I had a birthday recently and also did some traveling. Went to our firm's Altanta and Alpharetta offices. I had some great one-on-one meetings and did a little state and local tax (SALT) Q&A lunch-n-learn just talking about several current SALT issues and some common issues that always pop-up each year as companies operate, grow, change, etc. In addition to my meetings and trip, I also had some interesting calls with fellow SALT colleagues. Based on my week, I'd like to share some observations and opinions regarding the SALT profession.
One - as we discussed SALT issues during the lunch-n-learn, a few points became obvious. Most of the issues we discussed dealt with 'risk management' or areas in which companies either just missed the mark or purposely played the 'wait and see game.'
State and local tax laws or the interpretation of those laws are constantly being challenged or changed. That constant change in combination with the lack of conformity among the states creates opportunities for companies to do things incorrectly (whether by mistake or on-purpose). This puts a state tax consultant in the 'not so fun position' of telling companies bad news (i.e., large historical liabilities, etc.). However, this bad news is often told in conjunction with a solution to remedy the situation and alleviate the pain. It is still painful, but hopefully not as painful as if the company just waited for the state to catch them.
Another thought that became obvious as we discussed various state tax issues, how you analyze a company's situation, state tax law, rulings, etc. and ultimately reach a conclusion or guidance to give a company is that a state tax professional needs the ability to look at company's facts and state tax legal authority from multiple angles.
You have to be able to go to the 50,000 foot view and then be able to dig in the haystack. You have to be able to turn the facts and law upside down, sideways and then turn it right side up again. You can't just look at the picture as it is and then say 'yes or no.' If you simply rely on a 'chart' from a tax research software tool, then you will likely end up with the wrong answer or an answer that doesn't address the whole picture or a variation of the picture. A chart can be the starting point, but should never be the finish line.
Someone told me this week that state taxes aren't that difficult, but then later said they handled some very complex issues that made them scratch their head. - well, which is it? Is state tax simple or is it complex?
I've always said that state taxes are deceptively simple and endlessly complicated. Some questions are 'bread and butter.' Some questions are complicated. Actually, most questions seem to be living in the grey and require knowledge, judgement and advocacy. Responses require providing companies with options, levels of assurance and risks.
Regardless of the issue and a company's ultimate decision regarding a state tax position, documentation is key.
A company should ensure they have documented the facts, assumptions, state tax legal authority at the time of making the decision, and the conclusions reached. This is especially needed when the answer is not 'should' or 'more likely than not.'
State taxes require consultants to be technically sound and have the ability to communicate that knowledge and expertise in a practical manner so companies can make decisions and take action - "actionable intelligence."
Companies don't need 20 page memos that describe every facet of the law when those 'facets' don't apply to the situation at hand. Companies need their guidance to be thorough and brief (to the point). Clear. Concise. Supportable. Reasonable. As long as the facts and assumptions are correct; and all applicable legal authority has been reviewed and addressed, then the written guidance that contains those things should be sufficient.
Knowing - where to look, how to look, when you have looked in all the right places, how to organize the analysis, how to communicate the analysis with the right levels of assurance, how to present options and risks to a company - takes experience, judgement and skill that is developed over time.
I guess me 'getting older' isn't such a bad thing when I think of it this way. My 'older age' just means I'm more experienced and hopefully more skillful then when I was 'younger.'
Here's to you getting older, wiser and more skillful.
Stay safe out there.