STATE & LOCAL TAX
About
There are thousands of state and local tax jurisdictions across the country, each seeking to grow their tax base by expanding their taxation scope and intensifying audit activity. Complying with the ever-evolving web of tax laws and regulations is an intense challenge, particularly for businesses operating in multiple locations, selling across state lines or with an online sales footprint.
Gray, Gray & Gray gives you the power to navigate this complex tax landscape. Our state and local tax (SALT) professionals have the knowledge and connections necessary to help you achieve compliance in all applicable jurisdictions, while making sure you do not pay any more tax than necessary by working to find opportunities to reduce your tax obligation and improve your tax position. That includes local, on-the-ground expertise across the nation to understand the nuances of compliance in the states where you do business.
Working with Gray, Gray & Gray, you’ll gain the power to proactively plan for and address state and local tax responsibilities throughout your business life cycle. We not only help you stay in compliance and reduce your tax burden, but are always seeking to identify opportunities to improve efficiency and grow your business profitably.
Our Services
Among the specific services Gray, Gray & Gray offers that are focused on your state and local tax needs are:
- Determination of Filing Requirement (Nexus Studies)
- Audit Defense
- Refund Reviews
- M&A Due Diligence
- State Income and Franchise Tax Planning and Compliance
- Apportionment Analysis
- Filing Methodology
- Legal Entity Rationalization
- ASC 740
- Credits and Incentives
- Sales & Use Tax Consulting and Compliance
- Abandoned and Unclaimed Property Reporting Requirements
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Frequently Asked Questions (FAQ)
Not automatically, but possibly. The key factor is “nexus,” whether your business has sufficient presence in a state to trigger tax obligations. Physical presence is a clear trigger, but since the 2018 Supreme Court decision in South Dakota v. Wayfair, economic nexus rules have expanded. If your sales cross state lines and meet certain revenue or transaction thresholds, you may owe taxes in those states, even without a physical presence. Conducting a nexus study is essential to determine your obligations.
Nexus is the legal link between your business and a state that grants taxing rights. It changes because states set and frequently update their own thresholds to increase revenue. With 45 states imposing sales taxes, businesses with a wide geographic reach must continuously monitor their exposure, not just annually. Errors can lead to back taxes, penalties, and rapidly accumulating interest.
Unclaimed property, or abandoned property, includes financial assets like uncashed checks, unused gift cards, dormant credits, and forgotten deposits left untouched for a set period. Many businesses only discover reporting obligations during state audits. States aggressively pursue unclaimed property because collections fund general revenue. If your business handles outstanding credits or payables, review this proactively to avoid issues.
The federal cap on state and local tax deductions mainly affects individual taxpayers, especially in high-tax states like Massachusetts. Many states offer Pass-Through Entity (PTE) Tax elections for S-corps, partnerships, and LLCs to bypass this cap at the entity level. Whether a PTE election suits your situation depends on your business structure and income, but it is a practical planning option for owners in high-tax states.
Acquisitions can significantly increase SALT exposure, often unexpectedly. Buyers may inherit the target’s state tax history, including unresolved nexus issues, unreported sales tax, and unclaimed property liabilities. SALT due diligence is as critical as any financial review, and neglecting it can turn a smart acquisition into a costly surprise.