United States

California FTB updates factor presence thresholds for 2015

TAX ALERT  | 

On Dec. 1, 2015, the California Franchise Tax Board issued a news release providing an updated schedule of threshold amounts for the state’s factor presence nexus standard.

Pursuant to California Rev. & Tax. Code Sec. 23101, for tax years beginning on or after Jan. 1, 2011, a business entity is doing business and presumed to have California nexus for income tax purposes if the business has:

  • Sales in California, including sales by agents and independent contractors, exceeding the lesser of $500,000 or 25 percent of the total sales of the business;
  • Real and tangible personal property in California exceeding the lesser of $50,000 or 25 percent of the total real and tangible personal property; or
  • Payroll in California exceeding the lesser of $50,000 or 25 percent of the total compensation paid by the business.

By law, these threshold amounts are indexed each year by adjusting them to reflect changes in the California Consumer Price Index.

For 2015, the threshold bracket has been adjusted as follows:

 

2011

2012

2013

2014

2015

Property and Payroll

50,000

50,950

51,816

52,956

53,644

Sales

500,000

509,500

518,162

529,562

536,446


Out-of-state businesses with California property, payroll or sales should review their activities in the state to determine whether they have exceeded these thresholds. Please be aware that exceeding the thresholds provided in California Rev. & Tax. Code Sec. 23101 creates a presumption of nexus. As such, businesses have the opportunity to analyze whether they qualify for Constitutional and other protections, and determine whether to affirmatively rebut the presumption.   

 

AUTHORS


How can we help you?

Contact us by phone 800.274.3978 or
submit your questions, comments, or proposal requests.



Events/Webcasts

LIVE WEBCAST

Government contracting tax webcast

  • January 05, 2017

LIVE WEBCAST

What's next for BEPS: The multilateral instrument

  • December 14, 2016