Blurred Vision and Multistate Taxes: Here Comes the Boom!
by Brian Strahle on
If you are a CFO, Controller, Tax Director or other tax professional, what do you want on a daily basis? What are your goals and objectives? What do you struggle with? What are your constant challenges?
In regards to state and local taxes, one of the constant challenges is finding clarity in a world where "generally" and "it depends on the state" are common phrases.
In addition, several areas of state and local tax can be grey or open to interpretation which can create issues OR opportunities.
Some of those areas that may create "blurred vision" are:
- Determining whether you business has nexus (having a taxable presence in a state)
- Determining whether something your business sells or buys is taxable for sales tax purposes
- Determining whether one of your entities is "unitary" with another related entity and should file a combined income tax return
- Determining whether some of you business income is "non-business" income and can be allocated instead of apportioned
- Determining if software-as-a-service or cloud computing is taxable for sales tax purposes
- Determining how to source revenue from services or intangible property for sales tax and income tax purposes
- Determining if your business activities qualify your company for specific credits and incentives opportunities (next step, actually capturing and utilizing those credits)
- Remembering to self-assess use tax on taxable purchases when the seller doesn't charge you sales tax
- Determining the impact of IRC Sec. 382 on you company's net operating loss carryforward on a state by state basis
- Knowing how to structure your company's operations in a state tax-efficient manner
This is just 10 areas or items. What other items can you think of? What is keeping you up at night from a state tax perspective? Is it simply not knowing what you don't know?
Sometimes just making an informed decision instead of no decision is the best form of action.
Don't play the "wait and see game." Otherwise, when the audit notice arrives you might say to yourself - "Here Comes the Boom!"