Resolve Federal Tax Group

Full resolve logo
Menu
Call 800-215-7080
The IRS Settles and Writes Off Hundreds of Millions Every Year
Please Fill Out This Quick Form
Approximately, how much does the IRS or state claim that you owe?
Selected Value: $5000
Selected Value: 5000
Name
Checkboxes
Checkboxes (copy)
Your Information in this form is secure and encrypted.
We take your privacy seriously. By clicking the "Submit" button, you are providing your electronic signature and consenting to Resolve Federal Tax Group's Terms of Service and Privacy Policy. You are consenting to Resolve Federal Tax Group's service providers contacting you with information and offers at the phone number provided using an automated system, pre-recorded messages, and/or text messages. Consent is not required as a condition of purchase. Message and data rates may apply.
Return To Home Page

Tax FAQ:

State & Local Taxes

Get answers about State & Local Taxes and understand how state and local tax rules can affect individuals and businesses.

Search Our Tax FAQ Subcategories Below

State & Local Taxes

Ad valorem taxes are taxes based on the assessed value of property. The term generally means “according to value.” Property taxes are a common example of an ad valorem tax.

An ad valorem tax is generally calculated by applying the applicable tax rate to the taxable or assessed value of the property. Assessment methods and tax rates vary by jurisdiction.

Real estate is commonly subject to ad valorem taxation. Some jurisdictions may also impose ad valorem taxes on personal property used for business or other taxable property.

The responsible state or local taxing authority generally determines or oversees the assessment of taxable property. The specific agency and assessment process vary by jurisdiction.

Generally, taxpayers have procedures available to challenge a property assessment if they believe the assessed value is incorrect. Deadlines and appeal procedures vary by jurisdiction.

Certain state and local taxes, including qualifying real property taxes, may be deductible subject to federal tax rules and applicable limitations. The deductibility depends on the taxpayer’s circumstances.

Businesses may be subject to ad valorem taxes on real estate and, in some jurisdictions, taxable business personal property.

No. Ad valorem taxes are generally based on the value of property, while sales taxes are generally imposed on qualifying purchases or transactions.

Yes. Tax rates, assessments, exemptions, and other factors can change based on state and local laws and decisions by taxing authorities.

Review your local property tax bill and the rules of the applicable taxing jurisdiction. Your county, city, or other local tax authority can provide information about assessments and applicable taxes.

Local taxes are taxes imposed by cities, counties, municipalities, school districts, or other local governmental authorities rather than solely by the federal government or state government.

Local taxes can include property taxes, local income taxes, sales and use taxes, business taxes, occupancy taxes, and other taxes authorized by state or local law.

No. Local tax systems vary significantly by jurisdiction. A taxpayer’s obligations depend on where they live, work, own property, operate a business, or conduct taxable transactions.

Yes. Businesses may be required to collect or pay local sales taxes, business taxes, property taxes, licensing-related taxes, or other local taxes depending on their activities and locations.

Potentially. Some jurisdictions impose taxes based on where income is earned or where work is performed. Local rules determine whether a taxpayer has an obligation.

Qualifying state and local property taxes may be deductible subject to federal tax rules and limitations. Eligibility depends on the type of tax and the taxpayer’s circumstances.

Consequences depend on the tax and jurisdiction but can include penalties, interest, collection notices, liens, levies, or other enforcement actions.

Review the tax rules of the city, county, municipality, or other local jurisdiction where you live, work, own property, or conduct business.

Yes. Local governments can change tax rates and tax rules when authorized under applicable state and local law.

Can a tax professional help with local tax compliance?

Tax nexus is a sufficient connection between a taxpayer or business and a taxing jurisdiction that can create a tax filing, registration, collection, or payment obligation.

Nexus determines whether a state or local government may have the authority to impose certain tax obligations on a business. Understanding nexus can help businesses determine where they may need to register, file returns, or collect taxes.

Nexus can arise through activities such as having employees, property, offices, inventory, or other physical presence in a state. Certain economic activity can also create nexus under state law.

Economic nexus generally refers to a tax connection created by reaching a specified level of economic activity or sales in a jurisdiction, even without a traditional physical presence.

It can. Employees or other personnel performing activities in a state may create nexus depending on the applicable state tax rules.

Yes. Online sales can create economic nexus in states where a business reaches the applicable sales or transaction thresholds.

Yes. Nexus is an important concept in determining whether a business has a state sales tax collection and registration obligation.

It can. States may use different standards to determine whether a business has sufficient connection to impose state income or franchise taxes.

Yes. A business can have nexus in multiple jurisdictions simultaneously and may have separate tax registration and filing requirements in each jurisdiction.

Review the activities, sales, employees, property, inventory, and other connections your business has with each jurisdiction. Because nexus rules vary by state and tax type, professional state and local tax advice may be appropriate.

Property taxes are taxes imposed by state or local governments on qualifying real property and, in some jurisdictions, personal property.

Property owners generally pay property taxes assessed against their taxable property. In some circumstances, property taxes may also be collected through mortgage escrow arrangements.

Property taxes are generally based on the property’s assessed or taxable value multiplied by the applicable local tax rates, after accounting for qualifying exemptions or adjustments.

A local assessor or other designated governmental authority generally determines the assessed value according to applicable state and local rules.

Generally, property owners can appeal an assessment if they believe the assessed value is inaccurate or does not comply with applicable rules. Appeal deadlines vary by jurisdiction.

Certain state and local property taxes may be deductible by eligible taxpayers, subject to federal requirements and limitations.

Unpaid property taxes can result in penalties and interest and may eventually lead to a tax lien, tax sale, or other collection action depending on local law.

No. Property tax systems, assessment methods, tax rates, exemptions, and payment procedures vary significantly among states and local jurisdictions.

Yes. Property tax assessments and rates can change, and some jurisdictions reassess property following a purchase or other triggering event.

Potential options may include applying for qualifying exemptions, reviewing the property assessment for accuracy, or appealing an assessment when appropriate. Eligibility varies by jurisdiction.

State income taxes are taxes imposed by certain states on taxable income earned by individuals, businesses, or other taxpayers.

No. Some states do not impose a broad individual state income tax, while others impose individual income taxes under their own rules.

Requirements vary by state. Residents generally may be subject to tax on applicable income, while nonresidents may be taxed on income sourced to the state.

Potentially. If you live in one state and work or earn income in another, you may have filing obligations in one or both states depending on residency, income source, reciprocity agreements, and state law.

Yes. A taxpayer can live in one state while working in another. This can create multi-state tax considerations.

State income tax withholding is the amount withheld from certain payments, usually wages, and sent to the state tax authority as an advance payment toward the taxpayer’s state tax liability.

Potentially. If your state withholding exceeds your final state tax liability, you may receive a refund after filing the applicable state return.

Certain state and local income taxes may qualify for a federal deduction for eligible taxpayers, subject to applicable federal limitations and requirements.

The state tax authority may assess tax, penalties, and interest and may pursue collection actions. Filing obligations should be addressed as soon as possible.

Review your residency, work location, income sources, property ownership, and other connections to each state. Multi-state situations can be complicated and may require professional advice.

State tax residency generally determines which state considers an individual a resident for income tax purposes. Residency rules vary by state and may consider domicile, physical presence, and other connections.

Residency can determine whether a state taxes all or part of your income and whether you have a state tax filing obligation.

It is possible for more than one state to consider you a resident under its rules. When that occurs, state laws and applicable credits or agreements may determine how income is taxed.

States may consider factors such as domicile, days spent in the state, home ownership or rental, family connections, employment, voter registration, driver’s license, and other evidence of where you maintain your primary home.

There is no universal number of days that applies to every state. Some states have specific statutory thresholds, while others consider multiple factors when determining residency.

Not necessarily. Establishing a new domicile and ending residency in a former state may require consideration of your overall circumstances and the rules of both states.

You may need to file a part-year resident return in one or both states, depending on the circumstances and the states involved.

Not necessarily. Property ownership is one factor that may be considered, but owning property alone does not automatically make you a state resident.

Yes. Remote work can create state tax considerations based on where you live, where you perform the work, your employer’s location, and the applicable state rules.

Evidence can include establishing a new permanent home, changing your driver’s license and voter registration, moving household belongings, changing mailing addresses, and demonstrating that you no longer maintain your former state as your domicile.

A use tax is generally a state or local tax imposed on taxable goods or services purchased without paying the applicable sales tax and then used, stored, or consumed in the jurisdiction.

Sales tax is generally collected by a seller on a taxable sale. Use tax generally applies when taxable property is purchased without sufficient sales tax being collected and is subsequently used or stored in a jurisdiction that imposes use tax.

You may owe use tax when you purchase taxable goods from an out-of-state or online seller that does not collect the required tax and the goods are used or stored in a jurisdiction where the tax applies.

Potentially. Depending on the seller’s collection obligations and the purchaser’s state and local rules, a buyer may have a use tax obligation on taxable online purchases.

Depending on the transaction and jurisdiction, the purchaser may be responsible for reporting and paying use tax when the seller did not collect the applicable sales tax.

Use tax is generally based on the taxable purchase price multiplied by the applicable state and local tax rate, with credit for qualifying sales tax already paid when permitted.

Yes. Businesses may owe use tax when they purchase taxable property or supplies without paying the appropriate sales tax and then use those items in a jurisdiction imposing use tax.

Individuals may report certain use tax obligations through their state income tax return or another state filing process, while businesses may have separate sales and use tax returns.

A state tax authority may assess the unpaid tax along with penalties and interest. Businesses can also face additional compliance consequences.

Review your state’s sales and use tax rules and your purchase records. Pay particular attention to taxable purchases on which no sales tax or insufficient sales tax was collected.

 
 
Return to Tax FAQs Main Page
Still can’t find what you’re looking for? Have a tax issue?

Contact us today for a free consultation and let us help you resolve your tax problems.

Schedule Free Consultation