State & Local Tax

Overview

States continue to face budget deficits, and state taxing authorities are mindful of the shortfall. At the same time, businesses face surging whistleblower and consumer class action cases that involve seemingly ambiguous tax laws. Preparing for and reacting to a changing enforcement landscape is vital to mitigate risk and can also present meaningful opportunities for professionals to drive value. With the recent Supreme Court decision in South Dakota v. Wayfair Inc., which uproots decades of constitutional nexus standards, this is now especially true for tax departments.

We pride ourselves on robust experience advising both on individual state issues and from a national perspective. For decades, domestic and international clients have trusted us to assist with the most complicated state and local tax and unclaimed property/escheat matters coast-to-coast and at every level. Alston & Bird was named “Law Firm of the Year” in Tax Law in 2020 by U.S. News – Best Law Firms. Our ability to listen and respond to your specific needs is one reason Alston & Bird was ranked in the BTI Client Service 30 for 10 years, recognizing our superior client service.

Members of our team have led national unclaimed property initiatives, such as co-authoring the highly respected Bloomberg/BNA Unclaimed Property Portfolio on multistate tax management. We bring this high-profile know-how to bear when counseling our clients—many of them best-in-class companies in sophisticated industries—on unclaimed property and escheat matters. Our services range from compliance and planning to representation during voluntary disclosures, audits, and litigation of complex unclaimed property and consumer protection law issues.

Deep connections to federal, state, and local tax administrators give us an inside perspective that only comes after decades of building relationships.

In tax controversy and litigation, whether at the audit or administrative review level or in the courts, we evaluate the core issues at play and develop custom strategies to achieve the best possible outcome.

Whether we’re restructuring a transaction to minimize adverse tax impact, handling a multijurisdictional state tax controversy, or consulting on myriad technical issues, our goal is to ensure the right results consistent with each client’s own definition of value and success.

Experience

• Representing a major beverage manufacturer and distributor in a multistate unclaimed property audit conducted by a contingent fee contract auditor. The auditors’ recommendations would have produced liability in excess of $200 million; settling for $38 million, this matter is among the largest unclaimed property settlements ever.
• Representing a large health care services provider with a partner base of more than 59 hospitals and more than 10,000 physicians in 15 states in two separate income and franchise tax assessments of more than $25 million by the Mississippi Department of Revenue.
• Representing a Fortune 100 company in a dispute with the Georgia Department of Revenue involving more than $20 million in various corporate income tax issues. The disputed matters involve (i) jurisdiction issues related to a captive REIT and a captive reinsurance company; (ii) apportionment issues related to an air carrier; (iii) the utilization of various tax credits; and (iv) the constitutionality of the disallowance of certain deductions for expenses paid to affiliates. The appeal is pending with the Georgia Department of Revenue’s Division of Law and Policy.
• Representing a major health insurance provider in a $44 million dispute over computation of Pennsylvania’s gross premiums tax base involving sourcing of risk.
• Representing a data processing and disaster recovery company in a $35 million dispute over whether restructuring permits combined filing of returns for New York State and New York City. This matter presents arguments of first impression.
• Creating and implementing a multistate unclaimed property compliance strategy for one of the world’s largest online travel agencies in connection with various state unclaimed property/escheat audits and assessing the advisability of a voluntary disclosure initiative for non-audit states. Our defense of these audits requires the development of a wide range of legal defenses to unclaimed property liability for different types of property arising out of business-to-business and business-to-consumer transactions.
• Represented a global vehicle manufacturer in California corporate income tax refund claims related to inclusion of treasury function gross receipts in the sales factor denominator of California’s apportionment formula. After five years spent actively protesting the denial of the client’s refund claims, we negotiated a very favorable settlement using the contours of the formal settlement program, but applying taxpayer-specific interpretations that resulted in a $45 million total refund of tax and interest.