Bass, Berry & Sims attorney Steve Jasper spoke at the October 2018 Paul J. Hartman State and Local Tax Forum on the topic, “Alternative Apportionment, Cost of Performance, & Other Tax Gotchas.” A recap of the panel presentation was provided in an October 29 article by State Tax Notes. The article outlined various ways Departments of Revenue (DOR) are applying cost-of-performance rules to raise funds without having to change tax codes. As Steve noted in the presentation, “states may try to do this by characterizing costs as ‘indirect costs,’ because most state statutes consider only ‘direct costs.’ Another way states may try to manipulate cost-of-performance sourcing is by arguing that costs of activities performed by third parties should be excluded because they are not ‘directly incurred.'”

The full article, “DORs Look to Administratively Reach Market Sourcing,” was published by State Tax Notes on October 29, 2018, and is available online (subscription required).