State and local tax year-end considerations in 2023

GUIDE | October 16, 2023

Authored by RSM US LLP


State legislatures were once again in full swing in 2023, but the story of near-universal state surpluses from the last two years has reached its denouement. Cracks have begun to show in the fiscal foundation of state budgets, as tax revenues saw the first signs of declining growth—but not among all states or taxes.

Still, many states continued tax cuts. While the fiscal environment remains unclear, taxpayers should prepare for decreased tax revenue growth over the next couple of years. Less revenue may provide states an opportunity to revisit tax base or tax rate increases. Preparation is key.

Importantly, state taxpayers are never without planning opportunities. Below we address a number of potential focus areas that should be considered for year-end state and local tax planning depending on a taxpayer’s facts and circumstances. Many of the topics listed below create risk for taxpayers who ignore them completely and opportunity for taxpayers who plan ahead.

  • Nexus
  • Public Law 86-272
  • Gross receipts taxes
  • Sourcing
  • Apportionment
  • State transfer pricing
  • State income tax refund
  • Unitary taxation
  • Credits and incentives compliance
  • Sales and use tax process
  • Reverse sales and use tax audits
  • Digital assets

Learn more about these year-end considerations in our planning guide.

This article was written by Mo Bell-Jacobs, David Brunori, Brian Kirkell and originally appeared on 2023-10-16. Reprinted with permission from RSM US LLP.
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The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

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