State & Local Tax

Tax Solutions That Follow You

No two states and localities have quite the same rules when it comes to taxes. In the complex landscape of state and local taxation, you need a dedicated partner to help you navigate through diverse regulations. Mowery & Schoenfeld is that resource. We put our years of experience and in-depth knowledge to work for you, minimizing your tax liability no matter where your business takes you.

Given the vast differences in each state’s treatment of income, available credits, and allowable deductions, we understand the financial impact of choosing where to operate your business and source your income can have on your company’s overall profitability. We will work with you to find creative solutions that make the most sense for your business and its bottom line.

Minimized Liability, Reduced Exposure

Looking at the complete picture of your situation and your specific business objectives and goals, we create state and local tax strategies tailored to you. Whether you’re dealing with income taxes, sales taxes, property taxes, employment taxes, state corporate franchise taxes, business incentives or tax credits, we design solutions for total compliance and good standing with state and local tax authorities.

One of the most valuable services we offer our clients is a continuous review of state and local filing requirements. We take all necessary steps to limit exposure from potential assessments arising out of tax audits, which could extend back up to 10 years in states where returns have not been filed.

Our tax specialists have the expertise to help you with all the state and local tax services you require, including:

  • Consulting and planning
  • Tax compliance
  • Audit representation

Understanding Nexus

Whether it is to take advantage of attractive locations for warehousing, a better pool of talent, or to expand into a new market, many businesses find expanding beyond their home states a natural part of growth.

While it is the states’ individual differences which make them attractive, the diverse landscape of state and local taxation can be a pain point for many businesses.  Compliance hinges on one key factor: nexus. Most commonly in the world of state and local taxation, nexus refers to the relationship between a taxing authority and a business.

Many activities can trigger nexus, but the most common include:

  • Owning or leasing property or capital assets
  • Employing workers (including remote workers in some cases)
  • Storing supplies or renting a warehouse
  • Transacting business 

The rules vary by state, but there are generalizations to follow. For income tax purposes, a business which derives income from, owns property in or employs residents of a state generally is considered to have nexus. For sales tax purposes, the nexus rules are a little broader, and also include solicitation of business and intangible property within a state, as well as activities which trigger online nexus.

Distinctions among rules and regulations can be complex and difficult to follow, much less comply with. If you have any business activities outside of your home state, reach out to one of our advisors today and we will perform a nexus analysis. This is the first step in maintaining compliance and avoiding burdensome audits by state taxing authorities.

Understanding Wayfair

In 2015, South Dakota passed a bill that would change the way state and local taxes were collected in monumental ways. After Wayfair challenged the law and lost, states all over the US began setting thresholds for online retailers for collecting and remitting sales tax on transactions with their residents.

Today, 43 out of 45 of the states that have a sales tax have enacted online nexus legislation. As is always the case with state and local taxation, the rules are complex, the questions are many and the answers are not always easy to determine. Online nexus is no exception – the laws are complex and vary by state, creating an intricate and everchanging web of legislation for businesses to carefully navigate.

Online nexus is determined in three ways:

  • Click-through nexus, which occurs when a resident business receives commission for referring sales to out-of-state sellers, commonly via a link on a website.
  • Affiliate nexus, which relates to independent businesses who sell through other businesses, such as Amazon.
  • Economic nexus, which is triggered simply by generating sales above certain thresholds to in-state residents.

If you have any business activities outside of your home state, we encourage you to reach out to us today for a state and local tax analysis.