We were in Annapolis when the Comptroller’s office delivered it’s 60-day report to the legislature outlining the impacts of the federal tax reform plan on Maryland’s taxpayers and state revenues. They project an estimated $572 million increase in state and local taxes in the fiscal 2019 year while the combined federal tax burden is expected to decrease by $2.8 billion. Since then we have seen major legislation in Maryland and all across the US proposing ways to adapt to the impacts of the Tax Cuts and Jobs Act of 2018 (TCJA).
We reached out to our friends at Avalara (https://www.avalara.com/Accountants/) for some advice we could share with you.
Every state except for four starts their personal and corporate income tax computation from either federal adjusted gross income or federal taxable income. Any change Congress makes to those two definitions directly impacts all those states that start with that definition. In addition, every state uses some or all the deductions/exemptions in the federal tax. Likewise, any change Congress makes to those deductions/exemption directly impacts all the states that use them.
States may be forced to rely more heavily on sales taxes if income tax collections go down as a result of the Tax Cuts and Jobs Act. “There’s a bunch of states out there now that have budget deficits,” said Scott Peterson, Avalara’s vice president of US Tax Policy. “It’s a bipartisan thing. Almost every Republican governor and almost every Democrat governor sees this as at least a partial solution to whatever funding problem they have.”
The point is that in addition to learning the impact of the federal TCJA, smart CPAs are also looking at how to anticipate the changes in the state and local taxes to help with their client’s planning. SALT consulting and compliance continues to be a fast growing area for many CPA Firms. Here is a small list of areas that tie tax reform topics to sales tax compliance:
Avalara is coming to our area in May just in time to help you with SALT compliance.
CRUSHDC is the premiere conference for transaction tax professionals. CRUSHDC will be taking place at the JW Marriott Washington, DC, May 9-11, 2018.
The registration fee will cover all conference meals, entertainment and event-related transportation, CPE training and education, as well as all networking events during the two-day conference.
For an at-a-glance look at CRUSHDC, please go to www.avalaracrush.com.
Don’t miss your opportunity to be proactive and help your clients plan for the many changes that will be happening in the Federal, State and Local Tax arenas in the next few years.