California - Throwback not required when taxpayer is subject to tax in the destination jurisdiction using CA economic nexus rule

October 2012


In a recently released Chief Counsel Ruling, the Franchise Tax Board (FTB) applied principles of California's new economic nexus standard, the new Finnigan rule, and market based sourcing to determine when throwback of sales of tangible personal property is required. The FTB found that a taxpayer does not have to throw back tangible personal property sales where it has more than $500,000 of sales in a foreign jurisdiction. Additionally, a taxpayer does not have to throw back domestic tangible personal property sales when a member of its California unitary group has more than $500,000 of sales, including sales of other than tangible personal property, in the destination state. [Chief Counsel Ruling 2012-03 (8/28/12)]

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