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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.

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This article was written by Mo Bell-Jacobs, David Brunori, Brian Kirkell and originally appeared on 2023-10-16.
2022 RSM US LLP. All rights reserved.
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