The Importance Of Multistate Taxation

Introduction Multistate taxation typically occurs when corporations do business activities in more than one state. Due to the activity in multiple states, the states need to incur the taxes towards that company. In order to understand multistate taxation, we must first understand the role of sales and use tax. After defining the purpose and background information of sales and use tax, it will set up a course to explain nexus and the relationship with multistate taxation. Corporations have to must face apportionment to determine the value of state tax for each state. Some corporations produce enormous sums of interest income, which may be taxed. Planning for multistate taxation can benefit for the taxpayer payer but not for the government due to the lowered state tax burden. The failing consistency in the multistate taxation lead to a state government tax agency that would define tax laws that relate towards multistate businesses. Lastly, the growing industry of businesses operating in multiple states improved the multistate taxation developments over the past couple of years. …show more content…
Without multistate taxation, the state and local governments will lose revenues. Also, one state will benefit more in terms of gaining revenue through tax if multistate taxation was not of importance. The taxes that are involved in state taxes are vendor tax, consumer tax, and the combination between the two. These taxes are a form of a state sales tax in which all states have except five states (Alaska, Delaware, Montana, New Hampshire, and Oregon) do not have sales tax. Another way state governments earn revenues is through income taxes, in which this tax is the majority topic for multistate