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State Tax Considerations for Foreign Entities


When considering state tax issues for a foreign entity, it is natural to focus initially on the potential corporate income tax considerations, particularly as an extension of analyzing whether that entity might be subject to any federal income tax filing requirements. This article provides an overview of the state income tax considerations for foreign entities in the context of six questions:

  • How is the foreign entity classified for state income tax filing purposes?
  • Does the foreign entity have nexus for state income tax purposes?
  • If nexus exists, does the foreign entity have income subject to state tax?
  • If the foreign entity has income subject to state tax, does it have in-state apportionment factors?
  • Even if the foreign entity does not have income tax nexus, is it required to be included in any state unitary combined filings, and if so, to what extent?
  • To what extent may the foreign entity be subject to state taxes other than those based on net income, such as franchise or net worth, gross receipt, or sales or use taxes?

Click here to read the entire article written by Charlie Fischer of Deloitte Tax LLP and recently published in Tax Analysts.

As used in this document, “Deloitte” means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.


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