Michele Randall, tax partner at EY, joined REIT.com for a video interview at REITWise 2017: NAREIT’s Law, Accounting & Finance Conference in La Quinta, California.
Randall commented on the level of uncertainty surrounding state tax issues, urging REITs to “keep state taxes at the front of their mind.” She noted that while states often “piggyback” off the federal system, “it’s really a mixed bag as to where some of the states will go” in terms of broad tax reform.
Randall also noted that states have been slow to react to federal legislation that changes how the Internal Revenue Service (IRS) conducts partnership audits.
States have their own audit and collection procedures, she explained. As a result, “this really isn’t something that I think states should rush into,” Randall said. “It’s very complex from a state standpoint because of how the partnership rules work.”
Meanwhile, Randall discussed how market-based sourcing is a way for states to pull more revenue in from taxpayers located outside the state with customers inside the state.