Will Your Company Owe More or Less State Tax After the Merger?

Is your company considering restructuring its business? Perhaps creating new legal entities or re-aligning its lines of business into different entities? Changing the ownership structure of the legal entities within the commonly controlled affiliated group? Or maybe it is considering acquiring or merging with a new business (unrelated third-party)?

Regardless of your company's situation, in each of the above mentioned scenarios, your company must perform its due diligence prior to completing any transaction or restructuring. That due diligence should take into consideration the impact the restructuring or transaction will have on the business operations, legal obligations, insurance, finance, and tax, etc.

Additionally, the company can't neglect state and local tax due diligence. If the transaction ends up costing the company a significant amount of state tax dollars now or in the future, you may be asked if these issues were considered or reviewed prior to completing the transaction.

The state and local tax impact can be material and varied. Some of the potential state and local taxes to take into consideration are: income tax, gross receipts taxes, franchise taxes, sales and use taxes, property taxes and transfer taxes.

Usually the biggest concern in regards to the transaction from a state and local tax perspective are:

1. Is there any sales tax on the sale or transfer of assets or change in ownership?

2. Is there any transfer tax on the transfer of assets or change in ownership?

The answers to these questions depends on the state or states involved.

In addition to the above, the impact that the restructuring will have on the business' state tax nexus (taxable presence) position across the country should be reviewed and considered before making any changes.


The following are state tax and business developments I have curated since April 11th, and posted in the LEVERAGE SALT LinkedIn group:

Some of the items may be on the same state/issue/topic, but they are from different sources which may give you a broader perspective to help your company or client.

  1. Legislative Session Review: Idaho

  2. Legislative Session Review: Arkansas

  3. Maryland Legislature Sends Single-Sales Factor Bill to Governor

  4. Oklahoma Enacts Marketplace Sales Legislation

  5. Oregon Updates IRC Conformity, Repeals Tax Haven Law

  6. Oregon Extends Interstate Broadcaster Apportionment Provisions

  7. Maine Amends Headquarters Credit, Other Provisions

  8. Enacted Oklahoma Marketplace Sales Legislation Detailed

  9. Virginia Allows Modified Apportionment Factors for Certain Companies

  10. New York Enacts Budget With IRC Conformity, Other Changes

  11. Nebraska Updates IRC Conformity

  12. Tennessee Allows Financial Asset Managers to Elect Single Receipts Factor Apportionment

  13. New Arizona Law Updates State Conformity to Some Provisions of IRC

  14. Texas Comptroller Reminds that Tax Amnesty Program will Run from May 1 to June 29 and Provides for Potential Waiver of Penalties and Interest

  15. Connecticut Administrative Guidance Discusses Treatment of IRC Sec 965 Federal Repatriation Transition Tax

  16. New York 2018-2019 State Budget Bill Addresses Treatment of Some Provisions of the 2017 Federal Tax Reform Act

  17. New Oregon Law Updates State Conformity to IRC for Specific Provisions and Extends Sunset Date of Modified Apportionment Regime for Interstate Broadcasters

  18. New Alabama Law Requires Certain Marketplace Facilitators to Collect and Remit Tax or Else Adhere to Information Reporting Requirements

  19. Oregon Enacts Qualified Business Income Addition

  20. Kentucky Enacts Apportionment Formula, Rate, Other Changes

  21. Kentucky Broadens Sales Tax Base, Hikes Cigarette Tax, Makes Other Changes

  22. Digital Tax Arguments Focus on Role of Congress, Compliance Costs

  23. Insight: ‘Wayfair: Covering the Waterfront—Amicus Briefs Supporting Respondents

  24. A Brief History of the Biggest State Tax Case in a Generation

  25. Rhode Island Discusses Treatment of IRC Sec. 965 Income

  26. South Dakota v. Wayfair - TTR Explains What Tax Technology Options Really are Available

  27. No Simple Story About Tax Bill’s Impact on States

  28. Cap on the State and Local Tax Deduction Likely to Affect States Beyond New York and California

  29. State & Local Tax Advisory: The Supreme Court Weighs a New State Tax Nexus Standard, Again | Alston & Bird LLP

  30. New Mexico Administrative Hearings Office Issues Timely Opinion Regarding State Taxation of Subpart F Income and Dividends from Foreign Affiliates

  31. Oregon Taxpayers Denied Use of MTC’s Apportionment Formula

  32. Kentucky Might Require Combined Reporting, Many Tax Changes

  33. Virginia Enacts Subtraction for REIT Income

  34. The Tax-Savvy Company Restructuring

  35. Adopt or adapt? New IRS partnership audit rules affect states

  36. Legislative Session Review: Florida

  37. New Jersey Permits Dedicated Prepayment of Anticipated Taxes

  38. Maryland Phases in Single-Sales Factor Apportionment Formula

  39. Legislative Session Review: Nebraska

  40. New Arizona Law Allows Some Taxpayers to Bypass OAH Process and Appeal Tax Dispute Directly to Board of Tax Appeals

  41. Arizona DOR Issues Notice Regarding Certain Fiduciary Return Filers with IRC Sec 965 Repatriation Income for 2017 Tax Year

  42. California FTB Issues Fourth and Final Report to Legislature on Recently Enacted Federal Tax Reforms

  43. New Maryland Law Phases in Single-Sales Factor Apportionment for Corporate Income Tax Purposes

  44. New Nebraska Law Provides Adjusted Basis Computation for Certain IRC Sec 179 Depreciable Property

  45. New Hampshire DOR Administration Issues Report on How 2017 Federal Tax Reforms May Affect State Income Taxation – New Law Revises Effective Dates of Tax Rate Changes Enacted in 2017

  46. New York City Memo Explains Deemed Repatriation Income under GTC, BTX, and UBT

  47. Pennsylvania DOR Discusses Application of IRC Sec 965 RTT to State CNIT

  48. Rhode Island Division of Taxation Provides Guidance on Treatment of IRC Sec 965 Income for Individuals and Pass-through Entities

  49. MTC Approves Hearing Officer Report on Apportionment Regulation Amendments

  50. Ohio Supreme Court Overturns Reduced NOL Credit


  52. Conformity with federal tax reform will result in an estimated state corporate tax base increase of about 12% for the first ten years



  55. Years of work to simplify the collection of remote state sales taxes may soon pay off.

  56. Kentucky legislature overrides Governor's veto of tax plan

  57. Florida Explains Treatment of Repatriation Income

  58. Kentucky Requires Combined Reporting in Tax Reform Bill

  59. Pennsylvania Explains Treatment of Repatriation Income

  60. Alabama Provides Guidance on IRC Sec. 965 Repatriation Income

  61. Kentucky Clarifies Definition of Prewritten Computer Software

  62. Kentucky Enacts Combined Reporting

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LEVERAGE SALT to daily curate state tax developments relating to a specific industry, state(s), tax type and issueYou can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at


If you've been paying attention, which I'm sure you have, I am constantly changing my website and thinking of ways to market, re-market, re-package or change the way I present my services and myself. This is the life of a solo state tax consultant. I am always thinking. Always learning. AND I can implement changes whenever I want - maybe sometimes hastily, but I would rather be innovative and try things, then to be stuck in the trap of 'that's the way we have always done it,' or changes take time to get approved by layers of bureaucracy and by the time they get approved all momentum and enthusiasm about the change is long gone.

Life is too short to be the same as everybody else, and that is exactly what we have in the public accounting and law firm world. Everybody is the same. The same boring websites. The same descriptions. The same strategic visions. The same services. The same message. The same hot topics. Every firm is trying to be the first to write about a hot topic, or the first to go in-depth about a topic. I should know. I spend my days daily reviewing state tax developments and writing about them. I also conduct research for clients and attempt to provide insight and actionable, innovative, intelligence (I just made that term up, you can feel free to use it). 

There is so much 'noise' in the world. So much knowledge and information being spewed on the internet and social media, while you are just trying to do your job. The question is - what do you need to know to do your job? How can you best help your company or your client? Are you going deep enough into the details of the law, cases, etc. to find true value? Or are you just scratching the surface, going from meeting to meeting, running around with your head cut-off, waiting for lightning to strike? 

Life is too short to be boring. Too short to not take the risk to be creative. 


What is your firm good at? What are you good at? How can you be different? How ARE you different? 

Be different. Be creative. Provide REAL VALUE, NOT NOISE.

Middle Market Companies Fight State Tax Surprises

As a CFO, controller or finance executive in a middle market company, you have a wide range of responsibilities to manage.  State and local tax matters can pop up when you least expect it and cause compliance and financial burdens.

Some of those state tax surprises could be (regardless of industry):

  1. State tax registration requirements - when should you register?  If you register, will that create tax filing obligations?  When can you withdraw your registration?
  2. State income tax apportionment - when can your company allocate income instead of apportion income?
  3. Sales taxability of digital goods, licenses, subscriptions, computer hardware, software, cloud computing, etc.
  4. Sales tax audits and appeals
  5. Choosing sales tax codes for your sales and purchases to correctly utilize your sales tax compliance/decision software with your ERP system
  6. Knowing when your company has a filing obligation in a state
  7. Filing Voluntary Disclosure Agreements to mitigate prior year tax exposure
  8. Determining sales tax consequences of "bundled transactions" or "mixed transactions" (transactions that include taxable items with non-taxable items)
  9. Determining sales and use tax consequences for entities that conduct transactions with governmental entities.  When does the exemption apply?  What does the exemption apply to? 
  10. If my company is a service provider, is my company paying use tax on purchases?

Several of my clients have had these issues recently.  Do any of the above items sound familiar to you?  


I am a state tax consultant and I hate state taxes. Why? Because state taxes are a burden to every company doing business. The registration to do business, the business licenses, the sales AND use tax, franchise taxes, income taxes, property taxes (personal and real property), local income or gross receipts taxes, etc.

Companies are in business to make money and use it to grow their business, not pay the government. I am not a state tax consultant because I love the complexity of state taxes and the fact that it changes daily. I am a state tax consultant because companies need help navigating the complexity of state taxation or they can end up in some big financial trouble that impacts cash flow. 

Now, your Fortune 500 companies may not care as much - meaning, their federal tax liability is usually relatively much larger than their state tax liability, so state taxes usually take a back-seat. However, your growing middle market companies and smaller companies must pay attention or face material liabilities that impact their ability to do business. 

The problem for a state tax consultant is that the correlation between the size of a company and importance of state taxation, is sometimes in contrast to how much a state tax consultant can charge for his or her work. Fortune 500 companies can afford to pay more for state tax consulting services and usually the project or issue has more zeros behind the dollar amount involved. So it makes sense that the fee is larger. 

For middle market companies and smaller companies, even though the dollar amount at issue may not be as large as it is for a Fortune 500 company, the issue is just as valuable or more so because of the relative effect it could have on the cash flow of the company. 

As a result, state tax consultants often have a hard time deciding which type or size of companies they should focus their services on. Each group (large and small) have a need with different means to pay or priorities. 

Regardless of size, companies are not in business to pay taxes. CFOs, Controllers and privately held company business owners are not in business to learn and study state taxes. They don't want to know the technical complexities, they just want solutions. They want to do business with as little tax burden as possible (in dollar amount and compliance). Our job as a state tax consultant is not to explain the technical difficulties and show how smart we are. Our objective should be to resolve state tax issues in practical and cost-effective ways, with as little technical jargon and difficulty as possible. If the client wants to know more, provide it. But otherwise, just do it without explaining the technical theories and potential 'greyness' of the issues involved. Clients don't want to know how difficult it is, they want to know you are on top of it and can resolve it with as little pain as possible.

As a state tax professional, don't fall so in love with the complexity of state taxation that you forget why you are studying it in the first place. That's why I like to keep my perception as one that hates state taxes, because every business does. This ensures that we are on the same page.


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.