2020 Census: What is Apportionment?

By: Flaka Ismaili    June 21, 2021

Based on that count, the total number of members elected to the House of Representatives grew from the original 65 to 106. The current membership of the House of Representatives was set at 435 by the Reapportionment Act of 1929, which established a permanent method for apportioning a constant number of seats according to each decennial census. To streamline your entire state tax apportionment process, consider a comprehensive tool such as the Thomson Reuters ONESOURCE State Apportionment module. This web-based software solution can help you manage your data, consistently apply the right calculation methods, and provide a trackable solution for audits.

  • Each formula is a fraction based on the value of the factor used in the state during the tax year as a percentage of the business’ total use of that factor.
  • While with overheads you may factor in the number of employees per department, for profits it is often more applicable to factor in the year’s business quarters instead.
  • This shift has compelled businesses to adapt their accounting practices to accurately capture and report digital sales for tax purposes, further emphasizing the need for advanced technological solutions to manage these complexities.

Each of the 50 states is entitled to a minimum of one seat in the U.S. The Constitutional basis for conducting the decennial census is to reapportion the U.S. Apportionment is the process of distributing the 435 memberships, or seats, in the U.S. Economic nexus requires out-of-state sellers to collect and remit sales tax once they meet a certain sales threshold within the state, even if they don’t have a physical presence there. The U.S. Supreme Court’s Wayfair decision in 2018 overturned the physical presence standard for imposing sales and use taxes and allowed states to collect sales and use taxes on remote sellers based only on their economic activity in a state. Since then, almost every state has adopted some form of economic sales tax nexus.

Meaning of apportionment in English

Code, within 15 days of receiving the apportionment population counts from the president, the Clerk of the House of Representatives must inform each state governor of the number of representatives to which that state is entitled. Other types of companies, such as S (Subchapter) corporations, limited liability companies (LLCs), and partnerships usually do not need to pay corporate income tax. Instead, they are subject to “pass-through taxation”; the individuals involved in the business pay state tax on their income from the business, while the business doesn’t pay separately.

On top of that, sales tax laws are complex and frequently change. Staying in compliance across the board is extremely difficult, if not impossible, especially for small teams without a lot of bandwidth to track every detail more ways to get your tax refund at eztaxreturn com of state tax law. With the House size static, even states that gain in population from one census to the next can still lose seats. This can happen when the state’s population growth rate is lower than the national average.

Other Subtopics Within ‘Public Sector’

Then, the remaining 385 seats are distributed using a formula that computes “priority values” based on each state’s apportionment population. Fundamentally, the representation of a population in the thousands or millions by a reasonable size, thus accountable governing body involves arithmetic that will not be exact. Although weighing a representative’s votes (on proposed laws and measures etc.) according to the number of their constituents could make representation more exact,[1] giving each representative exactly one vote avoids complexity in governance.

From Data to Decisions

The Census Bureau provides state legislatures with the small area census population tabulations necessary for legislative redistricting. In recent years, certain states have been more aggressive in their approach to nexus. The desire to get out-of-state businesses to pay a greater amount of state taxes can drive state tax policy. There is no common definition of nexus that applies to all states or universal rules for determining nexus change.

What is Apportionment?

A perfectly apportioned governing body would assist but does not ensure good representation; voters who did not vote for their district’s winner might have no representative who is disposed to voice their opinion in the governing body. The representative has the power, and in many theories or jurisdictions the duty, to represent the whole cohort of people from their district. There is not an obviously “correct” approach to corporate apportionment. A company’s payroll and property in a state are more closely related to its operations there, the costs they impose, and the benefits they receive from good governance, but all states include sales into the state as a factor, and the majority (29 states) use it as the sole factor.

Sales of tangible property are sourced to the destination of the sale, but accounting for the sale of services is more complex. Twenty-six of the 45 corporate income-taxing states emphasize, in varying ways, the location where a service’s benefit is received. This is known as market or benefit sourcing and contrasts to sourcing rules that emphasize the location where a greater proportion of a company’s income-producing activity takes place.

If apportionment is not done correctly, there is the potential for incorrect tax payments, risk of state audits, and missed tax benefits. States use different apportionment formulas and different sourcing rules to attribute sales to a state. In the sales formula, sales can be assigned based on “cost of performance,” where income-producing activities are performed and costs are incurred, or “market-based,” where customers are located or goods and services are delivered. Using its population count and more detailed demographic results from the census, each state legislature then defines the geographic boundaries of its congressional and state election districts through a process known as redistricting.

There is also “click-through nexus” that applies to referrals to out-of-state sellers from in-state websites. Alternative apportionment formulas may be used where the standard formula for a state does not accurately reflect the business’ activity in the state, along with other special rules for different situations. These teams need compliance solutions to stay on top of their company’s state income tax obligations. To help in navigating the complexity of tax rules and changes for each state, consider an industry-trusted tax and accounting research tool.

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