state and local tax (salt) news & commentary
from my desk to yours
I have put together a web page of sites that offer FREE updates on state tax developments. I have also included some of my favorite business and practice management sites, magazines and blogs.
Please take a look - ONE-STOP SHOP.
Please let me know which sites you find most useful and if you have a site I should add.
Thank you and enjoy.
HB 0534 was signed by the Governor on April 26, 2017 which allows manufacturers in Tennessee to elect to use a single-sales factor apportionment method. The election provides:
For franchise tax and excise tax purposes, a taxpayer whose principal business in Tennessee is manufacturing may elect to apportion net worth and net earnings to Tennessee by multiplying such values by a fraction, the numerator of which is the total receipts of the taxpayer in Tennessee during the tax year and the denominator of which is the total receipts of the taxpayer from any location within or outside of Tennessee during the tax year. A Tennessee taxpayer’s principal business is manufacturing if more than 50 percent of the revenue derived from its activities in Tennessee is from fabricating or processing tangible personal property for resale and consumption off the premises.
The new election is effective for tax years beginning on or after Jan. 1, 2017.
TN Notice #17-11 - Single Sales Factor for Manufacturers
It has been reported that the election is "worth about $113 million for an estimated 518 Tennessee companies."
Taxpayers are always trying to obtain certainty regarding their tax issues. Unfortunately, it is not possible to achieve 100% certainty when the facts are complex and the state's rules are grey. Consequently, the taxpayer and adviser generally review all binding authority (statutes, regulations, cases, etc.) and unbinding authority (informal guidance, etc.) to develop support for a tax position. This is why we have the lovely 'levels of assurance' such as the 'realistic possibility of success' (33%), 'substantial authority' (40%), or 'more likely than not' (> 50%).
Taxpayers are commonly balancing risk and the amount of dollars to spend to chase down this elusive certainty. Accordingly, taxpayers are trying to attain the most cost-effective and practical solution that reduces risk to an acceptable level. Thus, other factors (business, legal, financial) may determine how much effort is taken to support a specific tax position, resulting in some taxpayers choosing to default to paying more tax to avoid risk.
Bloomberg recently released its 2017 Survey of State Tax Departments. Now in its 17th year, Bloomberg BNA’s 2017 Survey of State Tax Departments clarifies each state’s position on the gray areas related to the income taxation of corporations and pass-through entities, as well as to the sales and use taxation, with an emphasis on nexus policies.
This year, new survey questions for the following topics include:
The survey also features 40 new questions, plus a new sales tax category on the sharing economy.
CAUTION
Surveys like this provide great insight into how a state will treat certain issues and fact patterns. The problem is that many answers provided by the state may not be based on actual statutes and regulations or court rulings. The answers may be based on internal policy or simply be an interpretation of a grey area (right or wrong). Regardless of the basis, the states' answers help a company formulate a conclusion.
First off, I would like to thank every one for the 'happy birthday' messages I received over the last few days. I really appreciate it. I turned 'double 4' or 44. I can't believe it. Mid-forties.
Each birthday, especially as you get older, causes you to reflect on what you have accomplished, how short life is, and what you still want to accomplish. Career wise, I have worked in almost every type of environment as a tax / state tax consultant. I have been self-employed the past 3 1/2 years. I have enjoyed working on my own - the money and the freedom have been great. Recently, I have been missing some things about working at a firm or corporate tax department - the teamwork and working together to solve problems and create opportunities.
My favorite tv show is "Suits." Lately, I have been binge watching the first 3 seasons. I still enjoy watching it over and over. I know it is a tv show, but I enjoy the fast pace, the creative problem solving, having to look at a problem from different angles to arrive at a solution that works. Albeit, in the show, the methods or solutions are not always legal or ethical.
I have been doing a lot of soul searching lately about my next career move, where my practice should focus, should I join a firm, etc. With getting older, we have no guarantee of tomorrow. We have to go for what we really want to do. We cannot go through the motions. We cannot waste time or days or months. We must pursue what we feel called to do. What we were made to do.
Looking back over my career, the times at which I felt the most 'alive' were when I was fixing or preventing a problem - controversy work. I call it 'research' with a purpose. Digging to find support for a position, to reduce an assessment. I want to focus on fixing and preventing state tax problems. I am a creative problem solver. That was what I was meant to do.
I get bored easily. I don't like wasting time on frivolous matters. I don't have time to waste. Life is too short. I have goals to accomplish.
Even at home, I love fixing and preventing problems. I will kill myself to get a large project done in a day. I don't like dragging things out. If I have a 'honey do' list, I will move like a machine to get things done. I don't like incompleteness.
I leave you with a quote - "you can' keep doing the same thing over and over, and expect a different result." Also, if you want something, you have to take action and pursue it.
I ask you, what do you really want to do? Are you pursuing it?
Are you doing 'deep work'?
Meaning, are you digging into the facts and state tax authority to find what is essential? To find true cash tax savings? To identify, quantify and mitigate risk?
We are all bombarded with the 'fire drill' of the day - compliance or reactive, last-minute advice needed for a transaction. Perhaps a notice or audit assessment out of the blue with a tight deadline. Some of us respond to e-mail constantly.
It's time to do deep work.
To do the projects that others don’t want to do or have time to do. To dig into court cases, rulings, statutes, regulations, audit assessments, transactions, etc. to identify opportunities, risks and tax policy that should be challenged.
To work with tax professionals, and legislators to learn their perspective and shed light on areas that are grey.
To help reduce the unintended consequences of legislation and problems caused by actions taken or the lack thereof.
After we do deep work, we need to turn that ‘deep work’ into intelligence and tools that are practical. To communicate the application of complicated state tax authority into easy to understand terminology which allows clients to make informed decisions and act.
It is too easy to be reactive in life and at work. I seek to live and work proactively, and lead my clients to do so as well. I believe extraordinary efforts are directly determined by how narrow you can make your focus. I also believe in every set of facts or law, something essential is hidden.
I don't just want to be the best at what I do. I want to find the best way to do it.
State tax professionals solve problems through technical arguments, experience, negotiation and contacts. My role is to make it easier.
State taxes are deceptively simple and endlessly complicated. Let's do deep work and get results.
I just finished reading a post by Nicole Kaeding at The Tax Foundation about how confusing and bad the Louisiana Gross Receipts Tax proposal is. I couldn't agree more.
Why do states continually try to raise revenue by making tax calculations more complex which end up producing unintended consequences or unconstitutional tax regimes?
Many answers are possible, but I digress. Back to Louisiana's gross receipts tax proposal.
I had noticed that Louisiana proposed a gross receipts tax, but hadn't drilled down into the details. When I read Nicole's article, I couldn't believe what I was reading. I particularly love the flow chart she provides which shows the complex tax structure under HB628.
As the corporate income tax becomes less of a revenue source, will more states adopt something similar? I hope not, but as history tells us, states like to play copycat.
Here is a link to another post Nicole wrote which discusses what states currently employ gross receipts taxes and other states considering such a tax.
Brian started the LEVERAGE SALT LinkedIn group in 2012.
Join the group to have one spot to visit for state tax and business developments from a variety of sources. Curated daily.
