Introduction

This comprehensive five-day course focuses on the specific challenges and implications of state and local taxes (SALT) for multistate businesses. With a deep dive into nexus, multi-jurisdictional tax obligations, and tax efficiency strategies, participants will learn how to navigate complex SALT issues, optimize tax structures, and manage compliance across multiple states.

Objectives

• To introduce the SALT challenges faced by multistate businesses.
• To provide skills in managing nexus, apportionment, and multi-jurisdictional compliance.
• To explore strategies for optimizing tax liabilities while ensuring compliance.
• To familiarize participants with state-specific tax laws, credits, and incentives.
• To examine case studies on successful SALT strategies for multistate businesses.

Who Should Attend?

This course is ideal for:

• Corporate tax managers, accountants, and compliance officers.
• CFOs and controllers managing multistate operations.
• Tax consultants and advisors for multistate businesses.
• Legal professionals specializing in state and local tax law.
• Students and recent graduates interested in multistate taxation.

Day 1: SALT Fundamentals for Multistate Businesses

• Introduction to SALT for Multistate Businesses
  • An overview of the key state and local tax issues that impact businesses operating in multiple states.
  • Understanding the importance of SALT compliance in the context of multistate operations.
• Understanding Nexus Requirements Across States
  • Nexus: The connection or link a business must have with a state for that state to impose taxes.
  • Different types of nexus: Physical presence, economic nexus, and affiliate nexus.
  • How SALT obligations are triggered when a company expands into new states.
• Types of Taxes Affecting Multistate Operations
  • Key tax categories: Income taxes, franchise taxes, sales taxes, use taxes, and property taxes.
  • Jurisdiction-specific variations and requirements for each tax type.
• Apportionment and Sourcing Rules for Multistate Businesses
  • Understanding the methods used to allocate business income across multiple jurisdictions, including single-sales factor and multi-factor apportionment.
  • Sourcing rules: How sales, services, and property are allocated to the correct states for tax purposes.
• Case Study
  • Review a business expanding into new states, identifying nexus triggers and the corresponding SALT obligations that apply.
  • Assess which taxes are relevant and which apportionment or sourcing rules should be applied.

Day 2: Sales and Use Tax Challenges for Multistate Businesses

• Sales Tax Collection and Remittance Across States
  • Navigating nexus and registration requirements for sales tax.
  • Understanding the differences in sales tax laws across states, including rates, exemptions, and reporting obligations.
• Exemptions, Resale Certificates, and Drop Shipments
  • Key sales tax exemptions for various industries (e.g., manufacturing, research and development).
  • The use of resale certificates and how to properly document exempt sales.
  • Drop shipments: Taxation challenges when goods are sold in one state and shipped to a customer in another.
• Use Tax Compliance on Out-of-State Purchases
  • Use tax: A complementary tax to sales tax that businesses must pay on out-of-state purchases used within their state of operation.
  • Reporting and paying use tax on purchases made without sales tax being charged by the seller.
• Mitigating Sales and Use Tax Liabilities with Strategic Planning
  • How to reduce tax liabilities by leveraging exemptions, optimizing sourcing rules, and properly managing compliance.
  • Best practices for sales tax audits and ensuring records are correctly maintained.
• Workshop
  • Develop a sales and use tax compliance strategy for a hypothetical multistate retailer, identifying nexus, applicable exemptions, and sourcing strategies for accurate reporting.

Day 3: Income and Franchise Tax Implications Across Jurisdictions

• Income Tax Implications for Multistate Operations
  • Apportionment formulas used for determining taxable income in different states.
  • Understanding the tax base calculations and how they vary by state.
• Managing State Franchise Taxes
  • The franchise tax: A state-level tax on the privilege of doing business in a jurisdiction.
  • Identifying tax bases, including capital stock and gross receipts, and understanding how specific states apply these taxes.
• Leveraging Tax Credits and Incentives for Multistate Compliance
  • State-specific credits and incentives: R&D credits, job creation incentives, green tax credits, and investment incentives.
  • Planning to leverage these credits effectively for multistate operations.
• Income Tax Planning for State-Specific Compliance
  • Structuring operations to optimize income tax liabilities across multiple states.
  • Developing a strategy for multi-state tax minimization, including the use of income-shifting and entity restructuring.
• Hands-on Exercise
  • Calculate income and franchise tax liabilities for a hypothetical company operating in multiple states, using specific apportionment formulas and assessing available tax credits.

Day 4: Property and Gross Receipts Tax Considerations

• State Property Tax Compliance for Multistate Businesses
  • Reporting and property tax compliance: Understanding tax obligations for both real property and personal property.
  • Assessment and valuation challenges and how to approach them across states.
• Gross Receipts Tax Challenges in Certain States
  • Understanding gross receipts taxes: States that impose these taxes, the methodology for calculation, and how they differ from traditional sales taxes.
  • How to identify and mitigate gross receipts tax exposure.
• Multi-Jurisdictional Audit and Appeals Processes
  • How to prepare for a SALT audit across multiple states.
  • Responding to audit findings and strategies for resolving disputes through the appeals process.
• Understanding the Impact of Real Estate and Personal Property on Tax Obligations
  • Real estate tax planning: Assessing how ownership and location of real property impacts SALT liabilities.
  • Personal property tax: Properly managing assets such as inventory and equipment for tax purposes.
• Group Exercise
  • Develop a property tax and gross receipts tax compliance strategy for a company with assets across multiple states, focusing on tax minimization and audit preparedness.

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

• Case Studies in SALT Strategies for Multistate Businesses
  • Reviewing examples of successful SALT planning strategies implemented by businesses.
  • Discussing challenges faced by companies in multistate compliance and how they were addressed.
• Strategic SALT Planning for Multistate Growth
  • Nexus evaluation and its role in expanding into new jurisdictions.
  • How to structure multistate operations to optimize tax liabilities and reduce compliance burdens.
  • Exploring compliance automation tools to streamline SALT reporting and reduce errors.
• Future Trends in SALT for Multistate Businesses
  • The expansion of economic nexus and its impact on small and large businesses.
  • Real-time compliance tools, automated sales tax calculations, and digital sales tax updates.
  • Changing state regulations and how multistate businesses can stay ahead of emerging trends.
• Ethical Considerations in SALT Strategy
  • The importance of responsible tax planning and ensuring transparency in tax reporting.
  • How to balance tax efficiency with ethical obligations.
• Final Project Presentation
  • Participants present a comprehensive SALT strategy for a hypothetical multistate business, incorporating sales and use tax, income tax, franchise tax, and property tax considerations.
  • Strategies should include compliance planning, risk mitigation, and tax minimization.

Conclusion

By the end of the course, participants will be well-versed in the complexities of SALT compliance for multistate businesses and equipped with the knowledge and tools to effectively manage nexus, apportionment, and tax obligations across different jurisdictions. They will also understand how to develop tax-efficient strategies and stay compliant in an increasingly complex tax environment.