60 P.L. 86-272 protection). Moreover, some states (e.g., California) take the position that foreign companies are not afforded the protection of PL 86-272 altogether because the statute says “interstate” as opposed to activities between the U.S. and another country. To the extent your company solely sells tangible personal property, it is worth analyzing how to structure the business to take advantage of the protections of P.L. 86-272. 9. Miscellaneous Taxes With over 10,000 state and local taxing jurisdictions, the taxes and fees are almost countless! While our Top 10 has primarily focused on sales tax and corporate income tax, states impose many other taxes that should be considered when doing business in the U.S. While the list below is not exhaustive, common other taxes that businesses must be aware of include: a. Employment Tax – Employers must withhold a percentage of the employee’s wages in trust to be provided to the state. Employment taxes become difficult to comply with when there is a remote workforce because the states’ threshold to withhold income from the take home pay of employees vary, with virtually no uniformity across states. b. Real Estate Transfer Tax – a tax on the transfer of real property, with some states imposing the same or a similar tax on the transfer of a controlling interest in an entity that owns real property. c. Property Tax – An annual tax for owning property in the state. These taxes are based on the value of the property itself and the valuations are often subject to debate. There are also ad valorem taxation in states that is imposed based on the value of tangible personal property located in the state. d. Unincorporated Business Tax – Several localities impose a separate income tax on unincorporated entities. As an example, NYC imposes its Unincorporated Business Tax on non-incorporated entities doing business in the state. Complying with each locality’s rules can become complicated and make tax planning even more complex. e. State and Local Gross Receipts Taxes – Certain states (e.g., Ohio, Washington) and certain localities impose a gross receipts tax based on total revenue, but typically at a lower tax rate than an income tax. For example, San Francisco imposes its gross receipts taxes on all entities conducting business within the City. Gross receipts taxes are burdensome on businesses that have not yet generated taxable income because no
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