What is market-based sourcing?

“Market-based sourcing” is the method of assigning gross receipts to a state based on where “benefit is received” for the purpose of determining the sales factor.

When did Iowa adopt market-based sourcing?

In recent years, many states have replaced the cost of performance rule with market-based sourcing rules for sales of services. In 2000, only a handful of states, including Georgia, Iowa, Maryland, and Minnesota, used market-based sourcing rules for sales of services.

What is market-based sourcing apportionment?

California uses market-based sourcing to apportion sales of other than tangible personal property to the state. Under the governing statute, sales of services are sourced to California to the extent the purchaser of the service receives the benefit in the state.

Is Hawaii market-based sourcing?

In 2019 Hawaii enacted Senate Bill (SB) 394, adopting market-based sourcing for Hawaii income tax purposes for tax years beginning after 2019. Under this legislation, receipts from services will be sourced to Hawaii if the service is used or consumed in the state.

Is New York market based sourcing?

For purposes of sourcing receipts from services, New York State stipulates that both C corporations and S corporations should source their receipts according to “market-based sourcing.” This means that the receipts are sourced to the location of the customer who receives the benefit of the services provided.

Is Maine market based sourcing?

In fact, most of the states that use market-based rules for sourcing sales of services have also adopted a single-factor sales apportionment formula. Examples include California (elective), Georgia, Illinois, Iowa, Maine, Michigan, Minnesota (post-2013), Utah (post-2012, for certain industries), and Wisconsin.

Is New York market-based sourcing?

Is Maine market-based sourcing?

Does NY have a throwback rule?

The other twenty states that tax corporate income (five states do not tax corporate profits), but do not have a throwback rule in place are: Arizona, Connecticut, Delaware, Florida, Georgia, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Nebraska, New York, North Carolina, Ohio, Pennsylvania, Rhode …

Is NYC UBT market-based sourcing?

15 The UBT changed to the current place of performance standard in order to conform with the sourcing provisions that applied under the GCT (those same standards still apply under the GCT, but since 2015, the GCT now only applies to S corporations; C corporations use a market-based method under the newly enacted NYC …

Is New Hampshire market based sourcing?

New Hampshire Adopts Market-Based Sourcing for 2021 & Beyond The New Hampshire Department of Revenue Administration has adopted various business profits tax and business enterprise tax rules that implement the market-based sourcing method of apportioning sales of services and intangible receipts in the sales factor.

What is market-based sourcing in California?

Under the market-based sourcing rule, sales of services are assigned to California “to the extent the purchaser of the service received the benefit of the service in this state.” 6

How many states have adopted market-based sourcing rules for services?

Thirteen states have adopted market-based sourcing rules for sales of services, as shown in the exhibit.

Is market-based sourcing a good fit for state taxpayers?

• Market-based sourcing arguably serves the purpose of the sales factor by more accurately reflecting the customer base for taxpayer’s services • Cost of performance tends to overweight the sales factor for service providers operating in a state. May be viewed as a disincentive for service providers considering investment in the state

What is the market-based sourcing method of apportionment?

Many states are adopting the market-based sourcing method of apportioning sales of services to a state instead of the UDITPA cost-of-performance method. In addition, most states adopting market-based sourcing require or allow taxpayers to elect to use a single-factor sales apportionment formula.