I have been swamped the past month with work and finishing our 6-month house renovation, so please forgive me for not posting as often. 2017 will be different. Looking to do great and different things in the world of state taxation next year. We are planning on moving-in this weekend (before Christmas - YES!). If you are considering renovating a house, feel free to contact me. I will give advice and my story. It may be helpful, or not.
In the midst of the chaos, I thought I would send out my annual year-end state tax planning list. Its strange, but predictable, that the list hasn't really changed from year-to-year.
The following is a brief list of some actions you may want to take RIGHT NOW:
- Nexus and FIN 48: At this time of year, it is a good time for companies to address their nexus position in advance of their FIN 48 analysis. Operations may also be able to be restructured. If your company or client utilizes telecommuting employees or independent contractors and hasn’t addressed their nexus position in a while, this may be a good time. Also, more states have adopted economic nexus standards and “bright line” nexus standards that may come into play.
- Sales and Use Tax: It is also a good time to conduct a reverse sales tax audit to identify sales and use tax refund opportunities and potential exposure. If your client has purchased any software, SaaS or cloud computing recently, they may want to confirm there is no sales or use tax exposure. States are still playing 'catch-up' with cloud computing, but several states have issued rulings and guidance over the last year.
- Income Tax: For C corporations, a reverse income tax audit could identify state income/franchise and gross receipts tax refund opportunities and potential exposure. Combined reporting and apportionment issues or opportunities may exist. Alternative apportionment and transfer pricing have become big (or bigger) issues in 2016.
- Income Tax: For flow-through entities, a reverse income tax audit may be helpful on major states such as Texas, Michigan, Washington, Pennsylvania, etc.
- Credits and Incentives: If your company or clients are entering into new states, hiring new employees, building new facilities, retaining employees, "going green," involved with renewable energy, etc. this is a good time to identify and capture credit and incentive opportunities.
- Transaction Due Diligence: If your company or clients are entering into any acquisitions of other companies or assets, state and local tax issues should be reviewed to determine exposure, successor liability, and nexus impact.
- Residency Issues: For individual tax clients that have changed their residency to another state or are considering such a change, guidance should be provided in regards to what records they need to maintain, etc.to support their residency or domicile.
- Employee Misclassification: If your company or client utilizes a high volume of independent contractors, contracts should be reviewed to mitigate exposure of those independent contractors being reclassified as employees.
What do you think? What is a high priority for you? Comment or send me an e-mail.