Jainen

[JoshinNC]

Why is my client filing a CA return? New client is a seller of refurbished telephone equipment based in NC. Their only office is in NC, they have only NC shareholders, but they sell telephones all over the country. They call on companies all over the country from NC, sell the items over the phone, ship the items from NC and get paid in NC (via either paypal or check or credit card).

The previous preparer has been preparing a CA return for the S-Corp, but has not been giving them a CA k-1 and has not been doing a CA non-resident personal return. I'm very confused. Following the other preparer's logic we would be filing returns in about 20 states. Please help.

[jainen]

the Golden State

California doesn't have a corporate income tax. It has a franchise tax for the priviledge of doing business in the Golden State.

[JoshinNC]

They're not doing business in CA,

They are doing business in NC. Am I wrong on that? Just because they ship the product to CA does not constitute doing business in CA, does it?

[jainen]

Ha-ha-ha!

>>Just because they ship the product to CA does not constitute doing business in CA, does it?<<

Ha-ha-ha! Good one, Josh!

No doubt there is some very serious correspondence from the California Secretary of State and the Franchise Tax Board, buried deep somewhere in the company's files.

[ChEAr$]

Imwtk

>>Just because they ship the product to CA does not constitute doing business in CA, does it?<<

Ha-ha-ha! Good one, Josh!

No doubt there is some very serious correspondence from the California Secretary of State and the Franchise Tax Board, buried deep somewhere in the company's files.

And about this California specific situation, inquiring minds want to know.
Is California really so picky? Prickly?

[JON]

Nexus-

go to a seminar and you will get sick. Just shipping a product into a state using common carrier-does not get you to nexus, but other things can. Storage facility, salaried employees or your employees maning booths at a convention in the state. New York for a while was allocating based on time spent in their state, but I believe gave up when New York residents started pro rating their income based on time spent out of their state. Maybe that is still going on.. Lots of things can cause nexus and it can be different depending on the state you are in..

[JoshinNC]

That's my point

They have no employees, no storage facilities, nothing in CA. I think the other preparer was a little over zealous.

[jainen]

right?

>>the other preparer was a little over zealous<<

Right. He just happened to start filing complicated returns 3000 miles away because he loves the Terminator movies, and the shareholder thought it was a great idea so he happily signed them. You're funny, Josh--probably more of a Kindergarten Cop fan, right?

[jainen]

&quot;Picky&quot;

>>Is California really so picky? <<

If California were a separate country, it would be about the 5th largest economy in the world. It has an incredibly powerful government run by (literally) an international Nazi syndicate, and they don't let much slip away. "Picky" doesn't even count.

[JoshinNC]

My client pays good money for professional advice

>>the other preparer was a little over zealous<<

Right. He just happened to start filing complicated returns 3000 miles away because he loves the Terminator movies, and the shareholder thought it was a great idea so he happily signed them. You're funny, Josh--probably more of a Kindergarten Cop fan, right?

And does as she is told when he advisors give her information. However, I, as her new advisor, see no reason to file this return. Please provide me with a cite from some publication to prove that there is a filing requirement as opposed to simply making unfunny snips at me.

[jainen]

it doesn't exist

>>My client pays good money for professional advice<<

Then, sir, you had better give her good value. "I see no reason" isn't much of a tax authority. There IS a reason, or at least there was at one time. The old preparer didn't just start filing CA returns by accident. Don't ask me for a citation--North Carolina has similar rules about income sourcing but just doesn't have the resources to enforce them. Find out what the California Secretary of State told your client before you take a naive position that if you can't see something it doesn't exist.