Foley Partner Lynn Gandhi was quoted in a Tax Notes article, “Businesses Could See Apportionment Changes With Pandemic Pivoting,” about apportionment changes faced by businesses who shifted to different income streams during the COVID-19 pandemic.
Gandhi stated that the apportionment changes are industry-specific, noting that many health care businesses shifted to telehealth services once federal agencies approved that type of service for Medicare and Medicaid insurance reimbursement. She added that health care services are often sourced differently from other services over the internet.
According to Gandhi, the explosion of online entertainment services like gaming is also “driving a need for understanding income tax sourcing probably well before they even imagined they would burn through their” net operating losses.
Gandhi said she believes the pandemic has exacerbated apportionment issues that were there before, adding that coordination within companies and departments of revenue has also been a challenge overall. “I think what we’re having exacerbated is the need to face some of these issues quicker than maybe we were to face them if things had just continued in the normal course,” she said.