Chapter 9

The clause in the U.S. Constitution that confers superiority to federal laws over state laws. That is, federal laws are "the supreme law of the land" and trump state laws. If a state law or constitutional provision is in conflict with a federal law, the state provision is invalid.

Found in the 14th Amendment to the U.S. Constitution, the clause (among other things) limits the territorial scope of a state's taxing authority, particularly in regard to interstate commerce.

The clause of the U.S. Constitution indicating that Congress has the power to regulate commerce with foreign nations, among states, and with Native American tribes. It grants powers to Congress and places constraints on the states' ability to tax interstate trade.

A sufficient business connection with a locality such as to give the locality taxing authority over the business.

A clause of the 14th Amendment of the Constitution provides that "no state shall ... deny to any person within its jurisdiction the equal protection of the laws." In a tax setting, it prevents states from implementing discriminatory tax classifications.

U.S. federal law that prohibits a state from imposing a net income tax if a company's only activities pertaining to the state are soliciation of orders for sales of tangible personal property that are sent outside the state for approval or rejection and are filled form outside the state.

A process by which nonbusiness income is traced directly to its geographic source or other connection with a state and attributed solely to that state.

A process by which a formula is used to arrive at an approximation of the amount of business income that should be attributed to a particular state.

A narrow category of income that may include interest, dividemds, rents, and royalties in certain circumstances.

Income that arises from transactions and activities in the regular course of the taxpayer's business. It includes income from tangible and intangible property if the acquisition, management, and disposition of the property constitute integral parts of the taxpayer's regular trade or business operations.

Drafted in 1957 by the National Conference of Commissioners on Uniform State Laws to create a greater uniformity and consistency in the measurement of business income.

Created in 1967 by the Multistate Tax Compact. The ... adopted the Uniform Division of Income for Tax Purposes Act (UDITPA) as part of its articles, issued regulations interpreting the UDITPA, and continues to urge states to develop and adopt uniform laws and regulations.

A reduction of U.S. tax liability for taxes paid or accrued to a foreign country on foreign source income and also subject to U.S. tax.

The price-setting process between related parties.

An act of Congress that addresses the application of certain Internal Revenue Code provisions to a taxpayer whose tax base falls under the taxing statutes of more than one country. Published in the Internal Revenue Bulletin, among other resources. Generally, ... are negotiated to prevent double taxation by providing reduced tax rates or exempting certain types of income from taxation. The income receiving reduced rates, tax holidays, and exemptions vary among countries.