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?

State Taxation: 'Food For Thought'

My recent posts have contained some of my notes and questions I recorded from attending the Paul J. Hartman State and Local Tax Forum last week. This is my last post which lists 20 takeaways or 'food for thought.'

1. The Organisation for Economic Co-operation and Development (OECD) does not identify tax havens, so why are the states?
2. Discretionary Authority is no warning. It doesn't allow taxpayers to know what a state will do (i.e., using alternative apportionment or combined reporting to force a taxpayer to deviate from the standard apportionment formula; or modifying a costs-of-performance statute to get a market-based sourcing result).
3. International taxation is starting to use state tax concepts such as combined reporting and apportionment.
4. "Are 'bright-line' tests knee-jerk reactions?" - quote from one of the speakers
5. "Tax Haven legislation should be trashed. Tax haven legislation picks winners and losers." - quote from one of the speakers
6. The only way to fight retroactive legislation is to monitor it and lobby against it before it is enacted.
7. Should states be able to enact retroactive legislation to protect the state budget from financial loss?
8. Should judicial decisions only apply to the taxpayer involved in the litigation if it involves a refund?
9. Retroactive legislation should not be able to increase revenue.
10. Ask yourself, if a 'technical correction' is creating new law or changing the interpretation of the law from the original interpretation that has been followed by taxpayers for years. If the answer is yes, do something.
11. Should retroactive legislation be limited to a state's statute of limitations?
12. Prior legislatures can't bind future legislatures.
13. New legislatures can't determine, or know, the intent of prior legislatures. Shouldn't be able to unbind or unwind prior legislation.
14. "Retroactive legislation is telling you what the law was." - quote from one of the speakers
15. Are we moving from apportionment to allocation when we use single-sales factor apportionment and market-based sourcing?
16. Is single-sales factor apportionment 'fair apportionment'? Moves income to customer states, not to states where the activities occurred that generated the income. Income is not based solely on sales.
17. "Throwback and throwout rules are unconstitutional because they look beyond the borders of the state." - quote from one of the speakers
18. If alternative apportionment is wide open and anything goes, why have statutes?
19. "To gain true insight, read the entire case - don't just read the blurb. See what it says and what it doesn't say." - quote from one of the speakers. Get creative. See the case, the issue from a different perspective. Ask "why not."
20. Does common sense apply? If so, is your definition of 'common sense' the same as mine?

Obviously, I obtained all of the thoughts above from the Forum. Some are quotes from speakers, some are ideas paraphrased from a speaker's discussion, and others are personal reflections. 

LEGAL PRINCIPLES IN STATE TAXATION - DO YOU KNOW THEM?

Last week I attended the Treasures in the Attic-Tried and True Legal Principles in SALT session at the Paul J. Hartman State and Local Tax Forum presented by Janette Lohman and Brian Kirkell. I found the session very interesting and wondered if all state tax practitioners really know or understand how to use the legal principles that were discussed. Here is a list of the principles that were mentioned and can be used to defend your company or client.

1. Manifest Injustice
2. Equitable Estoppel
3. Statute of Limitations
4. Equitable Tolling
5. Equitable Recoupment
6. Collateral Estoppel
7. Statutory Rules of Construction (Canons of Construction)
8. Burden of Proof
9. Regulations Cannot Expand the Reach of a Statute
10. Retroactive Changes
11. Doctrine of Consistency
12. Laches
13. Conformity