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California

Adjusted Factor-Based Nexus Thresholds Announced, Other Matters Discussed

cch-logo.jpgIn the January 2013 issue of Tax News, the California Franchise Tax Board (FTB) announced the inflation-adjusted property, payroll, and sales factor nexus thresholds for determining whether a multistate corporation is doing business in California and must file a corporation franchise tax return. Effective for tax years beginning on or after January 1, 2012, the property factor threshold is increased from $50,000 to $50,950, the payroll factor from $50,000 to $50,950, and the sales factor from $500,000 to $509,500. The taxpayer’s pro rata share of sales, property, and payroll from partnerships, LLCs treated as partnerships, and S corporations must be included when determining the amount of the taxpayer’s sales, property, and payroll for doing business purposes.

A variety of other corporation franchise and personal income tax topics are covered in the newsletter, including:

  • fraud prevention techniques for individual income tax preparers;
  • undelivered tax refunds;
  • recent updates to the FTB’s information directory (FTB 1240);
  • an upcoming free webinar on filing tips for new business owners;
  • the first in a series of articles on common audit issues for both individual and business entity taxpayers;
  • changes to the power of attorney form, FTB 3520;
  • the taxpayers’ bill of rights annual report to the Legislature and hearing update; and
  • Proposition 39 that repealed the annual single sales factor apportionment election for multistate taxpayers computing corporation franchise tax liability and made the use of single sales factor apportionment mandatory for all but those taxpayers required to use equal-weighted, three-factor apportionment.

Tax News, California Franchise Tax Board, January 2013

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