• Are there refund opportunities hidden in your filed state income and franchise tax returns?
• Have you claimed all available sales and use tax exemptions?
• Are you sending more tax dollars to the local property tax assessor than legally necessary?
• Are you spending too much time complying with state and local jurisdictions?

A SALT Minimization Review is a systematic process of reviewing your state and local taxes to assist in answering these and other SALT questions. Based on what matters most to your company, a SALT Minimization Review examines one or more of the following areas: state income and franchise taxes, including corporate and pass through income tax; Michigan Single Business Tax; sales and use taxes; gross receipts taxes; and property taxes.

Customized to Your Needs

A SALT Minimization Review is customized based on your company’s needs and focuses on the areas with the greatest potential for savings. Additionally, it’s designed to minimize your investment of time and resources. An overview of the review process is as follows:

• Define the scope. What taxes, states, and specific issues are to be reviewed?
• Gather and analyze information. This typically includes an interview of appropriate company staff, a facility tour, and a review of filed returns and supporting documentation.
• Provide initial findings. At the conclusion of the review, preliminary findings are shared, including a rough analysis of those findings.
• Develop and deliver recommended solutions. This provides an overview of recommended solutions, including saving estimates based on the information provided and estimated costs to implement recommendations.

With a review of your business tax structure, state activities, and filed returns, a SALT Minimization Review could result in the development of a more efficient tax filing position or structure or identify overlooked exemptions, credits, or incentives. As shown in the case studies below, the potential savings can be significant! Just think what your company could do with an extra $400,000!

Case Study #1: Income & Franchise Tax

Company: A consolidated C Corporation with three transportation subsidiaries and three logistics management subsidiaries operating in several states.

Background: Each subsidiary had multi-state operations and was filing separate state tax returns. The subsidiaries had mixed results of profitability and losses.

Solution: We recommended a reorganization of the subsidiaries into single member limited liability companies that permitted the combining of the two separate lines of business into groups that could combine results and reduce state income taxes by 25 percent.

Case Study #2: Income & Franchise Tax

Company: An S Corporation based in Michigan in the pharmaceutical industry that performs various consulting functions and research related to developing new products. In certain instances, they also manufacture products that are developed.

Background: The Company’s sales force performs sales solicitation activities in many states outside of Michigan.

Solution: The activities of the Company’s sales force created Michigan Single Business Tax (SBT) nexus in other states, thus permitting an apportionment of its Michigan tax base that was not previously claimed. These activities also created unreported tax exposure in other states. By acting as an intermediary with the states where past tax exposure existed, we obtained voluntary disclosure agreements that included a limited look-back filing period and penalty waiver. Concurrently, we amended four years of SBT returns. The bottom line was net refunds of $400,000, a 65 percent net reduction in state taxes.

Case Study #3: Sales Tax

Company: A metal stamper of automotive components based in Ohio.

Background: In an effort to save money, this manufacturer was handling its sales tax compliance in house. The company was paying sales tax based on a process established 10 years earlier.

Solution: Due to changes in tax law and the business’s complexity, the process used by the company had become obsolete, resulting in overpayments of sales taxes. We obtained refunds of $160,000.

Case Study #4: Personal Property Tax

Company: A metal finishing and decorative coatings manufacturer based in Michigan.

Background: The owners of the company formed a sister corporation and transferred nearly half of the original manufacturing company’s assets to the new corporation.Both companies were based in the same local property taxing unit and filed personal property tax returns based on each company’s respective assets on assessment day.

Solution: Upon reviewing the personal property tax returns filed by each corporation and the respective tax bills, we discovered that the local government unit made an error that caused the new corporation’s assets to be taxed to both corporations. Due to the timing of the discovery, recourse and appeal rights were limited. However, by working with the local assessor, we were able to secure a $35,000 refund of prior year taxes and another $30,000 reduction in current year taxes.

In Conclusion

Although a SALT Minimization Review is not guaranteed to find savings, consider this: federal taxes have more to do with “when” tax is due, whereas state and local taxes have more to do with “if” tax is due — and there’s always more money at stake with “if” than “when.” There’s no better way to uncover the “ifs” than via a SALT Minimization Review.