State and Local Tax Services
State & Local Tax Laws Are Complex
Every state’s economic activity is different, and state and local tax (SALT) laws are complicated and constantly changing, and they apply to all business types—C or S Corporation, partnership, or sole proprietor. SALT includes property taxes, general sales taxes, excise taxes, license taxes, individual income taxes, corporate income taxes, estate, inheritance, and gift taxes, documentary and gift taxes, severance taxes, special assessments, and many other miscellaneous taxes.
Sales & Use Taxes
States rely on sales & use taxes for much of their revenue and state revenue departments are constantly on the hunt to ensure that sales and use taxes are calculated correctly and paid, and they conduct routine in-depth audits to ensure proper compliance.
Paying sales or use tax sounds simple enough, but actually is a very complex area. Keeping up with constantly changing tax laws in the states where you do business can be time-consuming and costly. Sales tax nexus is generally established when a business’s retail activity in a state meets a certain dollar amount and/or number of individual transactions. Use tax can apply to online purchases, capital equipment, items taken out of inventory, donations of taxable items, taxable items given as gifts, construction material, non-highway fuel, interstate motor carriers, and bundled sales.
Laws vary from state-to-state, and it can be confusing and overwhelming.
In general:
- Sales Tax is defined as a tax on the sale, transfer, or exchange of a taxable item or service. Sales tax generally applies on the sale to the end user.
- Use Tax is defined as a tax on the storage, use, or consumption of a taxable item or service on which no sales tax has been paid. Use tax does not apply if the sales tax was charged.
Contact a Specialist
SALT taxes can significantly impact a company’s cash flow, effective tax rate, and risk. You need to work with a SALT expert to ensure your business is in compliance to avoid costly mistakes and penalties. To discuss your unique situation and find out how Olsen Thielen can help, contact one of our SALT specialists:
