State Income Tax Considerations for Non-US Corporations
The following article State income tax considerations for non-US corporations, originally appeared in the May 2024 issue of The Tax Adviser.
With more than $15 trillion in annual household spending, the United States is an attractive market for non-U.S. corporations. Globalization, technological advancements, and multinational trade agreements have facilitated non-U.S. corporations’ doing business in the United States.
Non-U.S. corporations have increased investment in U.S. employees and capital. For organizations operating in the United States, direct state and local taxes on net income typically make up the bulk of those companies’ overall tax burdens. State income tax rules are extremely complex, and inbound companies could unknowingly incur tax liabilities, leading to penalties for noncompliance.
In their article, Ilya Lipin and John Damin highlight key considerations non-U.S. corporations should take into account in connection with state income taxes, including nexus, filing methods, determining state taxable income, structuring, and reporting.
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