Reed Smith’s State Tax team prides itself on its ability to offer tax services such as Multi-state Refund Review Program, in addition to traditional legal controversy services. We are recognized as a leading state tax practice in the United States with more than 30 dedicated state tax attorneys across seven domestic offices. Our attorneys are from private practice, state government departments of revenue and attorneys general’ offices, the private sector, in-house, and Big 4 public accounting firms. Some of our attorneys are also CPAs or have accounting degrees and related experience. This deep and varied experience allows us to be more than just litigators; we are tax advisors focused on reducing our clients’ tax expense to increase their bottom line.
We approach each client’s state tax issues with the resources of a global firm and the focus of a boutique state tax firm. Our attorneys typically develop a particular skill-set in just a few states and build local relationships, while leveraging our national platform to truly be multi-state tax advisors. We have built a Tax Intelligence system that allows us to identify specific state tax positions before they become commonly known to the public. Quite critically, because of our team’s controversy and litigation experience, we are the best-suited tax advisor to perform such refund reviews, because we have the unique knowledge of when and how a state will pursue a particular tax issue, and we advise our clients accordingly.
We have a record of success in obtaining significant cash refunds and future tax savings using a contingency-fee structure, so that we take on the risk of failure and our clients incur no fees unless we succeed. Our Tax Refund Review Program is performed for all state income/ franchise tax returns, sales/use tax returns, and gross receipts taxes, such as the Ohio CAT, Texas Margins Tax, and Washington B&O. Notwithstanding the ever-vigilant work of taxpayers to correctly report taxes and maximize tax savings for the company, opportunities always remain for tax savings. Our lawyers can identify positions based on case law, administrative policy, or legislative changes that may support a refund of taxes paid.
Scope of Services
Our Tax Refund Review Program is designed to significantly reduce a client’s overall state tax expense, whether by reduction of cash tax liability, or maximization of usable deferred tax assets, such as net operating losses. We perform a tax refund review either as a stand-alone engagement, or as part of our strategy in audit defense and tax litigation engagements.
Depending on the states for which our clients request such review, we assign attorneys who have the appropriate state, industry, and tax-type experience to maximize identification of savings. After our initial review, we summarize the potential refund opportunities available, and in a focused meeting with the client, discuss the opportunities identified during the review, the projected benefits and risks of each opportunity, and our strategy to turn these opportunities into cash refunds.
If engaged to proceed with the identified opportunities, our team can:
- Prepare multi-state as-filed/as-amended tax calculations to ensure that the projected benefit identified during the review phase is accurate, and further ensure that if the position affects multiple states, the overall benefit is significant and worth pursuing
- Prepare legal memoranda to support positions being asserted on the amended returns, including FIN 48 and Valuation Allowance analyses as appropriate
- Prepare the amended returns to monetize the tax benefits
- Discuss the amended returns with the departments of revenue, when strategically appropriate, to protect a refund and/or to make its timeliness more likely
- Monitor the amended return refund claim to timely address problems that may arise, and to make timeliness of the refund more likely
- Develop maintenance plans in those cases where the legal position producing the tax benefit requires annual monitoring and additional documentation to be filed with the tax returns in each subsequent year
Fee Flexibility and Cost Savings
Our practice offers a flexible approach to billing and fees. We have the ability to structure matters based on contingency-based billing, risk-sharing agreements, and other arrangements tailored to meet client needs and internal corporate policies.
Reed Smith has the largest number of dedicated state tax attorneys of any law firm, with our attorneys located in offices across the United States. The location and experience of our team allows us to coordinate state tax issues and advise on a national level to help clients avoid decisions made in one jurisdiction, from having unintended tax consequences in other jurisdictions.
The size of our team allows us to track local developments across the country, even though several states do not publish their tax practices and policies. Through our Tax Intelligence system, we track key issues state-by-state. Our team has collected thousands of records that are not readily available through commercial sources, including case filings, unreported decisions and other key documents. Knowing these developments in advance allows us to bring opportunities to our clients earlier than other service providers.
Seamless Information-Sharing & Efficiency Through Technology
Our client-specific extranet site, ouRSite, is a free service that we offer to any client, for any matter, providing 100 percent real-time access to documents related to their matters. Clients also have the ability to add documents to the site, initiate conversations, and post issues for the team to consider. An ouRSite portal does not eliminate the personal communication between our lawyers and clients; it simply enhances the agility of the client/lawyer team by creating the visibility to our work at the convenience of the client.
With every matter we take, our team is keenly aware of the importance of preserving clients’ hard-earned goodwill with the public. We are experienced in achieving favorable and confidential settlements, including in nationwide matters involving hot-button disputes or other public tax issues, such as tax credits and incentives. Our attorneys are conscientious about media coverage and can create public relations strategies to minimize negative exposure and highlight success. We have advised the in-house media representatives of Fortune 50 companies as they interact with reporters from The Wall Street Journal, The New York Times and other media outlets.
Income Tax Success Stories
- Recovered more than $10 million of New Jersey’s unconstitutional AMA
- Recovered millions of tax dollars by uncapping or developing work-arounds to Pennsylvania’s NOL
- Recovered millions of Pennsylvania tax dollars by resourcing sales of services and intangibles
- Recovered millions of Pennsylvania franchise tax dollars, using multiformity and other theories, by excluding investments in subsidiaries
Sales Tax Success Stories
- Won the McNeil-PPC v. Commonwealth sales tax case, establishing the right to offset overpayments against underpayments
- Recovered significant New Jersey sales tax refunds arguing that bank ATMs and signs are fixtures to real property
Gross Receipts Tax Success Story
- Recovered significant refunds of Delaware gross receipts tax, arguing that the exemptions and exclusions in the tax benefitted multi-state taxpayers over multi-state taxpayers