Introduction

This comprehensive five-day course is designed to provide in-depth knowledge of State and Local Tax (SALT) compliance, focusing on critical aspects of sales, use, income, franchise, and property tax regulations. Participants will learn effective strategies for managing SALT obligations, minimizing tax liabilities, and optimizing compliance across multiple jurisdictions.

Objectives

• To introduce essential SALT compliance concepts and reporting requirements.
• To provide skills in managing income, franchise, sales, and use taxes.
• To explore tax strategies for reducing SALT liabilities and optimizing compliance.
• To familiarize participants with state-specific filing requirements and nexus considerations.
• To examine case studies on successful SALT compliance strategies.

Who Should Attend?

This course is ideal for:

• Tax professionals, accountants, and compliance officers.
• CFOs, controllers, and finance managers with multistate responsibilities.
• Corporate tax strategists managing SALT obligations.
• Legal and compliance professionals in large corporations.
• Students and recent graduates interested in state and local taxation.

Day 1: Overview of SALT Compliance Requirements

• Introduction to SALT Compliance and Its Importance
  • Understanding the role of state and local taxes (SALT) in business operations and tax planning.
  • Key tax types: Income, franchise, sales, use, property, and gross receipts taxes.
• Key State and Local Tax Types
  • Income and franchise taxes: Determining the tax base and allocating income.
  • Sales and use taxes: Registration, collection, reporting, and remittance.
  • Property taxes: Real and personal property tax obligations and assessment procedures.
  • Gross receipts taxes: Overview of states applying these taxes and calculation methods.
• Understanding Tax Nexus in SALT Compliance
  • Physical presence nexus: The traditional basis for SALT obligations.
  • Economic nexus: The evolving standard for sales tax compliance, especially in the digital economy.
  • Affiliate nexus: Nexus based on relationships with third-party affiliates, even without a physical presence.
• Sourcing Rules and Apportionment Methods
  • Apportionment: Allocating income and expenses across states, using various methods (single-factor vs. multi-factor).
  • Sourcing rules: How to allocate sales, services, and property to the correct jurisdiction.
• Case Study
  • Analyzing a multistate business to identify potential risks in SALT compliance, focusing on nexus issues and apportionment methods.

Day 2: Sales and Use Tax Compliance and Optimization

• Sales Tax Compliance Across Jurisdictions
  • Understanding the registration, collection, reporting, and remittance requirements for sales tax.
  • Identifying which products and services are taxable and which are exempt.
• Understanding Exemptions and Taxable Goods/Services
  • Industry-specific exemptions: Exemptions for manufacturing, research, and resale.
  • Sales tax holidays: Leveraging temporary tax exemptions to reduce liabilities.
  • Drop shipments and resale certificates: Proper documentation for tax-exempt sales.
• Use Tax Reporting and Compliance
  • Use tax: The tax on goods purchased out of state but used in the taxpayer’s home state.
  • How to properly self-assess and report use tax obligations.
• Strategies to Minimize Sales and Use Tax Liabilities
  • Exemptions: Identifying and leveraging exemptions and credits in different states.
  • Sourcing rules: Understanding how sourcing sales to the correct jurisdiction can minimize tax liabilities.
• Workshop
  • Developing a compliance plan for sales and use tax reporting across multiple states, identifying applicable exemptions and credits to optimize tax positions.

Day 3: Income and Franchise Tax Compliance

• Income and Franchise Tax Reporting Across States
  • Tax base determination: How states determine taxable income, including special rules for multistate businesses.
  • Understanding the allocation and apportionment of income across jurisdictions.
• Apportionment Methods and State-Specific Formulas
  • Single-factor vs. multi-factor apportionment: Which formula to use based on state rules.
  • Impact of sales, payroll, and property factors on apportionment.
• Managing Tax Credits and Incentives Across Jurisdictions
  • Key credits and incentives offered by states: R&D credits, job creation credits, investment incentives.
  • How to navigate state-specific credits to reduce tax liabilities.
• Minimizing Franchise Tax Liabilities with Planning Strategies
  • Structuring operations to reduce exposure to franchise taxes, such as entity selection and location considerations.
  • Managing tax base modifications to lower liabilities.
• Hands-on Exercise
  • Participants will calculate income and franchise tax liabilities for a hypothetical company operating in multiple states, focusing on apportionment and available credits.

Day 4: Property and Gross Receipts Tax Compliance

• Understanding State Property Tax Obligations
  • Real property vs. personal property: Identifying taxable property types and their implications for compliance.
  • State property tax rates, exemptions, and deductions.
• Property Tax Assessment and Valuation Challenges
  • Understanding how property is assessed and valuated for tax purposes.
  • Strategies for handling assessment appeals and minimizing taxable value.
• Gross Receipts Taxes in State and Local Jurisdictions
  • Identifying the states where gross receipts taxes apply and how they are calculated.
  • Differences between gross receipts taxes and sales tax.
• Managing State and Local Tax Audits and Appeals
  • Preparing for a SALT audit: Best practices for organizing records and documentation.
  • How to respond to audit findings and successfully navigate the appeals process.
• Group Exercise
  • Preparing property tax documentation and gross receipts tax calculations for a business operating in several states. The group will strategize to reduce liabilities through audit preparedness and compliance.

Day 5: Case Studies, Strategic Planning, and Future Trends in SALT Compliance

• Case Studies in Effective SALT Compliance
  • Reviewing successful SALT compliance strategies implemented by companies.
  • Key takeaways from businesses that have minimized risks and optimized their SALT positions.
• Strategic Planning for SALT Compliance Optimization
  • Leveraging tax incentives: How to structure transactions to maximize state-level credits and reduce liabilities.
  • Entity restructuring: Strategies such as choice of entity or reorganizations to optimize SALT exposure.
  • Using compliance automation tools to streamline SALT reporting and reduce human error.
• Future Trends in SALT Compliance
  • Expansion of economic nexus laws and implications for remote sellers.
  • The role of real-time sales tax compliance systems, automated tax calculations, and digital tax reporting tools.
  • Digital sales tax updates: Addressing challenges in taxing digital goods and services.
• Ethical Considerations in SALT Compliance
  • The importance of transparency, accuracy, and responsible tax planning in state and local tax matters.
  • Balancing tax minimization with ethical and legal obligations.
• Final Project Presentation
  • Participants will present a SALT compliance strategy for a hypothetical multistate business, covering compliance planning, risk mitigation, and tax minimization strategies.
  • The final project will assess each participant’s ability to integrate the concepts and strategies learned throughout the course.

Conclusion

Upon completion of this course, participants will have a comprehensive understanding of SALT compliance requirements and strategies to optimize tax planning. They will be equipped to manage SALT obligations across multiple states, reduce liabilities through strategic tax planning, and mitigate risks associated with audits and disputes.