Shop Talk: 10 Significant Multistate Tax Problem Areas and How to Handle Them
State income taxes can have a particularly significant impact on companies operating in multiple states. For many of these businesses, however, state income tax often is an afterthought, sometimes even after the federal returns are prepared and ready to go out the door. Just as often, state income taxation may not be fully considered in the tax planning and consulting phase of an engagement.
Carl N. Richie, CPA, is a Tax Manager at Kaufman Rossin, Miami, Florida, where he specializes in state and local taxation for clients in a variety of industries. He writes here to offer his thoughts on ten of the most common problem areas in the realm of state income taxation of multistate businesses. While this list is certainly not exhaustive, these are a few pitfalls you definitely want to avoid.
The list
- Property factor issues
- Sourcing payroll
- Sourcing revenue from services and intangibles
- Throwback
- Public Law 86-272
- Special industries’ apportionment
- Missing out on credits and incentives
- Not carefully considering the state tax impact of major transactions
- Filing separate vs. combined returns
- Appropriate treatment of entity partners
