State income and franchise regulations can be extremely obscure and complex. Even a sophisticated multistate organization may inadvertently overlook certain tax obligations, thus becoming liable not only for the tax itself, but also for unanticipated interest and penalties.
States and local municipalities need more money to operate, and are consequently growing more aggressive. Although most states have income and franchise taxes, some states have recently enacted variations of gross receipts taxes, changed the apportionment formula or tax base, and limited net operating loss carryovers, thus requiring broad knowledge and the resources to respond to an ever-changing state tax environment. Keeping up with these changes for all of the states in which a company does business can be burdensome and reduce the company’s focus on other areas of tax.
The complexity of state taxes presents many opportunities to both explore tax savings as well as address corporate tax compliance risk. Few tax departments have the resources necessary to stay up-to-date on the latest developments, which can put your company at risk of being assessed for major state tax liabilities. Get the professional guidance, training, and assistance your company needs to successfully manage state and local tax complexities.
Why UHY Advisors for Income, Franchise & Gross Receipts Taxes?
Our professionals specialize in state income and franchise tax issues covering many different industries such as manufacturing, construction, retail, oil and gas, real estate and other services. We understand state tax law and how it applies to the corresponding state tax return.
State Tax Compliance Services
We assist our clients in preparing or reviewing state income/franchise/gross receipts tax returns, which includes calculating and preparing estimated payments, extensions and withholding documents. Our U.S.-based professionals diligently focus on completing the state returns while ensuring these returns include the latest state tax law changes. Additionally, we can assist our clients in determining the effect of recent state law changes on their business. Whether it's completing the annual compliance process or reporting changes to the state returns as a result of a federal IRS audit, we can help clients reduce the strain on current tax department resources by outsourcing the compliance process to our team.
Audit Management & State Controversy Support
While the state tax auditors focus on underpayments, we strive to identify overpayments or opportunities to offset any underpayment, which oftentimes results in a net refund. We can assist our clients by:
- Responding to the initial audit request
- Organizing the audit documentation to present to the auditor
- Working directly with the auditor at our office so the auditor does not overhear information at the client site that could be detrimental to the audit
- Developing audit strategies
- Determining the best response to the initial audit assessment, which could involve going to appeals and negotiating with the states
We also assist the client with modifying his/her compliance process in an effort to improve risk management, reduce the potential for a future assessment and increase cash flow.
State Tax Planning
The legal structure of a company can significantly impact its tax exposure. We can review taxpayers' current tax structures and compliance processes to determine how they might be more efficient and effective. If a company is considering an acquisition, divestiture or merger, state tax consequences need to be considered. Our experienced professionals can assist with structural and transactional analysis in addition to location selection, which may result in tax efficiencies. Many tax departments have limited resources and personnel. Competing tax return filing and other deadlines consume these resources and do not leave much time for tax planning, issue resolution and state tax research. We know it can be difficult to stay current with all of the recent changes in state tax laws. We use this knowledge when considering the optimal structure for your company.
Based on the recent state tax nexus changes, it does not always take physical presence in a state to create nexus. Is your company filing state tax returns in all of the states where your company has nexus? We can determine where your company has nexus based on a study of your company’s activities in the various states and then assist with quantifying the tax exposure, if any, in those states.
Tax Refund Analysis
State tax laws and rules are constantly changing. It’s difficult to keep up with changes and focus on how these can affect your company. We can help you evaluate your current state tax posture and identify solutions that could reduce state taxes and other refunds, compliance or credits and incentive opportunities. As a result, this effort can reduce your company’s effective tax rates and improve measureable earnings.
Due Diligence Review
Our professionals identify potential risks and state tax opportunities as a result of partnering with clients during mergers and acquisitions. UHY Advisors can assist clients with the review of returns (identifying state tax refund opportunities and exposure) and incorporate tax planning that aligns directly with the business objectives. Additionally, our professionals can help with integrating and optimizing tax department processes and technologies after a merger or an acquisition.
Voluntary Disclosure & Tax Amnesty Programs
These state programs are there for companies to correct income and franchise tax deficiencies. We can initiate the discussion with the state tax authority and assist with completing the applications, as well as other required documentation and tax returns associated with these programs. This is typically done on an anonymous basis. The result is that the company becomes current regarding state taxes in that particular state, can reduce or remove any FIN 48 liability associated with the state exposure, and can even receive full or partial waiver of penalty and/or interest associated with the outstanding tax balance.
For more information about our State Income, Franchise & Gross Receipt Tax services, please contact Laura