State & Local Tax

When looking to drive more value out of your tax function, you need to take a hard look at your sales and use tax processes and procedures. According to one study, approximately 20% of the state and local business taxes paid are for sales and use taxes compared to approximately 10% for state income taxes (Total State and Local Business Taxes, COST and Ernst & Young LLP, July 2011).

Regardless of this fact, the amount of resources allocated to managing the sales and use tax function are often significantly lower than those dedicated to state income taxes, which are low to begin with! This mismatch of resources often results in both huge opportunities as well as material risk.

When done correctly, the cost associated with the collection and remittance of sales taxes should be limited to the cost of compliance. After all, the sales tax burden should be one that's borne by your customers. However, in reality, the lack of technical expertise, resources, and/or sub-optimal processes and procedures shifts that tax burden from your customers to you, often resulting in a significant hit to your bottom line.

On the use tax side, are you confident that you're paying the right amount of sales taxes on the assets and supplies that you use in your business? How do you know? At OUM, we can help you answer these questions and more. Our goal is to help you ensure that you are paying your fair share of sales and use taxes, but not a penny more.

Our consultants have expertise in the following areas:

  • Nexus determinations (especially in a modern economy)
  • Sourcing of revenues
  • Taxability studies and private ruling requests
  • Transaction support (i.e., mergers and acquisitions due diligence or post-acquisition integration support services)
  • Controversy assistance (i.e., audits, protests, settlements and appeals)
  • Voluntary disclosures
  • Sales and use tax compliance services
  • Tax accounting assistance (e.g., ASC 450 analysis for establishment and/or release)
  • Sales and use tax refund reviews (i.e., "Reverse Audits")
  • Tax efficient domestic structural planning, diagnostic, and "tune up" services
  • Sales tax systems support

State income and franchise taxes are one of the cornerstones of our practice. While in theory, calculating a state income tax liability is not an overly complicated process, in practice, capturing opportunities and minimizing risk is often sacrificed due to the tight windows between the completion of the federal income tax return and the state return due date. When you layer on the different rules which exist across the country, it's understandable why many take the position that "close enough is good enough."

It's often an eye opening experience to have a state tax authority spend sometimes more than 24 months auditing a tax return which was prepared in less than one or two months. Does this sound familiar?

At OUM, we make it our business to help you meet this challenge head on. We make it our business to keep abreast of the changes in state and local income and franchise tax issues and opportunities so that you don't have to.

Our consultants are experts in dealing with the following state income and franchise tax issues and service offerings:

  • Nexus and Public Law 86-272 protection
  • Formulary apportionment
  • Sourcing of revenues (especially in a modern economy)
  • State conformity and modifications to federal taxable income
  • Business/non business determinations
  • Unitary and combined filing determinations
  • Transaction support (i.e., mergers and acquisitions due diligence or post-acquisition integration support services)
  • Controversy assistance (i.e., audits, protests, settlements and appeals)