In the last few years, there's been a discernable focus on federal tax issues in the wake of the passage of the most comprehensive tax reform package in three decades. But much of the action is taking place in state legislatures and state departments of taxation. We wanted to get a better handle on those state tax issues, so we invited three experienced practitioners in the field to participate in a roundtable discussion in January. They are Robert Clary, state tax manager at Ford Motor Company; Julia Owen, vice president of tax for the C&S Wholesale Grocers group of companies; and Jennifer Wilson, state and local tax manager at Masco Corporation. Michael Levin-Epstein, Tax Executive's senior editor, moderated the discussion.
Michael Levin-Epstein: Let's start off by looking at the state tax filings for 2019. How did those filings compare with the previous filing seasons?
Julia Owen: We are a unique company when it comes to taxes. The way we are structured, we are a flow-through company for tax purposes; therefore, the most impact we see is primarily at the shareholders' level. We have some C corps in the structure, and we're also on a fiscal year, so I think the major impact is going to be for this year's compliance. The biggest challenge for us on the operational side is the volume and data integrity. On the legislative side, it's states' conformity, and on the tax compliance side it is state apportionment.
Robert Clary: State tax reporting for the 2018 calendar year was a challenge. There was a lack of uniform tax reform guidance for GILTI and the Section 250 GILTI/FDII deductions, which were reported for the first time on 2018 returns. It created a lot of uncertainty. Some of that uncertainty represented opportunity.
Jennifer Wilson: The 2018 return filing season was by far one of our most complex seasons yet. When we felt like we had a handle on the research earlier in the year and our positions of how to treat federal reform items, the various states began to digest and address or change their positions when they were in session during the summer. The roadmap of necessary adjustments to the state returns [became] overwhelmingly complex. Mapping these federal reform adjustments in our tax software added to the complexity.
Levin-Epstein: Are there specific states or issues that present challenges to you now in terms of filing state tax returns?
Owen: For us the most challenging state is Pennsylvania, with its locals. New York and Texas...