State and Local Tax
Help understanding where you owe state and local tax, filing correctly, and resolving exposure from prior years.
Overview
As businesses sell across state lines, hire remote employees, and add locations, state and local tax obligations multiply. Nexus can be created by economic activity alone, not just a physical presence, and each state applies its own rules for income and franchise tax, sales and use tax, and apportionment. We help businesses determine where they have filing obligations, how income should be sourced and apportioned, and what they may owe, so state compliance keeps pace with how the business actually operates.
Based in Cleveland, we work regularly with Ohio-specific taxes, including the Commercial Activity Tax and Ohio’s municipal income tax system, alongside multistate obligations for clients operating well beyond Ohio. When a review uncovers past exposure, we help evaluate options such as voluntary disclosure agreements. We also help pass-through owners evaluate state pass-through entity tax elections and how those elections interact with their federal and resident-state returns.
How We Help With State and Local Tax
Nexus Studies
Reviewing where you have physical presence, employees, property, and sales to determine which states may require income, franchise, or sales tax filings, including economic nexus thresholds.
Income and Franchise Tax
Preparing state income and franchise tax returns for corporations and pass-through entities, including composite returns, nonresident withholding for owners, and estimated payments where states require them.
Sales and Use Tax
Helping determine taxability of what you sell and buy, registration requirements, exemption certificate practices, return filing, and use tax exposure on purchases where the vendor did not charge tax.
Multistate Apportionment
Analyzing how income is sourced and apportioned among states under each state’s rules, including market-based sourcing for services, to support accurate and consistent multistate filings year over year.
Pass-Through Entity Tax Elections
Evaluating whether a state PTE tax election makes sense for a partnership or S corporation and its owners, and coordinating the election with owner-level credits and filings.
Voluntary Disclosure
Quantifying historical exposure and helping pursue voluntary disclosure agreements, which in many states can limit look-back periods and reduce penalties for unfiled returns and unpaid tax.
Challenges We Help You Address
- ✓Remote employees and online sales creating filing obligations in new states
- ✓Uncertainty about whether economic nexus thresholds have been crossed
- ✓Ohio Commercial Activity Tax and municipal income tax filing requirements
- ✓Prior-year exposure discovered during diligence, an audit, or a nexus review
- ✓Owners unsure whether a pass-through entity tax election is worthwhile
Frequently Asked Questions
What is economic nexus?
Economic nexus is a filing obligation created by the level of a business’s sales or activity in a state, even without a physical presence there. After the 2018 South Dakota v. Wayfair decision, most states adopted economic nexus standards for sales tax, and many apply similar concepts to income or franchise taxes. Thresholds and rules vary by state, so businesses selling into multiple states should review their activity regularly.
What is a pass-through entity tax election?
A pass-through entity tax, or PTE tax, is a state-level tax that a partnership or S corporation can elect to pay on behalf of its owners. Owners typically receive a credit or exclusion on their state returns. Many owners consider the election because the entity-level payment may be deductible federally. Whether it helps depends on the state, the owners’ residency, and their overall tax situation.
What is a voluntary disclosure agreement?
A voluntary disclosure agreement is an arrangement in which a business that has not filed in a state comes forward before being contacted by the state, files and pays for a limited look-back period, and in exchange often receives penalty relief. Terms vary by state. A voluntary disclosure is generally available only before the state initiates contact, so timing matters once exposure is identified.
Do Ohio businesses have to pay municipal income tax?
Many Ohio municipalities levy an income tax on net profits of businesses and on wages earned within the municipality. Businesses may have filing obligations in multiple cities based on where they operate and where employees work, and they are often responsible for withholding employee municipal tax. Ohio allows certain businesses to elect centralized filing of net profit tax with the state, which can simplify compliance.
Related services & industries
Contact Us
Tell us about your organization and a member of our team will be in touch.