (or local, a subdivision of the state) INCOME taxes ,,, and remember this is a pass through, so source income is generally determined by where YOU provide the services, and shareholders pay the tax, not the S-Corp UNLESS there are separate entity taxes in the state such as a franchise tax.

...

I'd be glad to dig into some of this for you, but not at this rate.

...

I'd strongly recommend, however that you separate the issues and evaluate them separately

...

  • State income tax (paid by the Shareholder/employees on their personal returns)
  • Any state entity tax (rare for S-Corps)
  • Payroll withholding to facilitate the employees being able to pay their own resident state income taxes
  • Payroll withholding for unemployment tax, state disability, and other state payroll purposes (again, a state by state issue, many times having to do with the size of payroll in that state)
  • Sales taxes for the state, (state SALES tax code, nexus defined differently for each state)
  • Foreign corporation filing with secretary of state, yet another definition of nexus, found in each state's corporate law
Ask Your Own Tax Question
Customer reply replied 3 months ago
OK! How much will it cost to check two states mainly OH and IN for S corp and Partnership State and Local taxes. ( Both State and Local Tax for the pass thru entity)Any links for checking for all these states for secretary of state other than NY and NJ?

See this from Ohio, regarding S-orp taxation:

...

"The purpose of the law is to treat S corporations as nearly as possible as partnerships for income and franchise tax purposes so that income earned by an S corporation is taxed only in the hands of the shareholders."

...

Also from Ohio:

...

QUESTION:

DO THE APPORTIONMENT/ALLOCATION PROVISIONS SET FORTH IN ORC SECTIONS 5733.05(B), 5733.O51, 5747.20, 5747.21, AND 5747.22 AFFECT THE TAX COMPUTATION FOR S CORPORATION SHAREHOLDERS WHO ARE OHIO RESIDENTS?

ANSWER:

No. Since ORC Section 5733.09(B) exempts S corporations from the franchise tax, it follows that the franchise tax apportionment/allocation provisions (ORC sections 5733.05(B) and 5733.051) are not applicable. Furthermore, under Chapter 5747 an individual's federal adjusted gross income is the basis for calculating Ohio income tax.

...

And finally, from Ohiio:

...

QUESTION:

ARE S CORPORATION NONRESIDENT SHAREHOLDERS SUBJECT TO THE OHIO INDIVIDUAL INCOME TAX?

ANSWER:

Yes. For taxable years ending after December 31, 1985, any nonresident individual or nonresident estate whose federal taxable income includes a distributive share from an S corporation is subject to the Ohio individual income tax and must file if any of the following circumstances apply:

  • The S corporation was incorporated in Ohio for any portion of the period to which the distributive share relates, or
  • The S corporation owned or used a part or all of its capital or property in Ohio for any portion of the period to which the distributive share relates, or
  • The S corporation did business in Ohio for any portion of the period to which the distributive share relates, or
  • The S corporation held a certificate of compliance for any day within the period to which the distributive share relates.

However, Federal Public Law 86-272 may protect some nonresidents from the Ohio individual income tax if the S corporation's Ohio activities do not exceed the activities protected by Public Law 86-272.

Ask Your Own Tax Question

From Indiana:

...

Nonresident Individual Filing Requirements Nonresidents meeting one or more of the following criteria are required to file a Part-Year or Full-Year Nonresident Indiana Individual Income Tax Return, Form IT-40PNR or a Form IT-40RNR if the person is a resident of a reciprocal state:

 Nonresident individuals with Indiana income from salaries, wages, commissions, sole proprietor income, and professional fees; or

 Nonresident individuals with winnings from Indiana’s riverboats, casinos, or lotteries. Nonresident partners of a partnership, nonresident members of a limited liability company treated as a partnership or an S corporation, and nonresident shareholders of an S corporation where the pass-through entity does business in Indiana are required to be a part of a composite return filed by the pass-through entity for all nonresident partners, members, or shareholders.

...

Publicly traded partnerships are not required to be included as part of a composite return for a pass-through entity.

...

If the individual has other Indiana source income that is not part of the composite return, the requirement to be a part of the composite return is not eliminated.

...

If the individual has no other source of Indiana income, being included in the pass-through entity’s composite return will eliminate the requirement for the individual to file Form IT-40PNR.

Ask Your Own Tax Question
Customer reply replied 3 months ago
Thanks,

You're very welcome ... Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …is thanks enough!

That's the only way I'll be compensated by JustAnswer for the work here

...

Thank you,

Lane

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,973
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,973
12,973 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

Lane is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,336 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,906 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Tax law.FICA Tax law. W-4 and W-2 payroll tax withholding
tax law.FICA Tax law. W-4 and W-2 payroll tax withholding from wages and salaries.gross pay and take home pay. number of hours measured direct work assigned by W-4 and W-2 forms. for Medicare eligibil… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I haven't filed a personal return since 2011 tax year. In
Hello. I haven't filed a personal return since 2011 tax year. In 2013, I moved overseas, and didn't return till 2016. Can I just file my back taxes, or must I consult with tax attorney first for any i… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
From a tax liability perspective, what are the differences
From a tax liability perspective, what are the differences between filing taxes from a trust versus a personal income tax filing ?… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
834 satisfied customers
I'm in the state of Florida and required to sales tax on
I'm in the state of Florida and required to sales tax on Fabrication - how do I determine what percentage of a manager's salary is considered taxable under the fabrication rule … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have a question with regards to state income tax. I live
I have a question with regards ***** ***** income tax. … read more
abci168
abci168
Principal
27 satisfied customers
What rate of withholding is applicable for a domestic
What rate of withholding is applicable for a domestic partnership with 2 foreign partners upon the selling of a rental property in US. … read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
Tax Question: Non-Resident Withholding Tax, Franchise Tax
Tax Question: Non-Resident Withholding Tax, Franchise Tax Board, CA HISTORY: 1. The property is in California 2. The owner resides in outside of California 3. Metro Property Management collects monthl… read more
abci168
abci168
Principal
27 satisfied customers
Are you familiar with income tax laws on business and
Are you familiar with income tax laws on business and personal returns? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Dose mean can not deduct state income taxes only or dose it
dose mean can not deduct state income taxes only or dose it includes property taxes too … read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
US taxation and sales tax issueI started ebay business with
Second opinion] US taxation and sales tax issueI started ebay business with a Korean relative. We don't have a partnership agreement. The partner has an paypal and ebay account, gets a sales order, an… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
For a ny state partnership tax return, if you file an
For a ny state partnership tax return, if you file an extension but don't pay anything and then end up owing a lot. Do they still recognize the extension or do they charge a failure to pay penalty (fo… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,973 satisfied customers
What is a franchise tax. What is franchise tax and it taxed
Is there anything else the Accountant should be aware of?Customer: the home sold was inherented… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
834 satisfied customers
US taxation and sales tax issue I started ebay business with
US taxation and sales tax issueI started ebay business with a Korean relative. We don't have a partnership agreement. The partner has an paypal and ebay account, gets a sales order, and let me dropshi… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,558 satisfied customers
Sell of property tax liability. Ca. Bought home 25 yrs ago
bought home 400,000 selling 2.5 mil. Invested 500,000 owe 800,000… read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,336 satisfied customers
When does the Florida sales tax liability due to the DOR'
When does the Florida sales tax liability due to the DOR' invoice & delivery or title registration with the county tag office? … read more
abci168
abci168
Principal
27 satisfied customers
Is there an exemption for the Philadelphia sales tax? For
Is there an exemption for the Philadelphia sales tax? For example a business enterprise requires a service provider services. Such as pest control service for rental properties? Or, accounting service… read more
abci168
abci168
Principal
27 satisfied customers
Can franking credit on an Australian income tax return be
Can franking credit on an Australian income tax return be used on Form 1116 as tax paid on the franked distributions? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,906 satisfied customers
Is a 1040 US Individual Income Tax Return federal income
Hi Is a 1040 US Individual Income Tax Return federal income taxes owed to the US government? Or is it FICA? I received a letter owing some back taxes and since I'm a priest with a weird set of tax exc… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
682 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x