United States

2016 year-end state and local tax considerations

2016 legislative changes: State tax matters

INSIGHT ARTICLE  | 

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Doing business in multiple states can mean addressing a variety of state and local tax challenges, including new and constantly changing statutory frameworks.

In 2015, state legislatures promised sweeping changes across a broad spectrum of state and local tax topics. Sales and use tax legislation primarily focused on expanding traditional nexus concepts in an increasingly digital economy.  Income and franchise tax legislation included the treatment of foreign entities, mandatory combined reporting, market-based sourcing and factor presence nexus. However, while much was promised in 2015, some of what was enacted was quickly clawed back by state legislatures.

In 2016, promises were not as broad or grand, and what was enacted proved to be incremental and more localized in nature. However, what did come to pass is shaking the foundation of the SALT world. Legislative attacks on the 25-year old sales tax physical presence standard established in Quill resulted in almost a dozen state proposals and two enacted laws directly challenging that standard. State legislative action coupled with the lack of movement in Congress to address remote-seller sales tax collection, leaves us wondering if 2017 will be the year Quill is overturned, replaced, or even reinforced. Income and franchise tax legislation was less ground-breaking, with states continuing the march toward single sales factor apportionment and market-based sourcing.

Our 2016 state and local tax year-end tax planning guide introduces information on the following (and more):

  • Income/franchise and sales and use tax nexus changes
  • Ever-changing taxability of digital goods
  • State apportionment and allocation updates
  • Credits and incentives developments
  • Current and past state and local tax amnesties
  • Changes that can affect your 2016 filings

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