More than 20 states now allow pass-through entities (PTEs) to elect to be taxed at the entity level to help residents avoid the $10,000 limit on federal itemized deductions for state and local taxes, also known as the “SALT cap.”
Consider these key state tax issues now that state and local governments are revisiting taxpayer compliance with nexus rules, considering new taxes on digital services, and evaluating the extent to which they are willing to conform to federal tax rules and legislation.
Failing to comply with sales tax collection and filing requirements can result in significant risk and penalties, and states are becoming more aggressive in pursuing. VDAs or Voluntary Disclosure Agreements for sales tax obligations can help limit exposure.
The Consolidated Appropriations Act, 2021 addresses tax provisions related to the PPP which could have consequences for state and local tax.