State Tax Expert Says REITs Should Monitor Local Impact of Tax Reform
Scott Smith, national practice team leader for state and local tax at BDO, joined REIT.com for a video interview at REITWise 2017: NAREIT’s Law, Accounting & Finance Conference in La Quinta, California.
Smith urged REITs to continue to monitor the potential impact on state taxes resulting from comprehensive tax reform and try to plan accordingly. He also noted that states are taking a wait-and-see approach to federal legislation effective in 2018 that will change procedures for how the Internal Revenue Service conducts partnership audits.
In addition, Smith commented on market-based sourcing, which relates to how states will source gross receipts received for the performance of services. Market-based sourcing rules are significant for an Equity REIT’s taxable subsidiary, Smith said. He noted that market sourcing attempts to source receipts to where a customer is located, as opposed to where the service is performed.
Smith stressed that the rules can vary on a state-by-state basis. REITs can end up in a situation where they are sourcing receipts to more than one state, he said.
Mortgage REITs face similar issues in terms of sourcing rules varying state-by-state, Smith said.
Published at Mon, 24 Apr 2017 16:02:33 +0000