State and Local (Subnational) Tax
Every state in the United States, and thousands of local taxing jurisdictions, impose taxes on the sale of property, the use of services, the generation of receipts, the earning of income, and many other activities and privileges. As a result, businesses operating in multiple jurisdictions regularly encounter planning opportunities and hidden hazards for which they require expert guidance. Fortunately, Rimon’s tax lawyers have assisted clients on issues in all 50 states on matters across the gamut of state and local taxation, including income taxes, franchise taxes, sales and use taxes, hotel occupancy taxes, real property transfer taxes, and a variety of other domestic tax issues.
We assist our clients with planning and tax controversy work involving:
- Tax presence (federal constitutional and P.L. 86-272)
- Allocation and apportionment
- Sourcing of services
- Sales throwback
- Alternative apportionment
- Unitary businesses and combined reporting
- Worldwide and water’s edge reporting
- Interest and royalty add-back
- Tax credits
- Taxation of flow-through entities, disregarded entities and their owners
- State tax issues confronting businesses headquartered abroad
- Electronic commerce
- Information services
- Mixed sales of goods and services
- Tax characterization planning
- Responsible party liability
- Voluntary disclosures
- Tax amnesties
- Residency issues
- And many more state and local tax issues.
Examples of Rimon P.C. Lawyers’ Multistate Tax Successes 2010-2013
- (1) Obtained ruling from Streamlined Sales Tax Governing Board regarding sales tax classification of carbon dioxide fit for human consumption (scroll to October 6, 2010 rulings at http://www.streamlinedsalestax.org/index.php?page=alias-9). Ruling is binding in more than 20 states.
- (2) Eliminated criminal and civil exposure in 20-25 states for client that was collecting sales tax but not remitting the same (potentially a crime in every state).
- (3) Saved client from liability for many million of dollars in uncollected hotel occupancy taxes in dozens of local and state jurisdictions nationwide. This project was particularly sensitive because of nationwide litigation involving a related issue and the local jurisdictions’ lack of familiarity with voluntary disclosure agreements.
(Undisclosed State per terms of settlement)
- Won 100% of $15.5 million income tax case involving tax credit. The state argued that the available credit was limited to $20,000.
- Reduced noneconomic substance transaction (NEST) income tax penalty from $1.1 million to $561,000.
- City of Denver Reduced sales and use taxes due from $6.8 million (assessed) to $254,000 (total for periods at issue and three more years). Case was before a hearing officer of the Manager of Finance of the City and County of Denver.
- Obtained sales tax victory by concession. General counsel’s office agreed that the client was not bound by the form of its transaction.
- Obtained refund of $1.3 million (of $1.7 million claimed) based on inclusion of gain in sales factor denominator. Board of Tax Appeals.
- Resolved seven figure business/nonbusiness assessment with 28% settlement.
- Eliminated 100% of a proposed $8 million assessment on a throwback issue. State argued that throwback was required from destination states because, the state alleged, the company did not have tax presence in those states.
- Won 100% of $1.7 million income tax refund case when the state conceded our position regarding the proper apportionment of income from sales of other than tangible personal property.
- Prior to our lawyer’s involvement, the Tax Appeals Commission had already decided income tax case against the client. Our lawyer successfully argued for re-opening of the case and obtained a favorable settlement with the state. The substantive issue related to the state’s treatment of IRC Section 338(h)(10) gain and recognition of IRC Section 351 in transaction involving foreign entities.
Rimon Attorneys With Expertise in State and Local (Subnational) Tax Include: