State & Local Tax
State and local taxes (SALT) have become a significant cost of doing business due to a variety of factors — state conformity to federal tax reform, increased pressure for revenue at both the state and local levels, and expansion of nexus provisions for various taxes. Compliance with constantly changing regulations has become a burden for businesses, so companies need customized SALT solutions tailored to their unique business needs — whether they are a Fortune 500 company or just getting started.
Our SALT professionals have a collaborative approach and combine their extensive technical knowledge and experience with professionals within our industry segments to provide our clients with an integrated approach and well-crafted services. We strive to provide responsive and proactive insights to your needs so that you can make the most of your tax opportunities.
IRS To Issue Regulations On Deductibility Of State And Local Income Taxes
The Internal Revenue Service (IRS) recently released Notice 2020-75, stating that proposed regulations will be forthcoming indicating that when a state or local jurisdiction imposes a tax at the entity level, the tax will not be subjected to the deduction limitation on state and local taxes that was part of the Tax Cuts and Jobs Act (TCJA) enacted in 2017. Historically, individual taxpayers have been able to claim an itemized deduction for state and local taxes paid. As a result of the TCJA, this deduction is now limited to $10,000 per individual taxpayer. In response to this, several states have enacted legislation to tax pass-through entities (PTE) at the entity level rather than passing the income to owners on a K-1 and subjecting the owners to tax. For federal and most state purposes, entities such as Partnerships and S-corporations have historically received “pass-through” treatment rather than being taxed at the entity level.