DON'T BE A SALY - PREPARING FOR 2017

I hope everyone had a great Christmas. Most of you are probably sleeping in today, unless you are working this week. 

I am working this week - as is the life of a freelance consultant and writer. I work all the time, anywhere, anytime around my daily life. For example, over the past week, we have moved in to our newly renovated home and been unpacking all week. In the middle of this chaos, I have been working at night, early morning and sometimes all night (this is after being exhausted from unpacking). I don't say this to brag or get sympathy, simply to relay what it takes to work on your own. You don't work, you don't get paid. However, along with that responsibility comes freedom and the ability to work anywhere and anytime. 

Regardless of whether you are working or taking time off to spend with family this week, I hope you take a breath and appreciate 2016 (the good and the bad), and prepare for 2017 as something to look forward to. 

State taxes are constantly changing which makes this career interesting and challenging. Some of you dread your job and think of it simply as something to do, to get through the day, to pay the bills, so you can live for the weekend. DON'T LIVE THAT WAY. Either make it exciting and challenging or find something else to do. Life is too short. Live while you are alive. Be self-aware. Know what you are good at. What your strengths are. Do that. Don't focus on what you aren't good at or what others want you to do. 

As I have stated in previous posts, my story is not the traditional one, but who wants to be a cookie-cutter, spec-house. Be a custom car, a custom house. Conformity breeds mediocrity. 

Looking to do something amazing in 2017. Looking to do something new in the state tax profession this year. I hope you are too. DON'T BE A SALY (SAME AS LAST YEAR).

COST Releases 14th Annual Study of State and Local Business Taxes

The Council On State Taxation (COST) recently released its fourteenth annual study of state and local business taxes. The report, "Total State and Local Business Taxes: State-by-State Estimates for Fiscal Year 2015," prepared by Ernst & Young LLP, shows all state and local business taxes paid in each of the 50 states and the District of Columbia. These taxes include business property taxes; sales and excise taxes paid by businesses on their input purchases and capital expenditures; gross receipts taxes; corporate income and franchise taxes; business and corporate license taxes; unemployment insurance taxes; individual income taxes paid by owners of non-corporate (pass-through) businesses; and other state and local taxes that are the statutory liability of business taxpayers.

According to the report, businesses paid more than $707.5 billion in state and local taxes in FY 2015, an increase of 1.9% from FY 2014. State business taxes grew less quickly than local taxes, with state taxes growing 1.0% compared to local tax growth of 2.9%. In FY 2015, business tax revenue accounted for 44.1% of all state and local tax revenue. The business share has been within one percentage point of 45% since FY 2003. 

I always enjoy these reports as they provide additional insight and context into the debate around state tax policy. The difference in the amount of sales taxes paid versus income tax paid always stands out to me: 

• General sales taxes on business inputs and capital investment totaled $150.6 billion, or 21.3% of state and local business taxes. 
• State and local corporate income and business gross receipts tax revenue was $67.3 billion, or 9.5% of all state and local business taxes. 

Will the report encourage changes in state tax policy? 

Will the report encourage taxpayers to change tax planning or operations?

do you have the 'holiday blues' about your state tax career?

As we near the end of 2016, I have a question - are you happy with your state tax job, your career, your profession? If not, what would you change if you could? What big idea have you been sitting on? What do you enjoy most about the state tax profession? What do you hate the most? Why do you feel that way? Why aren't you doing something about it? What can I do to help? 

Many colleagues I have talked to lately, have told me how they would love to have their own practice like me. They just need to be shown that it is possible, and get some help finding their path to success. I was blunt and honest about my path to success (financial, etc.) when I talked with them. I think it helped them feel that the road to success may not be as difficult as they think. I believe many SALT professionals are not happy in their roles - the constant growth pressures and fee escalations firms place on them make it difficult and simply miserable. It makes working on your own seem feasible because you can lower your fees and make more money from a personal standpoint. It's a win/win for clients and you.

Life is too short to not go for it. Stop asking, "what if I fail?" Start asking. "what if I succeed?" 

Comment or e-mail me.

YEAR-END TAX PLANNING: DON'T FORGET THE SALT

I have been swamped the past month with work and finishing our 6-month house renovation, so please forgive me for not posting as often. 2017 will be different. Looking to do great and different things in the world of state taxation next year. We are planning on moving-in this weekend (before Christmas - YES!). If you are considering renovating a house, feel free to contact me. I will give advice and my story. It may be helpful, or not.

In the midst of the chaos, I thought I would send out my annual year-end state tax planning list. Its strange, but predictable, that the list hasn't really changed from year-to-year. 

The following is a brief list of some actions you may want to take RIGHT NOW:

1. Nexus and FIN 48: At this time of year, it is a good time for companies to address their nexus position in advance of their FIN 48 analysis. Operations may also be able to be restructured. If your company or client utilizes telecommuting employees or independent contractors and hasn’t addressed their nexus position in a while, this may be a good time. Also, more states have adopted economic nexus standards and “bright line” nexus standards that may come into play.
2. Sales and Use Tax: It is also a good time to conduct a reverse sales tax audit to identify sales and use tax refund opportunities and potential exposure. If your client has purchased any software, SaaS or cloud computing recently, they may want to confirm there is no sales or use tax exposure. States are still playing 'catch-up' with cloud computing, but several states have issued rulings and guidance over the last year.
3. Income Tax: For C corporations, a reverse income tax audit could identify state income/franchise and gross receipts tax refund opportunities and potential exposure. Combined reporting and apportionment issues or opportunities may exist. Alternative apportionment and transfer pricing have become big (or bigger) issues in 2016.
4. Income Tax: For flow-through entities, a reverse income tax audit may be helpful on major states such as Texas, Michigan, Washington, Pennsylvania, etc.
5. Credits and Incentives: If your company or clients are entering into new states, hiring new employees, building new facilities, retaining employees, "going green," involved with renewable energy, etc. this is a good time to identify and capture credit and incentive opportunities.
6. Transaction Due Diligence: If your company or clients are entering into any acquisitions of other companies or assets, state and local tax issues should be reviewed to determine exposure, successor liability, and nexus impact.
7. Residency Issues: For individual tax clients that have changed their residency to another state or are considering such a change, guidance should be provided in regards to what records they need to maintain, etc.to support their residency or domicile.
8. Employee Misclassification: If your company or client utilizes a high volume of independent contractors, contracts should be reviewed to mitigate exposure of those independent contractors being reclassified as employees.

What do you think? What is a high priority for you? Comment or send me an e-mail.

THANKFULLY LOOKING FORWARD

Happy Thanksgiving to you! I hope you are having a great week, and are able to spend valuable time with family and friends this week. I know this time can also be a sad time or lonely time whether you are with family or not. Keep your head up.

I am back in my home town this week to visit family. It is great to see my mom and my wife's family, but I am also reminded of the fact that my dad is no longer here. He died 8 years ago from lung cancer. My mom re-married and it's just not the same. My mom sold the house I grew up in after my dad died, so I don't even get to go there. In addition, my home town is very depressing - a blue collar town that lost its glory years ago. 

In spite of this sob story, I am thankful. I am thankful for my family. Thankful that my daughters get to play games with their grandparents (most of them). Thankful for restoration. Thankful for strength in difficult circumstances. Thankful that we can change and improve despite our circumstances. Thankful that our decisions can lead us to better things if we are willing to endure short-term pain for long-term gain.

I am thankful for the ability to move on. The ability to work hard. The ability to achieve when you are bombarded with messages of "don't take risks, don't work so hard, play it safe, just relax." 

I am looking forward to doing some 'new' things in the state tax profession in 2017. I don't want to play 'follow the leader.' I want to change the profession. Change the balance of things. I want to do something different. I hope you do too. 

Don't accept mediocrity. Don't accept 'the way it is' for 'the way you want it to be.' 

THE TRUTH ABOUT STATE TAX SEMINARS

The Paul J. Hartman State and Local Tax Forum is one of the best state tax conferences you can attend. Great topics, great speakers.

With that said, while attending the Forum last week, I started to think about state tax seminars in general. What is the purpose of seminars? How can we make them better? More informative? More practical? More strategic? More actionable?

Do seminars actually help you change something when you get back to the office or do you simple check-it-off your list, and record your CPE credits?

The following is a list of some observations and opinions about seminars:

1. Tell me something I don't know.
2. Tell me strategy.
3. Tell me how to take what you are telling me and apply it. 
4. Tell me the 'so what.'
5. Don't just report. 
6. Let's have a discussion that results in changing the game.
7. Let's flip the classroom.
8. The speakers I enjoyed the most, told me a story.
9. People multi-task at live seminars the same as they do when they watch a webinar. The only difference is that you can see them do it at a seminar.
10. Speakers are here to help the audience. The audience doesn't need the speaker to sell their expertise or show them how great they are. We don't care. 
11. Why does every seminar have the same group of speakers? We need new blood. We need a new state tax 'collective' or 'think-tankers.' We need a SALT profession succession plan.

How can we make SALT seminars better?