Time change. Daylight savings time. Fall back. Spring ahead. However you describe it, most (if not all of us) changed our clocks recently. We either gained an hour or lost an hour (depending on how you look at it), but one thing I do know - I've lost daylight. So I'm not sure how this is "daylight savings" time. I don't like to complain, but I just do. So I'll just say that I really like sunlight and dislike darkness. As they said in a cartoon movie I can't remember the title of right now - "Darkness is Death."
Regardless of how you feel about changing your clocks or sunlight or darkness, one thing is certain, times continue to change. The way business is conducted continues to change. New technologies are created (whether that's good or bad; or will be used for good or bad is yet to be seen). And last but not least, state tax legislation continues to change; and court cases and rulings continue to be made which ultimately create certainty and uncertainty. Wait, what? What did you just say?
Yes, new legislation, court cases and rulings create just as much uncertainty as they do certainty.
Well, that's great.
Just as each company's facts and circumstances differ, state tax laws seem to have a life of their own when the answer isn't "black and white" (which is most of the time); or when each state's laws are different. This creates a world of grey (or some may say, "darkness"). This "darkness" is why I say every state tax question is a research question. (A research question that needs to be solved by a human (not A.I., AI or artificial intelligence, just saying)).
Darkness is debilitating. It's hard to drive in the dark without headlights. It's hard to walk in the dark without a flashlight. Darkness creates fear and uncertainty. Darkness creates unknown risks. Thus, light is needed to move forward with some level of assurance and confidence.
Darkness can also create unknown opportunities. You can't see them. This requires faith. A compass. A navigator. A roadmap.
"Darkness" in the state tax world surrounds several areas and questions companies continually ask:
what states do I need to file tax returns in?
is what I'm selling subject to sales tax?
which entity in my affiliated group of companies is required to file the tax return?
if I sell my interest in this partnership, to what states do I source the gain and have to pay tax?
I'm selling services all across the United States. How do I source those sales to each state in the apportionment factor of my income tax returns?
do I really have to get exemption certificates from my customers?
do I have to register with a state for sales tax purposes to provide a vendor with that state's resale exemption certificate or can I use a multijurisdictional certificate?
am I required to file combined income tax returns or does every entity file separately?
should I make this election or that election?
do I qualify for these tax credits?
do I have to collect sales tax on my total gross receipts or can I deduct costs reimbursements or costs that I flow-through and pay to someone else?
how do I know if we really meet the requirements to be protected from a state's income tax by P.L. 86-272?
I didn't even know that state had a gross receipts tax.
what is a franchise tax and why is the tax base so high?
am I really selling SaaS and does the state tax it?
should I make a state's pass-through entity tax election? How do i quantify or model the impact? Will it be beneficial for all partners and shareholders?
should I file a Voluntary Disclosure Agreement (VDA) or simply start filing returns?
should I request a Private Letter Ruling (PLR)?
should I challenge (protest) this audit assessment or simply pay it and move on?
when can I stop filing returns in a state?
how do I dissolve or withdraw from a state?
is registering with a state's Secretary of State's Office the same thing as registering with a state's Department of Revenue (taxation)?
what sales tax compliance software should I use? Should I outsource the return prep to a third-party?
I could keep going, but I think you get the point. The darkness is everywhere.
Finding the light in the state tax world is not easy.
Unlike darkness in life where you can just flip the light switch and see, darkness in the state tax world takes research and analysis and judgment based on experience. And even then, the answer may not be clear (still dark or grey).
Consequently, I think the "light" is finding the right-fit state tax consultant that you trust and like working with. Someone with not only the technical knowledge and experience, but the ability to look at an issue from 2 feet and 50,000 feet. To be technical and practical. To look at the risk and provide judgment. To reduce risk. To recommend positions with the proper level of assurance. Knowledge. Judgment. Advocacy. That is the light in the proverbial darkness. The compass. The roadmap. The flashlight. The headlight.
I hope you find the light you need to move your company and clients forward.
If you are a state tax consultant, I hope you "shine brightly."
QUOTES
"The art and science of asking questions is the source of all knowledge." - Thomas Berger
"The prize goes to the person who sees the future the quickest." - William Stiritz
"We are drowning in information and starved for knowledge." - John Naisbitt