Deck 8: State Tax Services

Question 1

Which of the following statements best describes the National Nexus Program?

A) It is designed to avoid federal and state tax duplication.
B) It allows the Multistate Tax Commission to perform a comprehensive audit of a business's taxes for several states at one time.
C) It provides support to the states on identifying potential companies for referral to the joint audit program.
D) None of the above.

Answer 1

C

Question 2

The Multistate Tax Commission is a organization of state governments created to:

A) facilitate the proper determination of state and local tax liability of multistate taxpayers.
B) simplify and modernize state sales and use tax administration.
C) facilitate the proper determination of Federal tax liability of multistate taxpayers.
D) All of the above.

Answer 2

A

Question 3

Tax statutes enacted by the state legislatures are signed by the:

A) President of the United States.
B) State Governors.
C) Commissioner of Internal Revenue.
D) Multistate Tax Commission.

Answer 3

B

Question 4

Which of the following generally constrains the type of taxes imposed within a state?

A) U.S. Constitution
B) State Constitution
C) Federal Internal Revenue Code
D) All of the above.

Question 5

Which of the following statements regarding the history of state and local taxation is INCORRECT?

A) In the southern states, early taxes were based on import/exports.
B) State income taxes were introduced in the early 1900s.
C) State sales taxes were imposed before state property taxes.
D) States relied on property taxes for revenue before income taxes were introduced.
E) All of the above statements are correct.

Question 6

RIA StateNet is:

A) a concise state-by-state analysis of all major taxes with links to state materials.
B) a database consisting of proposed and current state legislation.
C) the weekly state tax newsletter furnished with a Checkpoint subscription.
D) a feature that enables the creation of charts from various tax materials.

Question 7

Which of the following clauses of the U.S. Constitution immunizes the Federal government from taxation by the states?

A) Supremacy Clause
B) Commerce Clause
C) Due Process Clause
D) Equal Protection Clause

Question 8

Which Federal Constitutional clause states that Congress has the power to regulate business with foreign nations and among States?

A) Due Process Clause
B) Supremacy Clause
C) Equal protection Clause
D) Commerce Clause

Question 9

The All States Tax Guide, a special feature of RIA's State and Local Tax service, provides:

A) multistate charts that can cut across a variety of taxes and/or states.
B) the latest news on state tax developments.
C) a database consisting of all proposed legislation in full text.
D) a concise state-by-state analysis of all major taxes, with citations to state materials.

Question 10

Which of the following are criteria developed by the U.S. Supreme Court for allowing a state to tax interstate commerce?

A) The tax only applies to businesses with a substantial nexus with the taxing state.
B) The tax burden is fairly apportioned.
C) The tax is related to the services provided by the state.
D) All of the above.

Question 11

Which of the following statements is CORRECT regarding State judicial systems?

A) State Supreme Court precedents apply to all states.
B) Most states have specialized tax courts.
C) Most states have a three-tier judicial system.
D) All of the above statements are correct.

Question 12

Generally, local governments are authorized to impose taxes by the:

A) state statutory or constitutional provisions.
B) State Governor.
C) The President of the United States.
D) Secretary of the U.S. Treasury.
E) U.S. Constitution.

Question 13

Severance taxes are imposed on:

A) sale of real estate.
B) removal of natural resources from land or water.
C) sale of stocks.
D) all of the above.

Question 14

Which Federal Constitutional clause limits the territorial scope of a state's taxing authority based on "fairness" to tax?

A) Due Process Clause
B) Commerce Clause
C) Equal protection Clause
D) all of the above

Question 15

The Uniform Division of Income for Tax Purposes Act UDITPA) was drafted for which of the following purposes?

A) To help taxpayers understand nexus and business registration requirements.
B) To perform comprehensive audits of multistate businesses.
C) To create greater uniformity in the measurement of business versus nonbusiness income.
D) All of the above.

Question 16

Which two U.S. Constitutional clauses primarily control the states' power to tax out-of state individuals and entities?

A) Due Process Clause and Equal Protection Clause
B) Supremacy Clause and Commerce Clause
C) Commerce Clause and Due Process Clause
D) Supremacy Clause and Due Process Clause

Question 17

State revenue departments are:

A) administrative agencies responsible for interpreting and enforcing tax statutes.
B) legislative bodies responsible for enacting tax statutes.
C) branches of the Internal Revenue Service.
D) none of the above.

Question 18

Which statement is CORRECT regarding State sales taxes?

A) They were first imposed in the early 20th century.
B) New York had the first city sales tax.
C) They were first imposed in the early 19^th century.
D) Only a) and b) are correct.
E) Only b) and c) are correct.

Question 19

The purpose of the Streamlined Sales and Use Tax Agreement is to:

A) prevent income taxation of interstate commerce if a company's only business within a state is solicitation of orders.
B) encourage states to model their tax structures after the Federal tax system.
C) phase out sales and use tax gradually.
D) simplify and modernize sales and use tax administration.

Question 20

What effect does the Interstate Income Law Pubic Law 86-272) have on state taxation of out-of-state businesses?

A) It is the Supreme Court's rule that a state cannot tax a business without minimum contacts.
B) It allows joint audits of multistate businesses.
C) It prevents income taxation of interstate commerce if a company's only business within a state is solicitation of orders.
D) All of the above.

Question 21

The Federal Laws are the supreme laws in the United States and can trump state tax laws.

Question 22

The Tax Foundation is an educational organization that prepares a tax climate ranking for states in the United States.

Question 23

When determining state taxable income, refunds of state income taxes are added to the Federal taxable income when adjusting the difference between Federal and state tax rules.

Question 24

BNA provides a State Tax Series of portfolios organized by individual state rather than by state tax issues.
Short

Question 25

The interpretation of the Commerce Clause's limits on state taxation is based on the case Quill Corp. v. North Dakota, which established four criteria for permissible state taxation of interstate commerce.

Question 26

Which of the following newsletters is published by Tax Analysts?

A) State Tax Today
B) Journal of Multistate State Taxation
C) StateNet
D) State Taxation

Question 27

Most states' constitutions do not permit operating the state at a deficit.

Question 28

In most states, business income is allocated to a jurisdiction while nonbusiness income is apportioned.

Question 29

All states "piggyback" their income tax provisions on the federal Internal Revenue Code.

Question 30

The Journal of Multistate Taxation and Incentives is published by:

A) CCH
B) BNA
C) Westlaw
D) WG&L

Question 31

Which statement about the Multistate Corporate Tax Guide is CORRECT?

A) It is published by CCH.
B) It contains an analysis of key corporate tax issues for all states and some localities.
C) Much of the information is collected through questionnaires completed by top state tax officials.
D) All of the above.

Question 32

While Federal revenue bills constitutionally must start in the House of Representatives, this is not a requirement in all state legislatures.

Question 33

The process of dividing a multistate corporation's tax base among the states in which it does business based on several factors is called formula apportionment.

Question 34

The Joint Audit Program allows the MTC to perform a comprehensive audit of a business's taxes for several states simultaneously.

Question 35

Because state constitutions limit types and rates of tax, state use alternative methods of raising revenue, such as expanding the scope of nexus, increasing compliance and imposing substantial penalties.

Question 36

The noted State Taxation treatise is:

A) authored by Tax Analysts.
B) published by CCH.
C) authored by Walter Hellerstein and published by BNA.
D) authored by Jerome R. Hellerstein and Walter Hellerstein and published by WG&L.

Question 37

In RIA Checkpoint's state and local service, a researcher must select a state before the options for entering a state citation search are available.

Question 38

The RIA feature "Compare It" enables the researcher to compare the tax treatment of an item in one state to the treatment in another state or with the Federal treatment.

Question 39

State tax research can be a challenge because each state organizes its tax code based on different criteria and has a different numbering system.

Question 40

Which statement best describes the State Tax Reporters?

A) Published by CCH, these publications provide detailed explanations, primary source materials, and practical compliance guidance for each state.
B) Published by CCH, these publications contain all proposed federal and state tax legislation.
C) Published by RIA, these reporters contain the latest news on state tax developments.
D) Published by RIA, these publications provide multistate charts comparing taxes in the different states.

Question 41

Compare the general characteristics of state tax systems to the Federal tax system.

Question 42

Briefly explain how the income of a multistate company is divided among the states in which it conducts business.
Essay Questions

Question 43

Why is state and local tax planning gaining importance recently?

Question 44

What is the function of the Compare It feature in RIA? Briefly describe how it works.

Question 45

"Federal and state constitutional provisions play a vital role in state taxation." Explain in brief.

Question 46

What is the concept of 'nexus' as it relates to state taxation? Explain how it applies to the states' power to tax out-of-state individuals and entities.