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State & Local Tax Update: Indiana Follows Trend, Adopts Market-Based Sourcing

Posted 8:45 PM by

Over the past five years, many states have moved from cost-of-performance methodologies to market-based sourcing, modifying sourcing of receipts (other than of tangible personal property) and creating additional tax revenue from out-of-state service providers. On May 1, 2019, Indiana followed suit when Gov. Eric Holcomb signed Senate Bill 563 into law.

Effective for tax years beginning on or after Jan. 1, 2019, entities performing services other than telecommunications and broadcasting will determine their income sourced to Indiana based on where the entity’s customer or market is located. Previously, the income was determined based on where the entity was performing the greater proportion of the income-producing activity or services.

The change is generally considered a positive one for companies with Indiana-based operations who provide a majority of their services for customers outside of the state. Contact your KSM Advisor for more details about how this change will impact your business.

About the Author
Stephen Royster is a partner in Katz, Sapper & Miller’s State and Local Tax Group. Stephen helps clients navigate the multistate tax landscape by advising them on tax law changes in every state, ensuring they are efficiently structured, and ultimately protecting their bottom line. Connect with him on LinkedIn.

 

About the Author
Amy Zimmer is a director in Katz, Sapper & Miller's State and Local Tax Group. Amy advocates for clients in the multistate tax arena, protecting their assets by resolving complex compliance issues and negotiating settlements with taxing jurisdictions. Connect with her on LinkedIn.

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