The Rise of the State and Local Tax Specialist

by Matthew D. Melinson, CPA, Vito A. Cosmo Jr., CPA, CGMA, and Patrick K. Skeehan, JD | Feb 28, 2020

A career in state and local tax can be challenging but also rewarding. With 50 states, the District of Columbia, and thousands of localities, there are numerous types of state and local taxes, including income, nonincome-based entity taxes (gross receipts, franchise), sales and use, real and personal property, excise, transfer, and many other industry-specific taxes. Pennsylvania alone has about 34 state-level taxes.

Prior to the 1980s, there were few state and local tax specialists outside of government. With federal tax rates reaching 48% for corporations and 50% for individuals, estates, and trusts, state and local tax was an afterthought. The Tax Reform Act of 1986 changed the emphasis. With top corporate rates reduced to 35% and top individual rates reduced to 28%,1 state and local tax became more expensive, thereby creating an increased emphasis on state and local tax planning.2

Previously, a federal-tax-oriented professional may have been partly dedicated to understanding state and local tax, often with a primary focus on income and franchise taxes. However, large companies soon demanded greater expertise, and state and local tax groups started to arise within those firms. Soon, other taxes were added to their repertoire, and the state and local tax profession began to emerge.

By the early 1990s, states sought to increase revenue collections by expanding their indirect tax bases and rates while enacting entirely new taxes, such as gross receipts-based taxes. With states becoming more aggressive in their collections, an even greater demand arose in the market for specialists in these areas. State and local tax groups gradually became “subspecialized” to keep up with client demands.

Specialists in Demand

In 2020, the state and local tax profession is booming. The need for qualified practitioners is greater than ever, with at least six of the largest professional services firms having state and local tax departments with 400 or more fully dedicated professionals. A focus on sales and use taxes has significantly increased in recent years as states increasingly rely on revenue from these taxes. Other indirect taxes cover niche areas – such as real and personal property tax, credits and incentives, and unclaimed property – and often require their own subgroups within a tax department. Subspecialization and deep subject matter expertise remain as important in tax as they do across the accounting industry, with extensions into various sectors, such as manufacturing, services, entertainment, and utilities. 

Tax professionals in regional and local accounting firms will require at least a basic understanding of state and local tax concepts to properly advise clients, while some firms will have fully dedicated state and local tax practices. Collaboration with firms holding more expansive state and local tax capabilities is common for some firms and sole practitioners. This reflects the development of professional services as a whole as businesses and taxes have become increasingly complex.

For example, the explosive growth of businesses organizing as pass-through entities3 requires state and local tax specialists to have specific partnership skills. Moreover, states may treat flow-through entities differently than the federal government. Pennsylvania imposes a corporate net income tax that ties to the Internal Revenue Code, but also levies a personal income tax that does not. As a result, treatment of income and expense items may differ by entity type. Apportionment rules also differ in the number of factors and state sourcing.4 Today, a good state and local tax specialist needs to be conversant not only in the type of tax and the industry, but also the type of entity.

The U.S. Supreme Court’s 2018 decision in South Dakota v. Wayfair Inc.5 has far-reaching implications for state and local tax, having the potential to increase sales and use tax filing obligations for numerous smaller businesses that have a limited physical footprint but who make remote sales into multiple states. With this growing complexity comes a rapid embrace of technology. The automation of a company’s sales and use tax process will help reduce the administrative burden of complying with varying state tax laws.

Good State and Local Tax Practitioners

State and local tax professionals, first and foremost, must understand business issues and be able to apply complex laws and regulations to the business. Practitioners who can combine deep technical knowledge with a pragmatic application to businesses are invaluable. 

Possessing an open mind and working with uncertainty are also important qualities to have. A dearth of state authority and guidance requires the skill of making analogies and being creative in the thought process. In the area of state and local tax planning, a solution for one tax may result in an issue with another in the same or different jurisdiction. Creative thinkers can thrive in this environment.

It is imperative for state and local tax professionals to be good communicators. A consultant will be required to draft numerous research memoranda in addition to the preparation of administrative appeals and other controversy work. Attorneys can be good candidates for a state and local tax practice due to their research and writing skills, but a CPA who writes well can excel in state and local tax consulting due to the profession’s well-honed analytical skills. The ability to explain complex subject matter and analysis in an easily understandable manner is an art that many CPAs can develop.

Rapid advances in technology over the years have altered the public accounting industry and created a growing need for tax technology expertise.6 As a result, firms and businesses are devoting greater resources to building innovation departments with full-time technology and automation specialists. Therefore, there is a demand for professionals with nontraditional backgrounds in fields such as information technology and data science. These skills will become increasingly important as tax functions become further automated. The ability to have state and local tax technical expertise and related consultative skills or unique technology skills will be critical in the coming years.

Finally, good people skills are essential. The ability to build relationships and collaborate with colleagues, clients, and government officials is critical to a successful career in state and local tax. Relating to clients is important to understanding their business and what role tax plays in their overall decision-making process. Building relationships with state-specific contacts throughout the United States is beneficial in reaching a technical or practical tax conclusion that may not be readily apparent from the available authority and guidance. 

Given the variety of desired skill sets in a state and local tax professional, there is no one clear path to success. Some may primarily focus on income tax consulting or compliance, sales tax technology, or property tax, while others may be broad-based state and local tax specialists conversant in various tax types. A state and local tax career may also be an option for a federal tax practitioner looking to make a midcareer change. Options are available throughout public accounting, government, and private companies.


Developing into a deep technical subject matter expert and becoming exceptional in a specialty area, such as state and local tax, is one potential path to career success for a CPA. Technology will continue to drive the automation of tax functions, and deeper specialization will be required to stay current with increasingly complex varieties of indirect state and local taxes. As taxing authorities focus their enforcement efforts to collect additional revenue, and with the impact of the Tax Cuts and Jobs Act and the Wayfair decision just starting to come to the front, career opportunities will continue to increase for state and local tax professionals for years to come.  

1 The Tax Cuts and Jobs Act of 2017 presents a current parallel, having reduced the corporate tax rate from 35% to 21% and the top individual income tax rate from 39.6% to 37%.
2 State and local taxes are deductible for federal income tax purposes. Therefore, the lower the federal rate, the higher the net-of-federal-tax benefit will be.
3 Pass-through entities include partnerships, LLCs, S corporations, and other unincorporated entity structures. In Pennsylvania in 2015, according to the Department of Revenue, there were 124,069 C corporation filers and 451,472 pass-through entity filers, nearly a 1-to-4 ratio. 
4 The CNIT uses a single-sales factor, with the sourcing of service sales based upon the market location of sales. (72 Pa. Stat. Section 7401(3)2(a)(9)(a)). However, personal income tax uses an equally weighted three-factor formula, with the sourcing of service sales based upon costs-of-performance (61 Pa. Code Section 153.29(d)).
5 138 S. Ct. 2080 (U.S. 2018). 

6 Jamie B. Fowler, “From Accounting Firm to Technology Powerhouse,” Accounting Today, July 5, 2019; Edward R. Jenkins Jr., “Embrace the Technology Revolution,” Pennsylvania CPA Journal, spring 2019.

Matthew D. Melinson, CPA, is a partner at Grant Thornton LLP in Philadelphia, leader of the Atlantic Coast region state and local tax practice, and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at

Vito A. Cosmo Jr., CPA, CGMA, is a retired state and local tax expert in Fort Washington. He can be reached at

Patrick K. Skeehan, JD, is a state and local tax manager with Grant Thornton’s National Tax Office. He can be reached at
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