State and Local Tax
State and Local Tax needs are constant, recurring events. The impact of state taxation on businesses is truly deceptively simple and endlessly complicated. Managing risk and identifying opportunities within state and local tax laws can be overwhelming. This evolving area of the law has created uncertainty on all sides regarding when you are taxable, how much income is taxable, or what is and is not taxable. On the bright side, complexity creates opportunity.
Like your personal health, state and local taxes can be broken into diagnostic services, preventative services, and emergency services. As your business grows and evolves, new issues will surface that need to be addressed. LBMC’s State and Local Tax (SALT) team provides clients with proactive and strategic multi-state tax services to mitigate risk, defend positions and improve cash flow. Our SALT experts are ready to provide you with planning and solutions to your state tax issues whether you are conducting business in one, several or all 50 states.
While we focus on sales and use tax, state income tax, gross receipts taxes (Ohio CAT) and franchise tax, we also provide property tax (tangible personal property and real property) and unclaimed property services.
Whether your business needs are simple diagnostics or complex emergencies, LBMC’s State and Local Tax professionals will assist in ensuring that your state and local tax burden is minimized so your company can move forward.
Whether you are going to the doctor for a routine check-up or you have never been to the doctor, sometimes you just need the basic tests done to figure out if there are any issues or opportunities you should be aware of. As with your health, early detection is key to keeping a problem from getting out of control. Also, if an opportunity is not captured within the right time frame, it can be lost forever having lasting effects on your company’s bottom line.
The most basic diagnostic test is a nexus review where you learn what states your company is obligated to file an income tax return and/or register to collect sales tax.
Other diagnostic tests include:
- determining if what you are selling in a state is taxable (sales and use taxability review);
- reviewing invoices and transactions for all years open under the statute (usually 3 or 4 years) to identify refund opportunities related to exemptions, credits, exclusions, tax treatment of special transactions and tax base items (reverse sales tax audits); and
- reviewing income tax returns for all years open under statute (usually 3 or 4 years) to identify refund opportunities related to tax base, apportionment factors, filing methodology (separate, combined, consolidated), unitary group, business vs. nonbusiness income classification, net operating loss utilization, and pass-through entity non-resident withholding and composite filing (reverse income tax audits).
How do you keep problems from happening?
You need a system in place or an expert continually monitoring and maintaining potential areas where problems can form. State tax compliance can create large liabilities that grow over time if not properly managed. Consequently, the professionals at LBMC offer consulting services around a company’s state tax compliance and provision requirements.
Our sales tax consulting services in addition to the diagnostic services mentioned above may include:
- Reviewing your compliance process
- Helping your company select compliance software and implement the software solution
- Co-sourcing or outsourcing your sales tax compliance
- Helping your company determine your ASC 450 provision positions
- Providing on-site custom training to your team
- Helping your company determine the sales tax impact of mergers and acquisitions or restructurings
Our income tax consulting services, in addition to the diagnostic services mentioned above, may include:
- Reviewing your company’s apportionment and revenue sourcing methods to determine whether your apportionment factors represent a fair and accurate reflection of your income in a state
- Helping your company determine whether they should be filing separate, consolidated or combined returns which may minimize tax or facilitate the utilization of net operating losses
- Reviewing your company’s state tax add-backs and subtractions to determine if additional deductions or additions can be taken
- Helping pass-through entities determine if composite returns are possible and at what level non-resident withholding is required
- Helping your company file required amended returns related to federal RAR compliance
- Co-sourcing or outsourcing your income tax compliance
- Helping your company determine your ASC 740 provision positions
- Helping your company determine the income tax impact of mergers and acquisitions or restructurings
When a crisis strikes or unforeseen circumstances occur, you need an advocate with technical expertise and practical solutions. Whether the emergency stems from an audit notice or assessment, a notification from a vendor, or an internal review that uncovers errors over a multiple year period, we can help.
We advocate for our clients and help them before, during and after an audit. We help companies defend positions and reduce penalties and interest when possible. Ultimately, our goal is to resolve your problem quickly, outside of a courtroom and at the lowest cost to you.
- Have you received a notice of intent to audit and are overwhelmed by the amount of information requested?
- Are you being to ask sign forms, such as the statute of limitations waiver, which only seems to benefit the State?
- Have you been selected to use statistical sampling for the sales tax portion of the audit?
- Has the auditor identified issues in the audit and proposed adjustments where you disagree?
- Are you comfortable that the auditor has looked for potential overpayments as well as deficiencies?
- If the audit has concluded and you still disagree with some of the auditor’s proposed adjustments, what are your options?
- Do you understand the Department’s informal taxpayer conference process?
Our emergency services may include:
- Helping your company determine if there are any overpayments to offset potential underpayments
- Managing the audit and representing your company throughout the entire audit process
- Analyzing and defending your positions through written protest and informal conferences or administrative appeals proceedings
- Helping your company obtain clarity regarding its situation by writing a letter ruling request
- Helping your company mitigate historical tax exposure through Voluntary Disclosure Agreement negotiation and representation
How do you know if you need state and local tax assistance?
- Do you know which states you are required to file income tax returns with, or register and collect sales tax? You may need a Nexus Review.
- Do you need help reducing any prior year tax, interest and penalty exposure before collecting sales tax or filing income tax returns prospectively? You may need a Voluntary Disclosure Agreement.
- Do you know if what you are buying and selling is subject to sales tax? You may need a Sales & Use Taxability Review.
- Do you know if you are taking advantage of all applicable exemptions or credits? We can help you with an Exemptions and Credits Review.
- Do you know if you have been overpaying or underpaying your sales and use tax obligations? Would you like to obtain refunds of prior overpayments and reduce your exposure under future audits? You may benefit from a Reverse Audit and Automation of your Use Tax Accrual.
- Do you need to prepare for an audit by knowing your exposure and possible refund opportunities or reduce a current audit assessment? We can help you with Audit Defense and a Reverse Audit.
- Do you need to clean up sales tax exposure in preparation for a future sale or future purchase of a company? We can help you with a Reverse Audit and a Voluntary Disclosure Agreement.
- Do you know the impact of restructuring, acquisition or merger on your company’s state tax liability? We can help with Due Diligence and Modeling.
The LBMC Difference
At LBMC, we deliver deep and diverse expertise to clients around the nation with exceptional warmth and wisdom. We have built one of the finest reputations and have among the highest client satisfaction and referral rates in the industry. If you are looking for a firm with multistate expertise that delivers personal attention and performance, LBMC sets a higher, uncommonly approachable standard.