Flashcards Studio

TechNova Global, Inc. operates a cloud-based data-processing services company with its headquarters in City Solis. It maintains data centers in facilities outside City Solis and provides services to City Solis-based clients. The company bills City Solis clients for monthly subscription services. A substantial portion of the data processing work is performed in data centers outside City Solis, though the clients and billing are in City Solis. City Solis Treasurers’ Office assesses Local Business Tax (LBT) on gross receipts from TechNova’s business done within City Solis, including those receipts arising from services performed outside City Solis but billed to City Solis clients. TechNova contends LBT should apply only to receipts from services performed within City Solis; the tax base should exclude receipts for services fulfilled outside City Solis. TechNova fails to file its LBT return on time, and penalties are assessed under Sec. 146. (a)Identify the central doctrine governing Local Business Tax under Secs. 143, 145, and 146. (b)Distinguish the controlling rule on (i) situs of taxation and (ii) the tax base for LBT under these sections. (c)Apply to the facts: is TechNova liable for LBT on receipts from City Solis-based clients for services performed outside City Solis but billed to City Solis clients? Are penalties due for the late filing?