Reed Smith's State Tax Group’s California lawyers include the former Chief Counsel of the Franchise Tax Board and the former Legal Counsel to the Chairman of the State Board of Equalization. On the franchise tax side, Reed Smith State Tax attorneys are engaged in cutting-edge cases involving apportionment (such as 25137 issues and cost of performance), the treatment of dividends, the taxation of REITs, the taxation of Banks and Financial Corporations, and the preservation of various deductions and credits, such as EZ credits and research credits. Our California attorneys are also involved in the regulatory process, often commenting on proposed regulations and providing testimony concerning regulatory and policy efforts. On the sales tax side, our lawyers are engaged in litigation involving the taxation of software and bundled transactions, and also vexing sales tax issues that affect particular industries. In addition, they currently represent several major retailers that have been targeted by plaintiffs' lawyers in putative class actions in connection with various issues involving sales tax. For these matters, we combine our well-known state tax technical skills and relationships with our litigation skills and resources. Finally, throughout the state, we are involved in local tax issues, such as transfer tax, property tax, and business taxes.
Please contact Brian Toman (+1 415 659 5994), Kyle Sollie (+1 215 851 8852), or Marty Dakessian (+1 213 457 8310) to discuss our California State Tax practice.
Here is a brief summary of a few of the most recent and broad-reaching California issues we are working on for our clients:
Our lawyers have formed a coalition to reverse the Franchise Tax Board staff’s (FTB) decision imposing retroactive taxes on California residents, in connection with the California property and payroll requirements of California’s Qualified Small Business Stock incentives. We are pursuing all available means, legislative, administrative and judicial to overturn the aggressive FTB staff position, and are working to achieve an implementation of the Cutler decision that is sound both from a legal and policy perspective. (www.reedsmith.com/CAcoalition)
Water’s-edge filers are entitled to eliminate dividends, preserve interest deductions, and get factor representation for dividends received from foreign subsidiaries.
Sales Tax on Software:
Companies that paid sales or use tax on purchases of software may be entitled to a refund of tax they paid—even if the software is canned and even if it was delivered on tangible media.
Our lawyers have experience with California’s written and unwritten apportionment rules and policies. Our experience ranges from sourcing receipts from services; excluding property from the property factor; and developing creative approaches to apportionment under section 25137, which is California’s version of UDITPA § 18.
Our lawyers have experience unlocking the benefit of Enterprise Zone credits. For example, we are working on projects to aggregate all of our client’s subsidiaries into a single “taxpayer” and to aggregate all of our client’s zones into a single zone. This avoids trapping EZ credits in silos.
Our lawyers have experience maximizing the value of tax attributes such as net operating losses. For example, we are working with clients to extend by four years NOLs that were suspended in 2008-2011—setting aside the artificial and extra-statutory limitations under Legal Ruling 2011-04.