State and Local

Sales Tax Traps for Disregarded Entities
A handful of states pose hidden compliance risks

Sales tax rules can be confusing, because states often take different approaches to the same tax concept. In most cases, sales tax obligations apply at the level of each separate legal entity—even if that entity is disregarded for federal or state income tax purposes. Although this rule generally applies in… Read more »

How Does Conformity Impact State Revenues After the OBBBA?
Changes in federal tax law reverberate across state budgets, with conformity choices shaping revenues in vastly different ways

State conformity with the Internal Revenue Code (IRC) refers to how states’ tax codes align with the federal tax code. Most states, for ease of administration and compliance, base their state income tax regimes on the federal IRC, either by using federal taxable income as a starting point or by… Read more »

Transfer Pricing in Transition
Mitigating state tax risk while preserving value

Although states experienced significant tax revenue growth during the COVID-19 pandemic, many experienced revenue declines in fiscal year 2024, some for the second consecutive year.1 In response to economic downturns, state governments often intensify audit activity to raise revenue. One major focus for state tax audits has been, and will… Read more »

Preparing for Successful SALT Audits
Most of the work should occur long before the state tax notice arrives

Audit preparedness is crucial, since federal and state agencies have increased auditing to make up for budget deficiencies. In the complex, ever-evolving state and local tax (SALT) landscape, maintaining audit readiness and efficiently managing the audit process can be challenging for businesses, especially for entities operating in multiple tax jurisdictions.… Read more »

Inequitable Barriers to Equitable Apportionment
When petitioning for equitable apportionment, taxpayers face motley state-imposed obstacles

Every state that imposes a corporate income tax requires multistate businesses to apportion business income. The states’ methods of apportioning income, however, vary considerably and can produce inconsistent results. The United States Supreme Court sanctioned these differences in Moorman Mfg. Co. v. Bair1 when the Court allowed Iowa to deviate… Read more »

Who Is the Customer?
The ins and outs of market-based sourcing

Compared to the complexity of cost-of-performance (COP) sourcing of services for income tax purposes, a market-based approach to apportionment sounds downright simple. Instead of comparing the location of all payroll and material costs of generating revenue as in a COP calculation, for market-based sourcing one looks only to the location… Read more »

State and Local Tax Implications for a Remote Workforce
As remote work becomes more common, withholding and nexus are among key considerations

State and local tax issues related to remote workforces have existed for many years. However, the pandemic—with the attendant drastic increase in employees working from home or elsewhere—has intensified these issues and brought them to the forefront of taxpayers’ attention. The remote work trend continues even as we emerge from… Read more »

Sales Tax and the M&A Process
Understanding the entire journey—from diligence through post-transaction

Mergers and acquisitions (M&As) play an active role in the corporate landscape, facilitating growth, consolidation, and strategic realignment among businesses. Companies often include M&A activity in their short-term and long-term strategies. To successfully navigate M&As, tax directors and chief financial officers identify areas that tend to present pitfalls that can… Read more »

The SALT Team of the Future
An income tax perspective on the evolution of work environments

To respond to rapidly changing state and local tax (SALT) developments, this article envisions how a well-balanced SALT team can serve the needs of a large multistate business. It is instructive to look at how things, from a tax perspective, used to run in office settings back in the day,… Read more »

State Tax Policy Takes Center Stage
In a time of burgeoning deficits, what is the status of SALT?

In an informative session on the first day of the 75th Anniversary Celebration and Annual Conference in October, experts addressed the topic “SALT Tax Policy: As Deficits Turn, Will the Tide Change?” The panel included Mo Bell-Jacobs, senior manager in the Washington, D.C., office of RSM, who specializes in state… Read more »