SALT Strategies

States Orchestrating Intricate Tax Opus that Can Eventually Ensnare Most Multistate Taxpayers

MWE Headshots Thumbnail JoePizzimenti - States Orchestrating Intricate Tax Opus that Can Eventually Ensnare Most Multistate TaxpayersIt’s often the case that we get so caught up in our daily work that we neglect to step back and fully discern the magnitude of a developing situation.  After drafting the past several posts, I realized that a disconcerting pattern was being composed in front of my eyes – one that warrants all multistate taxpayers’ immediate attention.

Here is the tune that’s been playing in my head: It is not one or two state taxing authority initiatives or pieces of legislation that are going after multistate taxpayers.  It is a concerto of intricately orchestrated strategies that will at some point affect virtually every multistate taxpayer.

Today, I’ll focus on the state tax melody that is playing out to address the states’ increasing revenue demands.

Troubling Tax “Notes”

After reviewing the New York State 2014-15 Budget provisions, one cannot help but sense a common theme developing among states with large state budgets and high tax revenue demands.  For example, the similarities between New York and California corporate tax provisions come to mind.  The theme is based on an extensive array of initiatives focusing on broadening their revenue base.

The following reflects some of the common state tax themes that sound troubling “Tax Notes” for multistate taxpayers;

  • Remote Seller Sales Tax Nexus Provisions
  • Economic or Factor Based Net Income Tax Nexus Provisions
  • Market Based Receipt Sourcing Provisions for Receipts Earned from Services or Intangibles
  • Mandatory Combined Filing For Corporate and Flow Through Taxpayers
  • “Pay to Play” State Tax Procedural Provisions

Each of the above pose disconcerting state tax ramifications for multistate taxpayers. However, it appears that an ever increasing number of states are combining the adoption and implementation of one or more of the above to compose a complex paradigm designed to increase state taxes for all multistate taxpayers.

Take Away: Don’t Rely On “Vinyl” State Tax Advice In the Digital Age

The dynamic symphony of today’s multistate tax requires your advisor to be a “Tax Aficionado.”  In upcoming posts, with a focus on the above, we will attempt to arrange the cacophony of disconcerting state tax notes into a melodic composition to shed light on potential state tax issues that may increase your multistate tax.