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Tax Nexus Update for Franchisors
Franchisors thinking of expanding into new jurisdictions, and even those that are not changing anything, should be wary. State and local governments, in this time of deficits, are constantly looking for ways to increase their revenues by broadening the scope of their taxes.
According to a report for the Council on State Taxation, “Total State and Local Business Taxes 2000-2004,” released in April 2005, over the last 4 years:
- state and local taxes on businesses have risen faster than total state and local taxes, and business has paid 52% of the increase over those years;
- the corporate income tax represents only 8% of state and local taxes nationally (and the corporate share of federal taxes is about the same); and
- individual income taxes paid by owners of non-corporate businesses represent only 4% of total state and local business taxes.
The states, which generally must run on balanced budgets, are searching for revenues from any source so that they don't have to cut domestic programs too drastically.
But, desperate as they are, the states' ability to tax is limited. A foreign corporation is only subject to a state tax if there is a sufficient nexus between the taxing state and the foreign corporation. The underlying prohibition has two sources: the Due Process Clause and the Commerce Clause of the U.S. Constitution. Until the 1992 decision by the U.S. Supreme Court in Quill Corporation v. North Dakota, (112 S.Ct. 1904, 504 U.S. 298, 119 L.Ed.2d 91 (1992)), most courts did not see any major differences in the concept of “nexus” as defined by the two clauses. See Orvis Company v. Tax Appeals Tribunal, 630 NYS2d 680, 86 NY2d 165 (1995) at p.682 “Until Quill Corp. v. North Dakota, the constitutionally required nexus between the taxing state and the activity, entity or property subject to the tax was applied indistinguishably for purposes of both Due Process and Commerce Clause analysis, ie, a definite link or minimum connection (see, National Bellas Hess v. Department of Revenue, 386 U.S. 753, 756-757, 87 S.Ct. 1389, 1391, 18 L.Ed.2d 505; Scripto v. Carson, 362 U.S. 207, 210-211, 80 S.Ct. 619, 621, 4 L.Ed.2d 660).” But Quill decided that on the same facts “nexus” may be found under the Due Process clause, while it may be lacking under the Commerce Clause.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Anti-Assignment Override Provisions
UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?