HOW TO COMPARE CREDIT BUILDER APPS IN 2024

As tax codes evolve, states face growing pressure to reevaluate conformity to federal tax law—especially when it comes to fairness for domestic vs. multinational businesses.

Tax policies in the U.S. have always been a complex balancing act between federal guidelines and state-level decisions. But following the Tax Cuts and Jobs Act (TCJA) of 2017, many states are now grappling with outdated conformity rules that may inadvertently favor multinational corporations over purely domestic businesses.

Recently, Bruce Fort, senior counsel for the Multistate Tax Commission (MTC), published a compelling argument in Tax Notes State highlighting this growing disparity. Fort contends that state tax policies need a full reevaluation, not only to modernize them but also to ensure fair and equal taxation across the board.

For both businesses and individuals navigating these changes, understanding the impact of these shifts—and knowing where to find tax relief and tax solutions—is crucial.

Understanding the Problem: What is TCJA Conformity?

The Tax Cuts and Jobs Act introduced sweeping changes to the U.S. tax code, including how international business income is treated. Two key components of that are GILTI (Global Intangible Low-Taxed Income) and Subpart F income, both designed to prevent multinational corporations from shifting profits to offshore tax havens.

While the federal government taxes GILTI and Subpart F income, many states have chosen to either partially conform or exclude these types of income from their tax base. This has led to scenarios where multinational companies may be paying lower effective state tax rates than domestic-only businesses.

Fort argues that this approach creates an uneven playing field. It also stems from a misinterpretation of the 1992 Supreme Court Kraft case, which involved discrimination against foreign commerce. According to Fort, Kraft has no bearing on how states should treat GILTI or Subpart F income today.

For an in-depth look at Fort’s analysis, you can read the full article on Tax Notes (subscription required).

Why This Matters for Businesses and Taxpayers

Why should the average taxpayer or business owner care about whether states conform to the TCJA properly? Simple: unfair tax policies hurt local economies.

When multinational corporations are allowed tax breaks that local competitors can’t access, small and medium-sized businesses bear more of the tax burden.

For business owners trying to stay competitive and solvent, finding legitimate tax relief strategies is essential.

In some cases, these challenges can be addressed by working with experienced tax professionals who specialize in state and federal tax compliance.

For individuals and smaller businesses, sites like IRS.gov offer helpful overviews of federal tax credits and relief programs. However, navigating the relationship between state tax codes and federal policies often requires personalized help.

Exploring Tax Relief and Tax Solutions

If you’re a taxpayer facing challenges due to changing tax policies, you’re not alone. Whether you’re seeking business tax solutions or individual tax relief options, here are some key strategies:

1. State-Specific Credits and Deductions: Many states offer tax credits for things like research and development, renewable energy investments, and job creation. Make sure you’re claiming everything you qualify for.
2. Consulting With a Tax Professional: Professionals who specialize in multi-state taxation can help you optimize your filings and avoid costly mistakes.
3. Debt Relief Through Tax Settlements: If tax debt is piling up, programs like IRS Fresh Start or Offer in Compromise may provide debt relief by settling your tax liabilities for less than what you owe.
4. Appealing Incorrect Tax Assessments: If you believe your tax bill is based on an unfair interpretation of conformity rules, you have the right to appeal and seek legal counsel to represent your case.

Time for States to Level the Playing Field

It’s been over six years since the passage of the TCJA, and yet many state tax systems remain misaligned with modern business realities. As Bruce Fort points out, continued inaction could perpetuate inequality and distort local economies.

The push for fair taxation doesn’t just benefit governments—it benefits communities. Ensuring that multinational companies pay their fair share means more resources for public services, infrastructure, and local development.

If you’re struggling with tax complexity or want guidance on tax solutions available to you, exploring professional tax relief services may be the smartest move you make this year.

For more resources on current tax relief programs, check out Tax Foundation—a nonprofit focused on sound tax policy at every level of government.

Final Thought

Don’t let outdated tax policies stand in the way of your financial future. Stay informed, seek professional help, and protect your business and personal finances with the right tax relief solutions.