NAVIGATING MARKET SOURCING & APPORTIONMENT RULES

Transcription

1 @BDO_USA_Tax NAVIGATING MARKET SOURCING & APPORTIONMENT RULES July 28, 2016 BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of themarket Sourcing & Apportionment Rules BDO KNOWLEDGE Webinar Series Navigating international BDO network of independent member firms. Page

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3 WITH YOU TODAY MARIANO SORI, CPA, JD Partner - State and Local Tax, Income & Franchise Tax National Practice Leader BRANKO MARUSIC, JR., CPA, JD Sr. Director, State and Local Tax ANGELA ACOSTA, CPA Sr. Director, State and Local Tax TODD FACIANA, CPA, JD, LLM Sr. Manager, State and Local Tax Page 3

4 INTRODUCTORY COMMENTS Page 4

5 INTRODUCTORY COMMENTS Market-based sourcing is a hot topic in state income tax - Many states are adopting it - Represents a U-turn from the old cost of performance method (at least in theory) - Significance is underscored in those states that also adopt single sales factor apportionment, and even more so in states with a bright-line nexus standard based on sales Market-based sourcing is not uniform and is full of pitfalls States have adopted diverse market-sourcing methods - State market-sourcing methods may require specific procedures Taxpayers may need to document why a sourcing procedure doesn t apply Taxpayers may be bound as to their sourcing procedures for future return filings Market-based sourcing guidance is still evolving Page 5

6 AGENDA Page 6

7 AGENDA History of Income Tax Apportionment Sales Apportionment Trends Market-Based Sourcing Methods Closer Look at Market-Based Sourcing Laws Sourcing Comparisons and Conflicts: Same Facts Different Method Throw-Out Rules and Alternative Apportionment Market-Based Sourcing of Intangibles Key Takeaways Page 7

8 HISTORY OF INCOME TAX APPORTIONMENT Page 8

9 HISTORY OF INCOME TAX APPORTIONMENT UDITPA UDITPA 15 states the following with respect to the sales factor: The sales factor is a fraction, the numerator of which is the total sales of the taxpayer in this state during the tax period, and the denominator of which is the total sales of the taxpayer everywhere during the tax period. UDITPA 17 states the following with respect to sales other than of TPP: Sales, other than sales of tangible personal property, are in this state if: (a) the income-producing activity is performed in this state; or (b) the income-producing activity is performed both in and outside this state and a greater proportion of the income-producing activity is performed in this state than in any other state, based on costs of performance. Page 9

10 HISTORY OF INCOME TAX APPORTIONMENT Multistate Tax Compact Prior to July 30, 2014, the Multistate Tax Compact ("Compact") sourced sales in the following manner: - Tangible personal property ( TPP") Destination sourcing - Other than TPP (services or intangibles) Cost of performance ( COP ) Market-based sourcing arguably serves the purpose of the sales factor by more accurately reflecting the customer base for taxpayer s services Page 10

11 HISTORY OF INCOME TAX APPORTIONMENT COP Sourcing Historically, most states have used the approach for sourcing services - Allocates income to states based upon where cost of performing services were incurred - What is an income producing activity? - What costs to include in the determination? - Three COP sourcing methods: Plurality Method all or nothing Majority Method all or nothing Proportionate Method Page 11

12 HISTORY OF INCOME TAX APPORTIONMENT COP Sourcing - Example Facts - 30% of Costs in State A - 30% of Costs in State B - 40% of Costs in State C Application - PLURALITY: All receipts sourced to State C - MAJORITY: Receipts sourced nowhere - PROPORTIONATE: Receipts sourced 30/30/40% to States A/B/C, respectively Page 12

13 SALES FACTOR APPORTIONMENT TRENDS Page 13

14 Sales factor Apportionment Trends What is a Service? States may characterize the same transaction differently such as: - Sale of a Service or Sale of TPP? (e.g., electricity) - Sale of services vs. sale of intangibles (e.g., software) Custom vs. off the shelf Software as a Service Data storage and retrieval Page 14

15 SALES FACTOR APPORTIONMENT TRENDS Single Sales Factor Formula ( SSF ) States States that Require SSF or Provide an SSF Election Arizona (election*) Louisiana (2016) Oregon California Maine Pennsylvania Colorado Michigan Rhode Island Connecticut (2016) Minnesota South Carolina Delaware (2020) Mississippi (industry specific) Texas District of Columbia Missouri (election) Utah (industry specific and elective) Georgia Nebraska Virginia (retail req., mfg. elective) Illinois New Jersey Wisconsin Indiana New York Iowa North Carolina (2018) Page 15

16 SALES FACTOR APPORTIONMENT TRENDS Trends in Heavier Weighting of Sales Factor Page 16

17 SALES FACTOR APPORTIONMENT TRENDS Ignoring COP and Alternative Apportionment Limiting the Income Producing Activity - Some states with COP sourcing interpret many income producing activities as beginning and ending with the state s resident customer receiving the service Ignores the costs and efforts of producing the service Results in sourcing to where the customer is located or receives the service Section 18 - Alternative Apportionment - UDITPA 18 provides for the use of an alternative method of apportionment where the statutory formula distorts the amount of income reported to a state with respect to a taxpayer s activity in the state Provides COP states with the opportunity to source sales where customer located or service is delivered How is unfairness or improper reflection shown? Page 17

18 INCOME TAX APPORTIONMENT TRENDS Market-Based Sourcing Many states are moving toward market-based sourcing, particularly for sales of services and intangibles Under a market-based approach, sales of services are assigned to the state in which the services or benefits of the services are received or delivered, or where the customer or marketplace is located Reasons - Difficulty in determining where the costs of production for a service or intangible are located - Attempt to match receipts to the source of the corresponding revenue stream - Desire to reduce tax burden on in-state economic actors and to reduce tax burden on mobile capital - As states have increased weight on sales factor, market-based sourcing of services makes theoretical and economic sense - Move away from an all or nothing approach Page 18

19 INCOME TAX APPORTIONMENT TRENDS Sourcing of Revenue in 2016 Page 19

20 MARKET-BASED SOURCING METHODS Page 20

21 MARKET-BASED SOURCING METHODS Overview - Variety of State Approaches 23 states now require or provide election to use market-based sourcing General rules of sourcing services - Delivered to a location in the state - Where benefit of the service is received - Where receipts derived Throw-out rules Look-thru rules for sales of services to customers of, or through, the customer Complex regulations vs. simple/general statutory standards - Use of examples to illustrate (or implement?) the rule Page 21

22 MARKET-BASED SOURCING METHODS Overview - Variety of State Approaches (Cont d) Some states apply a proportionate approach where receipts of services are sourced in proportion to the benefit received by the recipient of the service in the state. Some states determine market using a hierarchy approach (where a taxpayer cannot comply with the threshold sourcing rule, move to next rule) - The hierarchy approach may require documentation as to the reasons why a particular sourcing step was not attainable Page 22

23 MARKET-BASED SOURCING METHODS Services Market-Based Sourcing Market-Based Sourcing Market-Based Sourcing Market-Based Sourcing Where Benefit Received Where Service Received Where Service Delivered Arizona (election) Connecticut Alabama Georgia California Illinois District of Columbia Maryland Iowa Maine Louisiana Nebraska Where Customer Located Michigan Minnesota Massachusetts Oklahoma Missouri (election) New York Pennsylvania Tennessee Rhode Island Utah Wisconsin Page 23

24 MARKET BASED SOURCING METHODS The MTC Model The MTC Model - Overview MTC Model Regulation is still in Working Draft form (issued November 30, 2015) Serves as the model for the Massachusetts, Rhode Island, and Tennessee market-based sourcing regulations General rule for sourcing services: delivered to a location in the state Throw-out rule Uses complex set of cascading rules to source sales of services Multistate Tax Commission (MTC Reg. IV.17, Working Draft as of Nov. 30, 2015) In-person services Where the service is received/delivered in physical presence of the customer or its property Professional services - Require specialized knowledge, license or degree and includes legal, accounting, management, financial, investment, fiduciary, payroll, data processing, consulting, engineering Page 24

25 MARKET BASED SOURCING METHODS The MTC Model (Cont d) Multistate Tax Commission (MTC Reg. IV.17, Working Draft as of Nov. 30, 2015) (Cont d) Professional services (cont d) - Individual customer [1] Primary residence [2] Billing address - Business customer [1] Where contract of sale managed by customer [2] Customer s place of order [3] Billing address - Separate rules for architectural/engineering services, financial services, and related parties - Overlaps with in-person services In-person sourcing rules control (e.g., medical/dental services), but not for legal, accounting, financial, or consulting - Safe harbor - Source to billing address if engage in substantially similar services with more than 250 customers, and do not derive more than 5% of gross receipts from that customer Page 25

26 MARKET BASED SOURCING METHODS The MTC Model (Cont d) Multistate Tax Commission (MTC Reg. IV.17, Working Draft as of Nov. 30, 2015) (Cont d) Services delivered to or on behalf of a customer, or delivered electronically through the customer - By physical means Where service is delivered (uses examples to illustrate). - By electronic transmission Individual customer [1] Where service is received [2] Reasonable approximation [3] Billing address - By electronic transmission - Business customer Location at which the service is directly used by the employees or designees of the customer Secondary Rule of Reasonable Approximation [1] Where contract of sale principally managed by the customer [2] Customer s place of order [3] Billing address Safe harbor Source to billing address if engage in substantially similar services with more than 250 customers, and do not derive more than 5% of gross receipts from that customer Page 26

27 MARKET BASED SOURCING METHODS The MTC Model (Cont d) Multistate Tax Commission (MTC Reg. IV.17, Working Draft as of Nov. 30, 2015) (Cont d) Services delivered electronically through or on behalf of a customer are sourced to the end users or third party recipients of the customer ( customers of the customer or look-thru rule) Software - Services delivered electronically through or on behalf of a customer are sourced to the end users or third party recipients of the customer ( customers of the customer or look-thru rule) - Software Sale or license of digital products - Apply sourcing rules for services delivered to a customer by electronic transmission; or - Apply sourcing rules for services delivered electronically through or on behalf of a customer (including look-thru rule ) Page 27

28 CLOSER LOOK AT MARKET-BASED SOURCING METHODS Page 28

29 CLOSER LOOK AT MARKET-BASED SOURCING METHODS Alabama Alabama (Ala. Admin. Code ) General rule for sourcing services is where service is delivered (follows MTC) Individual customer - Direct personal service Location of the customer s person or property receiving the service. - All other services Billing address - Alternative method requires conspicuous note on return Business customer (unaffiliated) - Substantial connection to a specific geographic location - Default is customer s commercial domicile; if unknown, then principal address of the customer or use a reasonable approximation method Page 29

30 CLOSER LOOK AT MARKET-BASED SOURCING METHODS California California (Cal. Code Regs. tit. 18, ) General rule of sourcing services Where the benefit of a service is received Means the location where the taxpayer s customer has either directly or indirectly received value from delivery of that service Page 30 - Individual customer [1] Billing address [2] Reasonable approximation - Business customer [1] Contract and taxpayer s or customer s books and records indicate where benefit of service received [2] Reasonable approximation [3] Where customer placed order [4] Billing address

31 CLOSER LOOK AT MARKET-BASED SOURCING METHODS California (Cont d) Chief Counsel Ruling (Dec. 31, 2015) Treated taxpayer s financial information and analytical applications services that its customers included in a service provided to their own customers as sales of non-marketing services Based on example in California regulations concerning non-marketing intangibles, Chief Counsel ruled the taxpayer should assign its receipts to its business customer s location rather than the customer s customer location (sometimes referred to as the look-thru rule) Page 31

32 CLOSER LOOK AT MARKET-BASED SOURCING METHODS New York New York (Proposed N.Y. CC&R 4-4.6) General rule for sourcing (non-enumerated) services Where benefit of service is received, but uses a sourcing hierarchy Taxpayers are expected to apply due diligence when applying the sourcing hierarchy, including maintaining contemporaneous records Sourcing hierarchy - Where benefit of service is received - Delivery destination - Prior year NY sales factor - Current year NY sales factor Page 32

33 CLOSER LOOK AT MARKET-BASED SOURCING METHODS New York (Cont d) New York (Proposed N.Y. CC&R 4-4.6) (Cont d) Where benefit of service is received - Individual customer Billing address - Business customer According to contract, taxpayer s books and records, and reasonable inquiries of the customer - In-person services- Location of customer s person or property receiving the service - Professional services Use general rule (contract, books and records, customer inquiry) - Default to reasonable approximation method Delivery destination - Individual customer Taxpayer s books and records. - Business customer Location at which customer manages the contract of sale (default to billing address) Page 33

34 CLOSER LOOK AT MARKET-BASED SOURCING METHODS New York (Cont d) New York (Proposed N.Y. CC&R 4-4.6) (Cont d) Intermediary rule services provided through an intermediary to a consumer or on behalf of an intermediary to a consumer - Apply sourcing hierarchy as to the consumer, not intermediary - Look-thru rule Prior year sales factor cannot be used for 2015 tax year (initial year for NY market-based sourcing) or by new taxpayers Page 34

35 CLOSER LOOK AT MARKET-BASED SOURCING METHODS New York (Cont d) New York (Proposed N.Y. CC&R 4-4.9) Digital products sourcing hierarchy - Place of primary use Individual customer Billing address Business customer Use general rule for sourcing services (contract, records, customer inquiry) - Where digital product is received Use where services are delivered rule - Prior year NY sales factor - Current year NY sales factor Page 35

36 CLOSER LOOK AT MARKET-BASED SOURCING METHODS Georgia Georgia (Ga. Comp. R. & Regs. r ) General rule for sourcing services Derived from customers within the state or otherwise attributable to the state s marketplace Georgia regulations apply basic rule for sourcing services receipts based on where the recipient of the services receives the benefit and illustrates with examples EXAMPLE: A corporation headquartered in State A, building an office complex in Georgia, contracts with an engineering firm from State B to oversee construction of the buildings on the site. The engineering firm performs some of their service in Georgia at the building site and additional service in State B. All of the gross receipts from the engineering service are attributable to Georgia. Page 36

37 CLOSER LOOK AT MARKET-BASED SOURCING METHODS Illinois Illinois (35 ILCS 5/304) Services - Individual customer Received in Illinois - Business customer Gross receipts from services may only be attributed to a state where the business customer has a fixed place of business If the state where services are received is not determinable or there is no fixed place of business: o o [1] Place of order [2] Billing address - Throw-out If taxpayer is not taxable in state where services received, the sale must be thrown out Page 37

38 CLOSER LOOK AT MARKET-BASED SOURCING METHODS Beware of Traps Changing methods can be problematic. - Massachusetts prohibits changing sourcing methods filed with the original return (but changes to the method can be made with each annual original return filing as long as the return declares the taxpayer s change in method). - For California taxpayers using the reasonable approximation sourcing method, which will be frequently used when its contracts or books and records do not provide the location, the reasonable approximation sourcing method cannot be changed on the current or future returns without the Director s consent. How much documentation is sufficient? - Most states sourcing methods are silent on this requirement Customer s Billing Address. - While sourcing to a customer s billing address may seem like the easiest option, this method is generally disfavored and has been viewed as too narrow and easily manipulated Page 38

39 SOURCING COMPARISONS AND CONFLICTS: SAME FACTS DIFFERENT METHOD Page 39

40 SOURCING COMPARISONS AND CONFLICTS: SAME FACTS DIFFERENT METHOD Example 1 Taxpayer performs non-advertising and marketing services for its business customer. The customer uses and includes the taxpayer s services in its goods or services sold to its customers. Taxpayer s business customer orders the service from an office located in State A, and the customer s billing address is State B. The end-users of taxpayer s services through taxpayer s business customer are located in multiple states. CA Chief Counsel Ruling Non-marketing service sourced to customer s location (no lookthru rule applied) MTC Model Reg. IV.17.(d)(3)(B)3.d., Example (iv) Taxpayer third-party call center customer services provided to Retail Co sourced to where phone calls to taxpayer were placed, or based on a population ratio as reasonable approximation New York Reasonable approximation method or default to customer billing address under delivery destination (#2 in sourcing hierarchy) Page 40

41 SOURCING COMPARISONS AND CONFLICTS: SAME FACTS DIFFERENT METHOD Example 2 Payroll Services Corp provides payroll services to Company A. Company A is domiciled in State A and has employees in multiple states. The contract between Payroll Services Corp and Company A does not specify where the payroll services will be used by Company A. Payroll Services Corp s books and records indicate the number of employees of Company A in each state where Company A conducts business. Cal. Code. Regs. tit. 18, (c)(2)(E), Example 1 Payroll Services Corp sources its receipts using the ratio of in-state employees over total employees. MTC Model would treat as professional services sourced according to [1] Where contract of sale managed by customer [2] Customer s place of order [3] Billing address New York proposed regulations would likely require use of a reasonable approximation method (census data not permitted) Page 41

42 SOURCING COMPARISONS AND CONFLICTS: SAME FACTS DIFFERENT METHOD Example 3 Web Corp provides internet content to viewers and receives revenue from advertisers. Web Corp s advertising receipts are determined based on the number of times an advertisement is viewed and/or clicked on by Web Corp s viewers. Both MTC Model and California Model source Web Corp s receipts measured by viewings or clicks Differences could arise if must use reasonable approximation - MTC Model Use population ratio - California Model [1] Place of order [2] Billing address - New York Could default to billing address under where service delivered (#2 sourcing hierarchy) Page 42

43 SOURCING COMPARISONS AND CONFLICTS: SAME FACTS DIFFERENT METHOD Example 4 Training Corp provides live and on-line training to Customer. Customer is headquartered in TN and has offices in CA, MA, and NY where Training Corp performs in-person training for Customer. Training Corp s on-line training is cloud-based and is accessed by Customer s employees from their offices in CA, MA, NY, and TN. All invoices list Customer s TN HQ as the billing address. In-person training services receipts are likely sourced in proportion to offices where training is physically delivered to the employees of Customer under MTC (MA, RI, TN), California, and New York models. On-line services - California model if cannot rely on books/records or identify consistently applied reasonable approximation method, source based on place of customer order, or billing address - MTC Model (MA, RI, TN) and NY proposed regulations would likely treat as digital product, and likely source to customer offices (MTC) and customer primary use location (NY) Page 43

44 THROW-OUT RULES AND ALTERNATIVE APPORTIONMENT Page 44

45 THROW-OUT RULES AND ALTERNATIVE APPORTIONMENT Throw-Out Rules Some states that use a market-based sourcing have enacted a throw-out rule - Throw-out applies to sales of services, intangibles, or tangible property to states in which taxpayers are not taxable - Throw-out may also apply to income which cannot be assigned to a specific income producing activity, including income from intangible assets. - Some states apply throw out to service income if the amount of payment to a non-employee service provider cannot be determined or sourced - If throw-out applies, must exclude sales from the sales factor numerator and denominator Page 45

46 THROW-OUT RULES AND ALTERNATIVE APPORTIONMENT Examples of Throw-Out States Alabama (sales other than sales of TPP) Colorado (certain services of agents or independent contractors) District of Columbia (sales other than sales of TPP, eff. 1/1/2015) Idaho (certain services of agents or independent contractors) Illinois (services only) Maine (sales of TPP only) Massachusetts (sales other than sales of TPP) Oregon (certain services of agents or independent contractors) Washington (B&O, services only, and only if part of service performed in WA) West Virginia (sales of TPP only) Page 46

47 THROW-OUT RULES AND ALTERNATIVE APPORTIONMENT Alternative Formulas and IPA Interpretations Alternative Formulas: Vodafone Americas Holdings, Inc. v. Roberts, No. M SC-R11-CV (Tenn. Mar. 23, 2016). IPA Interpretations Indiana Dept. of Rev., Letter of Findings (Jan. 28, 2015) AT&T v. Dep t of Revenue, 357 Or. 691 (Sept. 11, 2015) AT&T Corp. v. Comm r of Revenue, Mass. ATB (June 8, 2011), aff d, No. 11-P-1462 (Mass. App. Ct. 2012) Cable One v. Idaho State Tax Commission, No (Id. Oct. 29, 2014) Dish DBS Corporation, f/k/a EchoStar, DBS Corp., and Affiliates v. Department of Revenue., No. 14- ALJ CC (S.C. Admin. Law Judge Div. May 20, 2016) Utah State Tax Commission, Initial Hearing No (Aug. 11, 2012) Page 47

48 MARKET-BASED SOURCING OF INTANGIBLES Page 48

49 MARKET-BASED SOURCING OF INTANGIBLES Overview Sourcing receipts derived from the sale or license of intangible property is difficult because intangibles, by their nature, do not have a definite geographical location States vary on how to source revenue from intangibles - Income from Intangibles (e.g. license fees, royalties) may be treated differently than gains from the sale of intangibles Market-based sourcing/location of use/situs of intangible - Many states source revenue from intangibles based on market-based sourcing or extent intangible is used in state - Rules for sourcing revenue from intangibles may or may not be within the provisions for sourcing service revenues Page 49

50 MARKET-BASED SOURCING OF INTANGIBLES Issues Where utilized by payor (e.g., licensee) - Where licensee is located? - Where licensee manufactures product? - Where licensee sells product? What if location of utilization cannot be determined? What if taxpayer/licensor is not taxable where intangibles are utilized? What about wholesale license transactions? Page 50

51 MARKET-BASED SOURCING OF INTANGIBLES The MTC Model Multistate Tax Commission (MTC Reg. IV.17, Working Draft as of Nov. 30, 2015) Licensing of intangibles - General rule of sourcing Where intangible is used - License of marketing intangibles Royalties and licensing fees sourced to the extent attributable to the sale... of goods, services, or other items... purchased by customers in the state - License of production intangibles Source to where used - License of mixed intangible Based on license if fees for each intangible are separately and reasonably stated in the contract; otherwise, treat as a marketing intangible Sale of an intangible Page 51 - Apply intangible licensing sourcing rules if sale resembles a license or sale of goods and services - Otherwise, except for intangibles that authorize business activity in specific geographic area, the receipts are thrown out, including receipts from sales of goodwill, partnership interests, and covenants not to compete

52 MARKET-BASED SOURCING OF INTANGIBLES California California (Cal. Code Regs. tit. 18, ) Licensing of intangibles - License of marketing intangibles Sourced to the extent attributable to sales of underlying goods or services to ultimate consumer; reasonable approximation - License of production intangibles Source to where used Sale of an intangible - [1] Source to location of use - [2] Reasonable approximation - [3] billing address Uses examples to illustrate application of the rules Page 52

53 MARKET-BASED SOURCING OF INTANGIBLES Illinois Illinois (35 ILCS 5/304) Licensing or sale or an intangible - Production intangible Place of use (throw out if cannot be determined) - Marketing intangible Commercial domicile of licensee/purchaser Throw out if does not constitute > 50% of taxpayer s total gross receipts for current taxable year and two prior years - Taxpayer means an entire Illinois unitary group Page 53

54 KEY TAKEAWAYS Page 54

55 KEY TAKEAWAYS Practical Considerations Situate service centers in market-based sourcing state Page 55 - Minimizes costs in states applying cost-of-performance rule - No effect in market-sourcing state Closely evaluate differences among states market-based sourcing rules - Proportionate or all-or-nothing approach? - Does state use tiered/cascading sourcing rules, e.g. billing address as proxy for location of customer? - Does the state provide a safe-harbor rule for sourcing of receipts from services? Document Each Step of the Market-Based Sourcing Hierarchy - May need to demonstrate why the initial sourcing steps were not attainable Choose the sourcing method CAREFULLY! - The state may not permit taxpayer s to change methods once chosen without permission

56 CLOSING COMMENTS Page 56

57 CLOSING COMMENTS Trends Single sales factor apportionment, market-based sourcing, and relevance in relation to historical COP and three factor apportionment State approaches to sourcing sales of services Delivery vs. benefit received, direct vs. intermediary services, hierarchical rules, reasonable approximation, and throw-out State approaches to sourcing receipts from intangibles Sale vs. license, marketing vs. production intangibles, and throw-out Traps to look out for Maintaining proper documentation, and adopting a sourcing method you may later regret Page 57

58 QUESTIONS? Page 58

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60 SPEAKER BIOGRAPHIES Page 60

61 BIOGRAPHY EXPERIENCE SUMMARY Mariano Sori is a partner in BDO s State & Local Tax services practice. He has more than 27 years of state tax consulting experience within a public accounting environment and concentrates on income and franchise tax issues such as jurisdiction to tax, state tax base modifications, apportionment of income, business/non-business income, unitary taxation, gross receipt taxes, allocation of partnership items, and state filing options. Mariano Sori, CPA, JD State and Local Tax Partner msori@bdo.com Direct: Mobile: N. Wabash, Suite 3200 Chicago, IL Tel: Fax: Mariano focuses on performing state tax diagnostic reviews designed to provide businesses with an assessment of their state tax position, including the identification of refund and prospective filing opportunities and the reduction of exposure in multiple jurisdictions. In addition, Mariano assists businesses in designing and implementing structural enhancements in order to generate long-term state tax reductions. Mariano consults on all aspects of state income tax, including participating in mergers and acquisition transactions, due diligence reviews, representation on state tax controversy matters, and assisting companies with state tax compliance and state tax accrual reviews. He has worked with Fortune 1000 and mid-size companies in industries such as manufacturing, retail, consumer services, financial services, real estate, technology, and transportation. PROFESSIONAL AFFILIATIONS American Bar Association American Institute of Certified Public Accountants Illinois CPA Society EDUCATION J.D., Law, IIT-Chicago Kent College of Law B.S., Accounting, Indiana University Page 61

62 BIOGRAPHY EXPERIENCE SUMMARY Branko works with retailers, manufacturers, service providers, healthcare providers, contractors, the entertainment and amusement industries and others to identify substantial state and local tax savings. He advises small to publicly-traded companies on multi-state income tax planning and restructuring and provides audit representation, letter ruling requests, analysis of tax exposures in non-filing states and the use of voluntary disclosure agreements. Also skilled in sales, use, property and other miscellaneous state and local taxes, Branko advises clients on potential tax risks and exposure while simultaneously identifying tax savings and refund opportunities. Baranko Marusic, Jr., CPA, JD Sr. Director, State and Local Tax Direct: South Hanley Road Suite 800 St. Louis, MO Tel: Fax: Branko possesses over 35 years of experience assisting companies in obtaining significant tax savings. He has published articles and commentary including tax analysis cited with approval by an United States Appeals Court. He is a frequent lecturer and presenter to various associations and trade groups on state and local tax issues. He has also argued tax cases before state Supreme Courts (Note: BDO is not engaged in the practice of law). Additionally, Branko is an Adjunct Professor for the Graduate Accounting Program on State and Local Tax at Saint Louis University. PROFESSIONAL AFFILIATIONS American Institute of Certified Public Accountants, Member American Bar Association, Member Associated Industries of Missouri Tax Committee, Member Institute of Professionals in Taxation, Member Missouri Bar Association, Member Missouri Society of Certified Public Accountants, Member EDUCATION J.D., Washington University in St. Louis B.S., Business Administration, University of Missouri Columbia Page 62

63 BIOGRAPHY EXPERIENCE SUMMARY Angela has over 20 years of experience in all aspects of state and local taxation including: planning and restructuring of multi-state businesses, audit controversy and appeal, nexus studies, voluntary disclosure agreements, negotiated incentives, tax credits, FAS 109 review, FIN 48 implementation, litigation support, mergers and acquisition, sales and use tax consulting, outsourced engagements, unclaimed property and many others. She specializes in all areas of state and local taxes and has extensive experience in income and franchise taxes. Angela Acosta, CPA Sr. Director, State and Local Tax Direct: Mobile: West Big Beaver Suite 1900 Troy, MI Tel: Fax: Prior to joining BDO, Angela practiced for almost 5 years at Grant Thornton, 2 years at PwC, and 9 years at Arthur Andersen, as well as almost 5 years in industry focusing on state and local taxation at a large utility company with over 200 entities. INDUSTRY EXPERIENCE Angela has worked with a variety of public and privately owned clients and has provided tax services for clients such as Hyatt, Infusystem, Ford Direct, PF Chang s, Dominos, DTE Energy, Lear Corporation, Dow Corning, Dura Automotive, ArvinMeritor, Visteon, Ramco-Gershenson Properties Trust, Sun Communities, Asset Acceptance Corporation and Tecumseh Products Company. PROFESSIONAL AFFILIATIONS American Institute of Certified Public Accountants Michigan Association of Certified Public Accountants, Former Vice Chair of the State and Local Taxation Task Force Prior Board Chair, Accounting Aid Society Michigan State Chamber Tax Policy Committee Inforum MWTA EDUCATION M.B.A., Michigan State University B.A., Accounting, Michigan State University Page 63

64 BIOGRAPHY EXPERIENCE SUMMARY Todd is a state and local tax specialist who represents and advises clients on a wide array of income/franchise tax, sales/use tax and other tax issues that arise in the context of controversies and mergers and acquisitions. Todd Faciana Sr. Manager, State and Local Tax tfaciana@bdo.com Direct: Mobile: BDO USA LLP 1801 Market Street, Suite 1700 Philadelphia, PA Tel.: Fax: Todd is a California licensed C.P.A. and a Pennsylvania and New Jersey licensed attorney who has been practicing in the field of state and local taxation for over 13 years. In addition to his experience with BDO, Todd has several years of Big Four firm experience as a state and local tax specialist (compliance and consulting), two years as a legal intern with the Pennsylvania Office of Attorney General Tax Litigation Section, and over three years of experience as a state and local tax attorney with a Top 100 law firm. His work experience includes a wide array of state and local tax offerings, including representing clients before the Pennsylvania Department of Revenue, Board of Appeals and Board of Finance and Revenue, representing clients before the New Jersey Division of Taxation and Conferences and Appeals and assisting clients with voluntary disclosures, tax amnesties, tax due diligence reviews, and income/franchise and sales/use tax advisement. PROFESSIONAL AFFILIATIONS American Institute of Certified Public Accountants Pennsylvania Institute of Certified Public Accountants EDUCATION Tax LL.M., Temple University, Beasley School of Law J.D., Pennsylvania State University, Dickinson School of Law B.S., California State University, Long Beach Page 64

65 BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 41 offices and more than 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multinational clients through a global network of 1,204 offices in 138 countries. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. To ensure compliance with Treasury Department regulations, we wish to inform you that any tax advice that may be contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding taxrelated penalties under the Internal Revenue Code or applicable state or local tax or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. Material discussed in this publication is meant to provide general information and should not be acted on without professional advice tailored to your individual needs BDO USA, LLP. All rights reserved. Page 65