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State and Local Tax

Thomson Reuters Provides Guidance on State Tax Filing Obligations for Pass-Through Entities

Dana Greenstein  

Dana Greenstein  

Thomson Reuters has released a Checkpoint report to help practitioners and companies navigate state tax filing obligations for pass-through entities, such as partnerships, limited liability companies taxed as partnerships, and S corporations. It focuses on the complex challenges faced by entities that must research and comply with the rules and regulations of multiple states.

The report, Top 5 Easy Ways to Identify and Comply With State Tax Filing Obligations for Pass-Through Entities, outlines approaches to determine nexus, which describes the amount and degree of a taxpayer’s business activity that must be present in a state before the taxpayer becomes subject to the state’s taxing jurisdiction. It provides examples of activities that can create nexus for both income tax and sales and use tax purposes, and discusses the current political environment in which a growing number of states are asserting economic nexus to circumvent federal law.

It also addresses the various scenarios for non-resident withholding on pass-through entity income, which include state withholding thresholds and differing requirements based on the type of partner or entity type. Entities have their own considerations, such as whether to conduct composite filings on behalf of their nonresident members.

“The number of pass-through businesses has been steadily growing over the past decade. Combined with the expansion of multistate commerce, these trends represent a growing business development opportunity for the tax and accounting profession,” said Salim Sunderji, managing director, Checkpoint, with the Tax & Accounting business of Thomson Reuters. “Practitioners who implement the proper compliance research tools and keep their knowledge current will be in a stronger competitive position to secure this work.”

The report also covers entity-level taxes, which may include business privilege taxes, franchise taxes, or other taxes based on income, gross receipts, capital value, or net worth.

To download the special report, click here.

Thomson Reuters Checkpoint tackles market disruption through integrated research, editorial insight, productivity tools, online learning, content marketing solutions and news updates along with intelligent links to related content and software. It is relied on by hundreds of thousands of tax and accounting professionals, and counts among its customers 97 of the Top 100 U.S. law firms, 99 of the Fortune 100 companies, and all of the top 100 U.S. CPA firms.

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