Neal
California’s position on doing business in California
john
California
For the first time, the factor-presence standard is being applied to a traditional corporate income or franchise tax. It has formerly been incorporated in only non-income based taxes, such as gross-receipts taxes. For tax years beginning on or after January 1, 2011, California defines “doing business” for purposes of income and franchise tax based on a factor presence standard modeled directly on the MTC statute. Companies with property or payroll of $50,000 or sales in excess of $500,000 to California customers will now be determined to be doing business in the state. If more than 25 percent of a company’s sales are in the state, including sales made by independent contractors or agents, the company will be subject to income and franchise tax, regardless of whether or not physical presence has been established.
JOHN J RENNER II
RENNER AND COMPANY,CPA, P.C.
700 N. FAIRFAX STREET SUITE 400
ALEXANDRIA, VA 22314
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