What you need to know: State tax observations on federal tax reform

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On March 13, 2018, the Internal Revenue Service released its Questions and Answers about Reporting Related to Section 965 on 2017 Tax Returns

What it means for State Tax

A diverse and wide-ranging number of state tax implications will arise simply as a result of how/whether states conform to the federal Internal Revenue Code provisions. There are a number of critical elements that have the potential to significantly affect state tax and financial statements starting in 2017:

  • A deemed repatriation toll charge
  • Full expensing of certain property
  • Interest expense limitations

Looking beyond 2017, other elements of tax reform may have a significant state tax and financial statement impact. As these elements progress through the legislative process, we anticipate issuing new and updated Insights and providing them in real-time on this page.

How PwC can help 

  • Quantitative solutions: Model how repatriation, a territorial tax system, 100% expensing, and interest limitations may affect the state tax base, apportionment, and state tax attributes.
  • Global and domestic incentives: Develop a state incentives strategy for additional investments made by companies as a result of tax reform. 
  • Legal entity rationalization and value chain transformation: Implement proposed business and structural changes in a way that may reduce detriments and enhance benefits of tax reform from a state tax perspective.
  • Provision review: Review state tax deferred results from tax reform, including the impact of state conformity to or decoupling from the interest expense limitation and full expensing.
  • State automation and reporting: Perform state specific calculations that may no longer be required for federal tax filings due to states' nonconformity to the federal changes.

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Peter Michalowski
National SALT Practice Leader
Tel: +1 (646) 471 5259
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Eric Burkheiser
Partner, Detroit
Tel: +1 (313) 394 6407
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Scott Austin
Principal, Philadelphia
Tel: +1 (267) 330 2567
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Robert Ozmun
Partner, Boston
Tel: +1 (617) 530 4745
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