State and Local Tax (SALT) Services are designed to help businesses and individuals navigate the complexities of state and local tax systems, which have become a significant cost of doing business. As tax laws and regulations at the state and local levels vary widely, businesses need expert guidance to ensure compliance, mitigate risks, and optimize their tax positions. Here’s what SALT services typically entail:
1. State and Local Tax Compliance
- State Income Tax Compliance: Assisting businesses and individuals in understanding and complying with state income tax laws, including calculating taxable income, deductions, credits, and filing requirements. This includes managing multi-state tax filings for businesses operating in multiple jurisdictions.
- Sales and Use Tax Compliance: Helping businesses comply with state and local sales and use tax regulations. This involves determining taxability of goods and services, correctly collecting and remitting sales tax, and addressing nexus issues (when a business has a sufficient connection to a state to be required to collect and remit taxes).
- Property Tax Compliance: Assisting businesses in managing their property tax obligations, including assessing the value of tangible personal property, real property, and equipment, and ensuring the correct filing of property tax returns in various states and municipalities.
- State and Local Tax Audits: Representing clients during state or local tax audits, providing guidance through the audit process, and negotiating with tax authorities to resolve any tax disputes or discrepancies.
2. SALT Nexus and Apportionment Services
- Nexus Analysis: Assessing a business’s “nexus” (connection) to various states and localities to determine its tax obligations. This includes examining physical presence, economic activity, and other factors that may trigger the requirement to collect or pay taxes in a given jurisdiction.
- Multi-State Apportionment: Helping businesses with the allocation of income and expenses across multiple states for income tax purposes. This involves understanding and applying state-specific apportionment formulas and managing how income is split between jurisdictions to minimize tax liability.
3. State and Local Tax Planning
- Tax Incentives and Credits: Identifying state and local tax incentives, grants, or credits that a business may be eligible for, such as research and development credits, enterprise zone credits, or investment tax credits. Advising on strategies to take full advantage of these opportunities can help reduce overall tax liability.
- Business Location and Expansion Strategies: Providing advice on the tax implications of opening new offices, facilities, or stores in different states or localities. This includes evaluating the state and local tax environment in terms of tax rates, incentives, and compliance requirements to determine the most tax-efficient location.
- Sales Tax Strategy: Assisting businesses with sales tax planning, including reviewing product or service offerings to ensure compliance with evolving sales tax rules, especially for industries affected by changing online sales tax laws.
4. Indirect Taxes and Transactional Taxes
- Sales and Use Tax Planning: Providing advice on managing sales and use taxes in the context of business operations, including guidance on taxability of products or services, exemptions, and the proper collection and remittance procedures.
- Value-Added Tax (VAT) or Goods and Services Tax (GST): For businesses operating internationally or in states with these tax systems, offering strategies for VAT/GST compliance and optimization.
- Excise Taxes: Helping businesses understand and comply with excise taxes, which may apply to certain goods such as alcohol, tobacco, fuel, and other specific industries or products.
5. SALT Tax Credit and Incentive Maximization
- State Tax Credits and Incentive Programs: Assisting businesses in identifying available state tax credits and incentive programs, such as those for energy-efficient equipment, hiring programs, or economic development incentives.
- Enterprise Zone and Opportunity Zone Programs: Advising on how to take advantage of tax incentives provided for investing in enterprise zones or opportunity zones, which may include exemptions or reductions in state and local taxes.
- Economic Development Incentives: Helping businesses access state and local government programs designed to promote job creation, infrastructure development, or community growth. These may include credits for hiring local workers or establishing operations in underdeveloped areas.
6. State and Local Tax Dispute Resolution
- Tax Audits and Controversies: Representing clients in disputes with state and local tax authorities, including audits, administrative appeals, and litigation. Providing strategic advice on managing audit risks, minimizing penalties, and negotiating settlements.
- Sales Tax Disputes: Handling disputes related to sales tax collections, audit assessments, or refund requests with state and local authorities. This also includes navigating issues related to economic nexus and the taxation of digital goods and services.
- Tax Litigation: Representing businesses in tax litigation at the state and local level, ensuring compliance with tax laws while protecting the business’s financial interests.
7. Property Tax Services
- Property Tax Appeals: Assisting businesses in challenging property tax assessments that may be overvalued, advising on the process of appealing property tax assessments, and helping to negotiate lower valuations.
- Real Estate Tax Planning: Helping businesses with strategies to minimize property tax liabilities related to their real estate holdings, including developing tax-efficient ownership structures and identifying tax-exempt property opportunities.
- Personal Property Tax Compliance: Ensuring that businesses are in compliance with state and local personal property tax rules, including proper reporting of equipment, machinery, inventory, and other personal property for tax purposes.
8. SALT Technology Solutions
- Sales Tax Automation: Helping businesses implement automated solutions to manage sales tax compliance more efficiently. This includes selecting and integrating tax software to ensure proper rate calculation, exemption management, and filing.
- Data Analytics for SALT: Using data analytics tools to monitor, analyze, and optimize state and local tax compliance. This includes tracking sales, identifying tax savings opportunities, and monitoring potential audit risks.
- SALT Reporting and Documentation: Assisting businesses in streamlining SALT reporting, creating systems for maintaining documentation, and ensuring that all records are properly stored for audit purposes.
9. Economic Nexus and Remote Sales
- Online Sales Tax Compliance: Helping businesses understand and comply with the tax obligations of remote sales, including sales tax collection in states where they may not have a physical presence, as well as navigating complex “economic nexus” laws for online businesses.
- Marketplace Facilitator Nexus: Advising businesses on sales tax collection requirements for third-party platforms (e.g., Amazon, Etsy), including ensuring that the business complies with state and local tax laws when selling through these platforms.
10. Multistate Tax Considerations
Interstate Tax Structuring: Advising businesses with operations in multiple states on the best tax structure for managing complex multi-state tax issues, including evaluating the implications of doing business in different states.
State Tax Policy Changes: Keeping businesses informed about state-specific changes in tax policies, rates, and compliance requirements, and advising on how to adjust business operations accordingly.