Delaware is often thought of as a safe haven from state taxes. Often that's true; sometimes it's not. Consider the following:
- Delaware has a quirky corporate income tax statute that has traps for the unwary, especially companies with significant swings between income and loss, and companies that recognize large allocable gains. We have approaches to deal with this issue.
- Delaware has gross receipts taxes on manufacturing, wholesaling, and other industries that can cause tax headaches. We have significant experience with Delaware's gross receipts taxes (www.reedsmith.com/DEDial). Delaware has recently won some important court cases on this tax, so we expect the Division of Revenue may start focusing on compliance with its gross receipts taxes to enhance revenue.
- Delaware has a one-of-a-kind bank franchise tax. We have experience representing clients in bank-franchise tax matters, including successful settlement before the bank commissioner.
- Delaware has an infamous unclaimed property law. Our lawyers understand this system, from audit technique through litigation and settlement. Reed Smith is litigating a significant case for McKesson Corporation that covers important questions regarding the propriety of Delaware's audit methodology and whether certain property (notably inventory in McKesson's case) is properly subject to the unclaimed property laws. (www.reedsmith.com/DEMcKesson). Our firm's office in Wilmington and our 14 state tax lawyers in Philadelphia make us especially well suited to handle intensive Delaware tax litigation. (We believe, after all, that unclaimed property statutes have evolved into just another form of tax.) We are also involved in voluntary disclosure projects. It is important to handle these projects carefully—Delaware recently settled a voluntary disclosure matter that "went bad." (www.reedsmith.com/DECAInc). In this regard, our lawyers have extensive exposure to the Kelmar audit methods and have conducted intense investigations into their methods, including attending the training courses they give to their auditors. Our state tax team is in the unique position to actively handle your Delaware unclaimed property audit and appeal.
As part of our full service for clients with Delaware tax problems, we have a unique, fully searchable database of unpublished authority, including decisions of the Tax Appeals Board going back to the early 1970s, unpublished trial court decisions, and unpublished legal briefs. We also maintain regular and direct lines of communication with high-level state officials involved in all areas of Delaware taxation.
We combine our experience, unique collection of information, and close working relationships with the state to serve our clients' Delaware tax needs.
For information regarding cutting-edge opportunities in Delaware, contact Lee Zoeller (+1 215 851 8850), Kyle Sollie (+1 215 851 8852), or Sara A. Lima (+1 215 851 8872).