Demystifying the Sales Factor: Conduit Receipts


Catherine Battin, Maria Eberle and Lindsay LaCava, with contributions from Dwight Mersereau, wrote this bylined article on potential concerns and opportunities arising from conduit receipts in which a taxpayer receives funds for the purpose of transmitting them to another party. The authors wrote that “this issue has arisen frequently in our practices, and arguments can be made to exclude conduit receipts from both the numerator and the denominator of the sales factor based on the federal claim of right doctrine. That may present a significant opportunity for taxpayers in many states.”