55 Israeli companies face different and unique issues when operating in the U.S. compared to companies headquartered in the U.S.. While the most focus is on federal tax concerns, U.S. state and local taxes (“SALT”) have the potential to increase significantly the tax burden. SALT is truly a trap for the unwary because seemingly innocuous actions can give rise to substantial tax liabilities. For example, if a company fails to collect sales tax from its customer, the company’s obligation to pay such tax can continue to accrue indefinitely if it fails to file any sales tax returns, and the liability is based on gross taxable sales, not net taxable sales. Therefore, it is possible to conduct business at a loss and thus have no federal or state corporate income tax liability but still owe a substantial sales tax liability because of the company’s failure to collect and remit such tax. While this is just one example of state tax liabilities exceeding a federal tax liability, many more exist. David Pope Partner Naftali Z. Dembitzer Partner Top 10 State Tax Issues Affecting Israeli Companies with Operations in the U.S.
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