About State Tax Research
In performing state tax research services, a tax professional must do all of the following:
- Establish relevant background facts
- Distill the appropriate questions from those facts
- Search for authoritative answers to those questions
- Resolve the questions by weighing the authorities uncovered by that search
- Arrive at a conclusion supported by the authorities
This careful and complete research process is best performed in accordance with the AICPA's Statements on Standards for Tax Services (SSTSs), which are enforceable tax practice standards for members of the AICPA.
In arriving at a conclusion, the tax professional is able to state which of the most common tax reporting standards are satisfied in a particular fact situation, based upon the percentage likelihood that the position will be upheld on its merits if challenged. These standards are:
- Probable (~ 67 percent)
- More likely than not (> 50 percent)
- Substantial authority (~ 40 percent)
- Realistic possibility (~ 33 percent)
- Reasonable basis (~ 20 percent)
Note that different standards apply to different reporting and disclosure requirements of various federal, state and local regulatory authorities.
How We Can Help with State Tax Research
State tax research is often needed with respect to the following:
- State tax compliance and planning
- Compliance with ASC 740, Income Tax (formerly FIN 48)
- Compliance with ASC 450, Contingencies (formerly FAS 5)
- Reverse audits and state tax refunds
- Due diligence for mergers and acquisitions
- Negotiations with state tax auditors on tax return positions
We perform research in strict compliance with professional and state taxing authority standards. Whether a client situation requires meeting the "more likely than not" standard for financial reporting in accordance with ASC 740, or meeting the "realistic possibility" standard for certain types of state income tax reporting, we know how to meet the standard and provide the appropriate state tax opinion to support the tax return position taken.
We can assist with state and local income tax positions, and with tax positions relating to non-income taxes,including sales and use, gross receipts, franchise taxes based upon capital, etc.
Our state tax opinions, like all of our State Tax Research Services, involve careful and complete research that complies with the AICPA's Statements on Standards for Tax Services (SSTSs), which are enforceable tax practice standards for members of the AICPA. Opinions relating to financial statement disclosures comply with FASB Accounting Standards Codification (ASC) 740, Income Taxes and other applicable standards.