Omri Y. Marian has posted “Jurisdiction to Tax Corporations”
on SSRN. Here is the abstract:
Corporate tax residence is fundamental to our federal income
tax system. Whether a corporation is classified as “domestic” or “foreign” for
U.S. federal income tax purposes determines the extent of tax jurisdiction the
United States has over the corporation and its affiliates. Unfortunately, tax
scholars seem to agree that the concept of corporate tax residence is
“meaningless.” Underlying this perception are the ideas that corporations
cannot have “real” residence because they are imaginary entities and because
taxpayers can easily manipulate corporate tax residence tests. Commentators try
to deal with the perceived meaninglessness by either trying to identify a
normative basis to guide corporate tax residence determination, or by
minimizing the relevance of corporate tax residence to the calculation of tax
liabilities. This Article argues that both of these approaches are misguided.
Instead, this Article suggests a functional approach, under which corporate tax
residence models are designed to support the policy purposes of corporate
taxation. This Article concludes that the U.S. should reform the way it defines
“domestic” corporations for tax purposes by adopting a two-pronged tax
residence test: the place where the corporation’s securities are listed for
public trading, or the place of the corporation’s central management and
control.