20/20 FORESIGHT SALT UPDATE
State and local tax issues continue to cause confusion and headaches for taxpayers and clients. Here are a few from the past week:
- "Bundled Transactions" - when a transaction contains both a taxable and nontaxable item and they are not separately stated. Some states look to what the "true object" of the transaction is to determine taxability.
- Sales taxation of computer services, cloud computing, hosted software services and other electronic transactions.
- Whether a taxpayer should file a combined or separate income tax return in several jurisdictions.
- Whether a repair to real estate is a nontaxable service or a taxable sale of tangible personal property.
- Credit and incentives programs create opportunity and confusing "hoops" to "jump" through.
- States reach to require taxpayers to disclose more information and be more "transparent."
- States find taxpayers create other entities only for "sham transaction" purposes.
- States look to reform tax appeals process.
- Taxpayers struggle to situs gross receipts and take proper deductions for local gross receipts taxes.
- Taxpayers fail to obtain proper sales tax exemption certificates at the time of sale and struggle to prove exempt upon audit.
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at firstname.lastname@example.org.
Because state and local taxes are deceptively simple and endlessly complicated.