Were it not for New Jersey crashing the list of the worst five states, little would have changed from previous surveys—the states that corporate tax officials love to hate remain fairly consistent. This year, we simplified our maps to highlight the states that really stand out. The states marked the least (or most) fair and predictable are those whose survey scores deviated from the average by more than one standard deviation.

What is your overall impression of the tax environment in this state? Is it fair and predictable?

5 Least Fair:

1. New Jersey
2. California
3. Massachusetts
4. New York
5. Pennsylvania

Hello, Goodbye
How do this state's revenue-department policies and systems influence companies' decisions to locate or expand there?

Least Desirable
 

1. New Jersey
2. California
3. Massachusetts
4. New York
5. Pennsylvania

Kangaroo Courts
How would you rate the independence of this state's administrative appeals process—tax board, administrative law judge, or tax court—from its audit department?

Least Independent
 

1. Pennsylvania
2. Massachusetts
3. California
4. Louisiana
5. Alabama

Black and White
When it comes to settling "gray issues" at the auditor level, which states' auditors are the most unfair or least able to avoid escalation of these issues?

Worst Auditors
 

1. New Jersey
2. California
3. Massachusetts
4. Illinois
5. North Carolina

Friends of Geoffrey

New Jersey again had the dubious distinction of leapfrogging into the lead among most-aggressive states, despite losing the Lanco case. Also notable is Maryland's appearance among the most aggressive states on this map after its courtroom win arguing that certain Delaware holding companies were tax-sheltering shams. Not surprisingly, this map corresponds closely to the map of states that have passed or are considering legislation disallowing company deductions between affilliated companies.

Which states are most aggressive about asserting nexus positions for corporate income tax over corporations with only an economic presence in the state?

5 Most Aggressive
 

1. New Jersey
2. Massachusetts
3. New York
4. California
5. Connecticut

Legislative Repo
Which states' legislatures are likely to eliminate or reduce existing business tax incentives this year?

Most Likely
 

1. California
2. New Jersey
3. Massachusetts
4. Illinois
5. Connecticut

Grabbing for More
Which states are most aggressive about assessing additional tax based on forced combinations and decombinations, IRC ss.482 issues, or business/nonbusiness classifications?

Most Aggressive
 

1. California
2. New York
3. Massachusetts
4. New Jersey
5. Illinois

Clawbacks
Which states are likely to pursue clawbacks of individual company incentives this year?

 

1. California
2. New Jersey
3. New York
4. Massachusetts
5. Illinois

You Are Here

When it comes to aggressively asserting sales-tax nexus, California has held the number-one slot since CFO conducted its first state-tax survey in 1996. Asked if new governor Arnold Schwarzenegger's business-friendly attitude would extend to addressing California's aggressive audits of out-of-state companies, spokesman H.D. Palmer said, "I can't speak to that specific issue," emphasizing instead Schwarzenegger's efforts to aggressively audit the state's own government, and his hopes to improve the climate for California-based businesses.

While no state comes near California's dismal ranking, New Jersey placed a close second, once again making its first appearance among the top-five aggressive states. Its poor ranking in this category could simply reflect general corporate displeasure with the Garden State's recent tax-law changes—which did not include sales-tax changes—but its prodigious leap to the number-two slot suggests its nexus unit has in fact been busier than in the past.

Although long considered an aggressive sales-tax collector, Texas is also a newcomer to the top five. The Lone Star State has recently toyed with such heretical ideas as a state income tax, but it hasn't made significant changes to sales tax. Nonetheless, our survey results—and write-in comments—suggest that the state has significantly increased its nexus efforts. Brian Murphy, Grant Thornton's partner in charge of state and local taxation, says Texas is among the many states that have recently beefed up their nexus units, an impression shared by one respondent who groused, "Texas must have an unlimited audit staff." —T.R.

How would you rate this state's stance on asserting sales/use tax nexus?



5 Most Aggressive
 

1. California
2. New Jersey
3. New York
4. Massachusetts
5. Texas

Links to State and City Departments of Tax Revenue

Alabama - Department of Revenue
Alaska - Department of Revenue
Arizona - Department of Revenue
Arkansas - Tax Legislation
California - Franchise Tax Board
Colorado - Department of Revenue
Connecticut - Department of Revenue Services
Delaware - Division of Revenue
District of Columbia - Office of Tax and Revenue
Florida - Department of Revenue
Georgia - Department of Revenue
Hawaii - Department of Taxation
Idaho - State Tax Commission
Illinois - Department of Revenue
Indiana - Department of Revenue
Iowa - Department of Revenue and Finance
Kansas - Department of Revenue
Kentucky - Department of Revenue
Louisiana - Department of Revenue and Taxation
Maine - Revenue Services
Maryland - Comptroller of the Treasury
Massachusetts - Department of Revenue
Michigan - Department of Treasury
Minnesota - Department of Revenue
Mississippi - State Tax Commission
Missouri - Department of Revenue
Montana - Department of Revenue
Nebraska - Department of Revenue
Nevada - Department of Taxation
New Hampshire - Revenue Administration
New Jersey - Division of Taxation
New Mexico - Taxation and Revenue
New York State - Tax & Finance
North Carolina - Department of Revenue
North Dakota - Office of State Tax Commissioner
Ohio - Department of Taxation
Oklahoma - Tax Commission
Oregon - Department of Revenue
Pennsylvania - Department of Revenue
Rhode Island - Division of Taxation
South Carolina - Department of Revenue
South Dakota - Department of Revenue
Tennessee - Department of Revenue
Texas - Window on State Government
Utah - State Tax Commission
Vermont - Department of Taxes
Virginia - Department of Taxation
Washington - Department of Revenue
West Virginia - State Tax Department
Wisconsin - Department of Revenue
Wyoming - Department of Revenue






Kentucky
Lexington

Michigan
Battle Creek
Detroit
Grand Rapids
Port Huron

Missouri
St. Louis

New York
New York City - Department of Finance

Pennsylvania
Philadelphia



U.S. City information
city-data.com

 

Colin M. Cody, CPA, CMA
TraderStatus.com LLC
6004 Main Street
Trumbull, Connecticut 06611-2400

(203) 268-7000



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