6. Multi-jurisdictional Tax

Question 1

What is the Interstate Income Act of 1959?

Answer 1

Restricts a state’s authority to tax interstate commerce

Question 2

What are the principles of the Interstate Income Act of 1959?

Answer 2

A state can’t collect income tax on sales within its borders as long as the orders are filled and shipped outside of the state

Applies to tangible property only

Does not protect a Corporation in the state where incorporated

Does not protect from taxes using metrics other than income (Ex: Sales Tax)

Question 3

What is the Uniform Division of Income for Tax Purposes Act (UDITPA)?

Answer 3

Uniform criteria for determining taxable income of multi-state corporations

Also known as the Multi-State Tax Compact

Question 4

What are the basic principles of UDITPA?

Answer 4

Designed to ensure a company is not taxed more than once on its income

Forces a corporation to segregate Business Income from Non-Business Income

Question 5

What is considered Business Income?

Answer 5

Part of the corporation’s regular course of business

Includes acquisition of tangible and intangible property if such activities are part of the regular trade or business