State Tax Planning and Preparation
Many business owners are familiar with the unique challenges of operating in multiple states. State taxes, including income, sales, property, receipts-based, and other taxes, are often as material as federal income taxes - if not more so. We work proactively to identify your state tax exposures, evaluate the availability of federal protections from state taxation, and remedy any exposures. Work with us to take a more effective approach to your state tax planning.
State Tax Nexus Studies
CTW tax professionals have deep experience in conducting studies directed at determining whether a business' connections with a state or local taxing jurisdiction rise to the level of a taxable presence.
When conducting such studies, we investigate the following:
- A business' connections with a taxing jurisdiction
- Its sales into such jurisdiction
- The employment of people residing in the state
- Contractor relationships
- Visits in the state by out-of-state employees
- The nexus laws of each jurisdiction to make an initial assessment on nexus
- The impact of federal laws on that initial assessment to make a final determination on the need to register and make tax filings/payments
Our process results in a "living document" which receives updates at least annually if not more frequently. Our objective is for our clients to meet each of their state and local filing requirements in real-time as the facts of their operations dictate.
Voluntary Disclosure Agreements
If you have failed to meet your state or local tax obligations, we can help represent you in negotiations with your local jurisdiction to come into compliance. This negotiation seeks to limit the number of back years for which you will be exposed to the new jurisdiction's tax system, the exposure to back-year penalties, and the registration to do business.
CTW professionals will handle all negotiations and present a contract in the form of a "voluntary disclosure agreement" setting forth the terms under which you will come into compliance. CTW professionals also prepare the required back filings.
State Tax Apportionment Planning
State apportionment planning begins with a solid understanding of the state apportionment computation for each jurisdiction in which a taxpayer makes filings. CTW tax professionals are highly familiar with the operation of apportionment rules.
Having established the correct approaches for making apportionment calculations, we advise the clients on:
- The state impact of re-locating current operations in different states
- Locating new operations in alternate states
Unitary Determinations
CTW tax professionals regularly advise groups of related companies regarding the need to make unitary or combined state tax filings in states requiring such filings. Our teams perform a detailed gathering of facts surrounding business operations in the group of related companies.
After gathering those facts, our teams meet to determine several important things:
- Whether the group members meet the three unities test
- The degree of functional integration between the companies
- The extent of centralized management over the companies
- The economies of scale achieved by the group
- Rules barring instant unity, in cases where there has been a client acquisition
Our deliverable is a report which sets forth the facts, the unitary analysis, concludes as to the need for unitary filings, and identifies any tax planning opportunities that might result from the conclusions.
Federal/State Nonconformity
States and other local jurisdictions followed a variety of different paths towards conformity or continued non-conformity with federal laws. CTW tax professionals carefully follow developments on this subject to ensure accurate tax reporting and to early-identify any resulting tax exposures or tax savings opportunities. We model the impact of the changing landscape and proactively suggest steps for the future.
State Tax Credits
CTW tax professionals thoroughly search for and claim available credits in each state or local jurisdiction where clients have a tax filing requirement. Others offer credits unique to their jurisdiction. When clients are considering establishing new locations, CTW tax professionals represent the client in negotiations to secure tax and other incentives.
For more information on our tax credit planning services, visit our Business Tax Planning page.