Businesses operating in multiple states must navigate and comply with various state and local taxes imposed on legal entities, their owners, and transactions of products and services.
Each state has unique tax rules and underlying theories, and the application of these rules often results in distinctly different tax liabilities based on slight differences in the facts of a business or transaction. The total annual cost of state and local taxes materially impacts cash flow, effective tax rate, and earnings per share; and this cost is increasing.
How can your company not only comply with the array of state and local taxes, but also properly manage these liabilities?
At Mueller & Co., LLP, our tax specialists are experienced in the nuances of state and local taxation, and take a proactive approach in guiding clients via our multi-state tax compliance and planning services. The proactive management of state and local tax costs typically yields substantial savings over time and limits exposure. Businesses that are both tax-efficient and compliant are rewarded, a system which is consistent with Mueller’s overall objective of helping your business succeed.
The pace of change in the state tax world has increased in recent years, thereby altering the landscape in which businesses operate and creating both opportunities and pitfalls. As examples of these changes, states are:
- Expansively defining taxpayers and taxable transactions
- Increasingly imposing entity-level taxes and withholding obligations on traditionally pass-through entities
- Enacting gross receipts and gross margin taxes that are owed regardless of whether there is net income and requiring unitary combined reporting
- Heavily-weighting the sales apportionment factor
In response, the state and local tax services provided by Mueller & Co., LLP are in touch with this changing landscape to provide our clients with services that are timely, needed, and valuable.
State and Local Tax Services
Tax Return Preparation
The core of the state tax process is the quality preparation of state tax returns for legal entities and individuals by our experienced tax professionals. Experience makes all the difference.
Many states, including Illinois, have expanded and extended a wide variety of tax credits designed to encourage certain business activity, such as new jobs and investment, within their borders. These credits can be lucrative, when applied to the right facts, to substantially reduce or eliminate income tax and other taxes. Credit should also be taken full advantage of on both original and amended returns.
Refunds Analysis and Claims
Revisiting state tax returns for prior years that are still open under the state’s three or four-year statute of limitation could reveal refund claims for which amended returns should be filed. Given unique rules in different states and the state tax knowledge of Mueller’s tax professionals, refund claims are not uncommon and represent a good source of cash.
Sales and Use Taxes
In the sales and use tax area, states are asserting nexus through affiliated and non-affiliated parties, expanding their lists of taxable services, and aggressively limiting exemptions. As a tax imposed on gross receipts, exposure can build quickly, and liability can accrue to both a seller and purchaser as well as to an acquirer of a business with unpaid tax.
