When will you receive your refund? The answer depends on how you filed your return. The IRS should issue your refund check within six to eight weeks of filing a paper return.
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In addition, under the new law, taxpayers are required to source sales based on a market approach rather than identifying where the taxpayer incurs the greater cost of performing the income producing activity.
Prior to Proposition 39, most taxpayers had three options when apportioning business income:
The Impact of Proposition 39
Proposition 39 aims to even the playing field for California businesses and out-of-state businesses doing business in California. Sales from services will be apportioned under a "market based sourcing" concept. At its core, the following rules apply with respect to sales other than sales of tangible personal property:
There is a long list of presumptions to determine where the benefit of the service is received. The order of these presumptions differs on whether the customer is an individual or an entity.
It is important to note that market-based sourcing rules will be used in applying California's new economic nexus standard under Section 23101(b) of the California Revenue and Taxation Code. Under the new standard,a taxpayer is "doing business" within California if California sales for the applicable tax year exceed the lessor of (a) $500,000 or (b) 25% of the taxpayer's total sales.
What did NOT change?