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					Economic Nexus Worksheet/Calculator
Introduction:

          Use this Excel workbook to:                                                                           Note: "Financial
                 •Determine if your business has economic nexus with Washington                                 institutions" (banks,
                 •Calculate your taxable Washington income                                                      savings & loans and
                                                                                                                credit unions) must use
          If you have economic nexus with Washington, you must register your business with the state and        WAC 458-20-19404 to
          report and pay taxes on the Washington portion of your income (apportionment).                        apportion income
                                                                                                                between Washington and
          Do not use this workbook for sales of tangible personal property under the retailing or wholesaling   other states. This Excel
          B&O tax classifications. These classifications are not affected by economic nexus.                    workbook was not
                                                                                                                intended to be used by
          How to use this workbook                                                                              Financial Institutions.
                1. Use steps 1 through 5 in the "nexus" tab to determine if you have economic nexus
                2. If you have economic nexus, use the “Apportionment” tab to calculate your taxable
                    Washington income
                3. Use the “Attribution of Income” tab to determine which of your income is considered
                    Washington income
                4. Use the “Definitions” tab to look up terms you do not understand



          B&O tax classifications subject to apportionment
B&O tax classifications subject to apportionment
A business may be taxable under more than one classification if it conducts more than one
business activity. Click once on the links below to see more information about the B&O tax
classifications. Click on the button below to see other B&O tax classifications subject to



* service and other activities
* royalties
Step
  1 Basic Economic Nexus Test

       Most businesses will be able to determine whether they have economic nexus in Washington by
       reviewing the basic criteria below. If you cannot determine whether your business has economic
       nexus in Washington, go to Step 2 to begin the nexus calculation.


        You are considered to have economic nexus in Washington and subject to the B&O tax
        on your Washington (apportioned) income if:

              •You are an individual that is either a resident or domiciled in Washington,
              •The business entity is either organized or domiciled in Washington, or
              •In a tax year you have one of the following in Washington:

                      Property exceeding $50,000,
                      Payroll exceeding $50,000,
                      Sales exceeding $250,000, or



                                                Nexus Instructions: If you are not certain whether you have established
                                                                   nexus (under the above thresholds), go to Step 2 and
                                                                   begin the calculation.

                                Apportionable Income Instructions: If you have determined that your business has
                                                                   economic nexus with the state of Washington, you
                                                                   may proceed to Step 4 to begin the apportionment
                                                                   calculation to determine your Washington income
                                                                   subject to the B&O tax.

                                        Other Income Instructions: Other income (including Retailing and Wholesaling) is
                                                                   only subject to Washington taxes if your business has
                                                                   established physical nexus.
2   Nexus Calculation - Property Factor

        Enter information about property owned or rented by your business for the current tax year plus the
        end of the two previous tax years. See the Definitions worksheet for definitions and explanations
        about terms shown in green.

    Current Year - Based on current data:
        Washington property:
        Enter the original cost of all real property.                                                   -
        Enter the original cost of all tangible personal property.                                      -
        Enter the original cost of all intangible property.                                             -
        Enter the net annual rental rate of real property rented.                    x 8                -
        Enter the net annual rental rate of tangible personal property
        rented.                                                                      x 8                -
                    Sum of property owned in Washington - Current Year                                  -

        Worldwide property:
        Enter the original cost of all real property.                                                   -
        Enter the original cost of all tangible personal property.                                      -
        Enter the original cost of all intangible property.                                             -
        Enter the net annual rental rate of real property rented.                    x 8                -
        Enter the net annual rental rate of tangible personal property
        rented.                                                                      x 8                -
                        Sum of property owned worldwide - Current Year                                  -
Previous Year - For the end of the preceding tax year:
    Washington property:
    Enter the original cost of all real property.                           -
    Enter the original cost of all tangible personal property.              -
    Enter the original cost of all intangible property.                     -
    Enter the net annual rental rate of real property rented.         x 8   -
    Enter the net annual rental rate of tangible personal property
    rented.                                                           x 8   -
               Sum of property owned in Washington - Previous Year          -

    Worldwide property:
    Enter the original cost of all real property.                           -
    Enter the original cost of all tangible personal property.              -
    Enter the original cost of all intangible property.                     -

    Enter the net annual rental rate of real property rented.         x 8   -
    Enter the net annual rental rate of tangible personal property
    rented.                                                           x 8   -
                   Sum of property owned worldwide - Previous Year          -


Previous Year 2 - For the end of the tax year, two years preceding:
    Washington property:
    Enter the original cost of all real property.                           -
    Enter the original cost of all tangible personal property.              -
    Enter the original cost of all intangible property.                     -
    Enter the net annual rental rate of real property rented.         x 8   -
    Enter the net annual rental rate of tangible personal property
    rented.                                                           x 8   -
             Sum of property owned in Washington - Previous Year 2          -

    Worldwide property:
    Enter the original cost of all real property.                           -
    Enter the original cost of all tangible personal property.              -
    Enter the original cost of all intangible property.                     -   -
    Enter the net annual rental rate of real property rented.         x 8   -   -
    Enter the net annual rental rate of tangible personal property
    rented.                                                           x 8   -   -
                 Sum of property owned worldwide - Previous Year 2          -
Summary:

           Value of property at the end of each tax year:
                                                               Worldwide                  Washington
                                                                Property                   Property
                                            Current Year                   -                        -
                                         Previous Year 1                   -                        -
                                         Previous Year 2                   -                        -

                              Average value of property:
                                                                                                         Percent       Economic       Economic
                                                               Worldwide                  Washington    Washington   Nexus           Nexus             Physical
                                                                Property                   Property      Property     (> $50,000)      (> 25%)           Nexus
                                            Current Year                   -                        -           0.0%       -               -               -
                                         Previous Year 1                   -                        -           0.0%       -               -               -
                                                                                                                                    no nexus         no nexus
                                     Nexus Instructions: You have not established nexus based on the property                                    0                0
                                                            factor. Continue to Step 3.                                                          0




                     Apportionable Income Instructions: Not applicable until you have established economic
                                                            nexus.

                             Other Income Instructions: After completing the Nexus worksheet, review Step 5
                                                            to determine if your business has physical nexus.
3   Nexus Calculation - Payroll Factor



       Enter information about payroll for your business. You must enter payroll compensation for the current tax
       year and the previous tax year. See the Definitions worksheet for definitions of terms shown in green.

       Washington payroll:                                                Current Year          Previous Year
       Enter the amount of employee compensation.
       Enter the amount of nonemployee compensation.
                             Sum of Washington payroll - Current Year                  -                            -

       Worldwide payroll:                                                 Current Year          Previous Year
       Enter the amount of employee compensation.
       Enter the amount of nonemployee compensation.
                              Sum of worldwide payroll - Current Year                  -                            -

       Summary:                                                                                                                                                            -

                                                                                                                         Percent       Economic         Economic
                                                                           Worldwide                Washington          Washington   Nexus             Nexus         Physical
                                                                            Payroll                  Payroll              Payroll     (> $50,000)        (> 25%)       Nexus
                                                          Current Year                 -                     -                  0.0%       -                 -           -
                                                         Previous Year                 -                     -                  0.0%       -                 -           -
                                                                                                                                                    0 no nexus     no nexus
                                                   Nexus Instructions: You have not established nexus based on the payroll factor.                  0            0            0
                                                                       Continue to Step 4.                                                                       0




                                   Apportionable Income Instructions: Not applicable until you have established economic nexus.


                                           Other Income Instructions: After completing the Nexus worksheet, review Step 5 to
                                                                      determine if your business has established physical nexus.
4   Nexus Calculation - Receipts Factor

       Enter gross income of the business subject to the service and other activities and royalities B&O tax
       classifications for the current year and the previous tax year. If you are subject to other B&O tax
       classifications that must apportion income, use the drop down list available on the two blank lines.
       (The drop down list become visible by clicking on a blank line for Washington income. These lines
       wlll automatically transfer to the Worldwide income and the Apportionment Worksheet after
       selected.) Attribution of income between Washington and out-of-state is explained in the
       Attribution of Income worksheet. Amounts entered below may be used in the calculations of
       receipts factors on the Apportionment worksheet.

       Washington income subject to the following B&O tax
       classifications:                                                     Current Year    Previous Year
       service and other activities
       royalties




          Sum of Washington income subject to apportionable B&O
       classifications - Current Year                                                  -                       -


       Worldwide income that would be subject to the following B&O
       tax classifications, if the income was attributable to Washington:   Current Year    Previous Year
       service and other activities
       royalties




          Sum of worldwide income that would be subject to
       apportionable B&O classifications, if the income was
       attributable to Washington - Current Year                                       -                       -
Summary:

                                                                                          Percent      Economic          Economic
                                                 Worldwide               Washington      Washington   Nexus             Nexus
                                                  Receipts                Receipts        Receipts    (> $250,000)        (> 25%)
                               Current Year                  -                     -             0.0%       -                 -
                              Previous Year                  -                     -             0.0%       -                 -
                                                                                                                     0 no nexus
                         Nexus Instructions: You have not established economic nexus under the                                      0
                                              receipts factor. Continue to Step 5 for a nexus
                                              summary.

           Apportionable Income Instructions: Not applicable until you have established economic
                                              nexus.




                  Other Income Instructions: After completing the Nexus worksheet, review Step 5
                                              to determine if your business has physical nexus.
5   Nexus Worksheet Summary

       Your business has established the following types of nexus in these years:

                                                                            Current Year          Previous Year
                                                       Physical Nexus            -                      -
                                                      Economic Nexus             -                      -

       Ramifications:

                                                     Economic Nexus:
                                                                         A business that has established economic nexus is subject to
                                                                         B&O tax on their income taxable under the B&O tax
                                                                         classifications listed above, on an apportioned basis.

                                                       Physical Nexus:
                                                                         A business that has income taxable under other B&O tax
                                                                         classifications not listed above (such as retailing,
                                                                         wholesaling, manufacturing, etc.) must have physical nexus
                                                                         to be subject to B&O tax. Note: Physical nexus may be
                                                                         established in ways that are not identified in this worksheet.

                                           Statutory Period for Nexus: A business has nexus in Washington for the calendar year it
                                                                       establishes nexus and the following calendar year.
Apportionment of Income
Computation of the Receipts Factors and Apportionment:

     The table below automatically calculates the amount of "apportionable       Reporting for 2010
     income" that is subject to Washington B&O tax using the criteria you
     select below and the data entered from the Nexus worksheet. You may         Businesses may use one of the following ways
     need to enter an (Throwout rule) adjustment to worldwide                    to calculate "receipts factors" for 2010:
     apportionable income for applicable B&O tax classifications that are
     attributable to other states when the apportionable income attributable            •Use 2009 receipts data
     to another state:                                                                  •Calculate new receipts factors each
                                                                                        period based on current year (2010)
            •is not subject to a tax on gross or net income and at least some           receipts data
            of the service activity is performed in Washington. (Transaction            •Use estimated 2010 receipts factors
            taxes, such as sales tax, are not considered a tax on gross or net
            income.), and                                                        Any end of the year (True Up) adjustments to
                                                                                 2010 income apportioned to Washington are
            •does not establish economic nexus based on Washington               required to be made by October 31, 2011, by
                                                                                 filing an amended return, and interest will
                                                                                 apply to additional tax owed. Penalties may
     Step 1. Choose one of the following ways to calculate "receipts factors"    apply after October 31, 2011, for additional
     for 2010 and enter the number in the box below:                             taxes owed.

            1. Use 2009 receipts data
            2. Calculate new receipts factors each period based on current
               year (2010) receipts data
            3. Use estimated 2010 receipts factors (estimate the percentage
               of your Washington receipts to Worldwide receipts)




               2010 receipts factor calculation method




    Step 2. Enter 1; 2; or 3 in the box above before proceeding to this step.
 If you change the method for calculating the receipts factors, you may disrupt the
 table's ability to calculate the receipts factors. You may need to use the "undo
 button" or download the worksheet again if you have problems with the



Step 3. Enter the current reporting period worldwide gross income applicable for
each B&O tax classification in column 7 of the table below.

Step 4. Report amounts shown in column 8 in the table below on your excise tax
return.

                                                           1                2                3               4                    5              6                7              8
                                                                                                                             Adjusted                         Current
                                                      Estimated        Washington       Worldwide       Worldwide           Worldwide                        Reporting
                                                    Receipts Factor   Apportionable    Apportionable   Apportionable       Apportionable Receipts Factor       Period         Income
                                                       for 2010        Income not       Income not      Income not          Income not    for each B&O       Worldwide     Apportioned to
                                                        (0.xxxx)         Needed           Needed          Needed              Needed       Classification   Gross Income    Washington
                B&O Tax Classification                                                                                         (3 - 4)      (2 / 5 or 1)                       (6 x 7)
service and other activities                                                       -              -                    0              -            0.0000
royalties                                                                          -              -                    0              -            0.0000


                                                                                   -              -                    0              -            0.0000


                                                                                   -              -                    0              -            0.0000
Examples of adjustments to worldwide income:

        1. An accounting firm located in Washington that has a tax client located
        in Maine. The client was a resident of Washington when he became a
        client of the accounting firm, but has resided in Maine for the last ten
        years. The firm has never sent an employee or representative to Maine,
        and the gross income for preparing tax returns for this client amounts to
        $400 annually. The firm performs all tax services for this client from their
        Washington location.

        Because the firm is not subject to a gross or net income tax in Maine, has
        not established economic nexus in Maine by exceeding either the Sales
        ($250,000), Property ($50,000) or Wages ($50,000) thresholds for
        income attributable to Maine, and the services are provided in
        Washington, the firm must make an (Throwout) adjustment for $400
        from the denominator (worldwide "apportionable income").

        2. An architect located in Oregon has clients in Washington, Oregon, and
        one new client in Nevada. Gross receipts generated from Washington
        clients total $260,000, and gross receipts from the Nevada client are
        $60,000. The architect has economic nexus with Washington, but not in
        Nevada. The architect is operating as a sole-proprietorship. Nevada does
        not have a tax on the gross or net income of sole-proprietorships. All the
        work for the Nevada client is performed in Oregon.

        The architect does not make an adjustment to worldwide "apportionable
        income" because the architect does not perform any of the service from
        Washington.


Instructions:

    Report the income apportioned to Washington from the table above on your excise
    tax return.
1
2
3
Definitions

            Term
Compensation




Intangible property
Net annual rental rate

Nonemployee compensation

Original cost
Property




Financial institution      (i) Any corporation or other business entity chartered under Titles
                           the Federal Bank Holding Company Act of
                           company under the Federal National Housing Act, as amended;
                           (ii) A national bank organized and existing as a national bank association pursuant to the p
                           National Bank Act,
                           (iii) A savings association or federal savings bank as defined in the Federal Deposit Insuran
                           1813
                           (iv) Any bank or thrift institution incorporated or organized under the laws of any state;
                           (v) Any corporation organized under the provisions of
                           (vi) Any agency or branch of a foreign depository as defined in
                           RCW
                           (vii) Any credit union, other than a state or federal credit union exempt under state or fed
                           (viii) A production credit association organized under the Federal Farm Credit Act of
                                                      Definition
Wages, salaries, commissions, and any other form of remuneration paid to employees and defined as gross
income under 26 U.S.C. Sec. 61 of the federal internal revenue code of 1986, as existing on July 1, 2010.
Compensation is paid in this state if the compensation is properly reportable to this state for unemployment
compensation tax purposes, regardless of whether the compensation was actually reported to this state.
Includes copyrights, patents, licenses, franchise rights, trademarks, trade names, and similar items
The annual rental rate paid by the taxpayer less any annual rental rate received by the taxpayer from subrentals.
This amount is multiplied by eight to determine the value of rented assets.
Includes the gross amount paid to nonemployees who represent the taxpayer in interactions with the taxpayer's
clients and includes sales commissions
Typically the amount paid for property, not including charges for sales tax
Means tangible, intangible, and real property owned or rented and used in this state during the calendar year,
except it does not include ownership of or rights in computer software, including computer software used in
providing a digtal automated service; master copies of software; and digital goods or digital codes residing on
servers located in this state.
(i) Any corporation or other business entity chartered under Titles 30, 31, 32, or 33 RCW, or registered under
the Federal Bank Holding Company Act of 1956, as amended, or registered as a savings and loan holding
company under the Federal National Housing Act, as amended;
(ii) A national bank organized and existing as a national bank association pursuant to the provisions of the
National Bank Act, 12 U.S.C. Sec. 21 et seq.;
(iii) A savings association or federal savings bank as defined in the Federal Deposit Insurance Act, 12 U.S.C. Sec.
1813(b)(1);
(iv) Any bank or thrift institution incorporated or organized under the laws of any state;
(v) Any corporation organized under the provisions of 12 U.S.C. Secs. 611 to 631;
(vi) Any agency or branch of a foreign depository as defined in 12 U.S.C. Sec. 3101 that is not exempt under
RCW 82.04.315;
(vii) Any credit union, other than a state or federal credit union exempt under state or federal law;
(viii) A production credit association organized under the Federal Farm Credit Act of 1933, all of whose stock
Attribution of Income
      Note: The following instructions for attribution of income do not apply to "financial institutions." Attribution of in
      discussed in WAC 458-20-19404.


      Royalty Income                                                                  Other Income
      To compute the numerator of the receipts factor, gross income                   Gross income of the business genera
      from royalties is attributable to states as follows:                            than wholesale and retail sales) is at

      1. Place of use: where the customer used the taxpayer’s intangible               1. Where the customer received the
      property. The location of the use of the intangible is determined on            service. The location of the benefit o
      a license use basis.                                                            determined on an activity by activity
                                                                                      benefit of a service in this state whe
      2. Primary place of use: if the customer used the intangible
      property in more than one state, gross income of the business must                       a. The service relates to real
      be attributed to the state in which the intangible property was                          b. An apportionable service
      primarily used.                                                                          property located in this stat
                                                                                               received; or
      3. Office of negotiation: if the taxpayer is unable to attribute gross                   c. The service does not relat
      income to a location under 1 or 2, then gross income must be                             property, and:
      attributed to the office of the customer from which the royalty
      agreement with the taxpayer was negotiated.

      4. Billing state: if the taxpayer is unable to attribute gross income to
      a location under 1, 2, or 3, then gross income must be attributed to
      the state to which the billing statement or invoices are sent to the
      customer by the taxpayer.

      5. Payment state: if the taxpayer is unable to attribute gross income           2. If the customer received the bene
      to a location under 1, 2, 3, or 4, then gross income must be                    one state, gross income of the busin
      attributed to the state from which the customer sends payment to                state in which the benefit of the ser
      taxpayer.
                                                                                      3. If the taxpayer is unable to attribu
      6. Customer’s address: if the taxpayer is unable to attribute gross             under 1 or 2, gross income of the bu
      income under 1, 2, 3, 4, or 5, then gross income must be attributed             state from which the customer orde
      to the state where the customer is located as indicated by
      customer’s address:                                                             4. If the taxpayer is unable to attribu
                                                                                      under 1 - 3, gross income of the bus
              a. As shown in the taxpayer’s business records maintained               state to which the billing statements
              in the regular course of business; or                                   customer by the taxpayer.
              b. Obtained during negotiation of the contract for the use
              of the taxpayer’s intangible property, including any address            5. If the taxpayer is unable to attribu
              of a customer’s payment instrument when readily available               under 1 - 4, gross income of the bus
              to the taxpayer and no other address is available.                      state from which the customer send

      7. Taxpayer’s domicile: if the taxpayer is unable to attribute gross            6. If the taxpayer is unable to attribu
      income under 1, 2, 3, 4, 5, or 6, then gross income must be                     under 1 - 5, gross income of the bus
      attributed to the commercial domicile of the taxpayer.                          state where the customer is located
attributed to the commercial domicile of the taxpayer.   state where the customer is located
                                                         address: (a) Shown in the taxpayer's
                                                         the regular course of business; or (b
                                                         of the sale or the negotiation of the
                                                         any address of a customer's paymen
                                                         available to the taxpayer and no oth

                                                         7. If the taxpayer is unable to attribu
                                                         under 1 - 6, gross income of the bus
                                                         commercial domicile of the taxpaye
    institutions." Attribution of income for financial institutions is




ther Income
oss income of the business generated from each activity (other
an wholesale and retail sales) is attributable to the state:

 Where the customer received the benefit of the taxpayer's
rvice. The location of the benefit of the service or services is
termined on an activity by activity basis. A customer receives the
nefit of a service in this state when:

      a. The service relates to real property located in this state;
      b. An apportionable service relates to tangible personal
      property located in this state at the time the service is
      received; or
      c. The service does not relate to real or tangible personal
      property, and:

              i. The service is provided to a person not engaged in
              business who is physically present in this state at the
              time the service is received; or
              ii. The service is provided to a person engaged in
              business in this state, and the service relates to the
              person’s business activities in this state.

 If the customer received the benefit of the service in more than
 e state, gross income of the business must be attributed to the
ate in which the benefit of the service was primarily received.

 If the taxpayer is unable to attribute gross income of the business
            , gross income of the business must be attributed to the
ate from which the customer ordered the service.

 If the taxpayer is unable to attribute gross income of the business
           , gross income of the business must be attributed to the
ate to which the billing statements or invoices are sent to the
stomer by the taxpayer.

 If the taxpayer is unable to attribute gross income of the business
           , gross income of the business must be attributed to the
ate from which the customer sends payment to the taxpayer.

 If the taxpayer is unable to attribute gross income of the business
           , gross income of the business must be attributed to the
ate where the customer is located as indicated by the customer's
ate where the customer is located as indicated by the customer's
 dress: (a) Shown in the taxpayer's business records maintained in
e regular course of business; or (b) obtained during consummation
 the sale or the negotiation of the contract for services, including
 y address of a customer's payment instrument when readily
ailable to the taxpayer and no other address is available.

If the taxpayer is unable to attribute gross income of the business
          , gross income of the business must be attributed to the
mmercial domicile of the taxpayer.
Other B&O tax classifications subject to apportionment

Click once on the links below to see more information about the B&O tax classifications.

* international investment management
* printing and publishing (advertising income only)
* international freight broker
* insurance producer / title insurance agents / surplus line
broker commissions
* research and development by nonprofit corporations
* publication of newspapers (advertising income only)
* cleanup of radioactive waste (certain accounting, legal,
and janitorial income only)
* travel agent / tour operator
* nonprofit hospital
* insurance general agents
* non-manufacturing aerospace product development
* stevedoring
* low-level radioactive waste disposal
* inspecting, testing, labeling, and storing canned salmon
* contests of chance
* horse racing
* licensed boarding homes

				
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Description: Taxpayer Records document sample