State & Local Tax

We help companies navigate complex State and Local Tax issues so they can achieve their business goals. We offer clients:

  • A nationally recognized State and Local Tax team with a deep understanding of multi-state SALT issues across the country, first-hand experience working in-house in large corporate tax departments and state agency experience
  • Trusted relationships with key state tax administrators
  • Sophisticated SALT practice in a boutique environment that provides high-touch, high-quality client service without high overhead, staffing pressures and complicated politics
  • A client engagement approach that ensures our ability to be as responsive as possible, provides operational efficiencies and ensures access to senior partners and subject matter experts


 

What We Do

  • We represent clients in all levels of litigation including: administrative hearings, tax tribunals, circuit and appellate courts, state supreme courts and the U.S. Supreme Court
  • Our litigation services include: complex discovery, motion practice, trials, expert testimony, appeals, oral arguments and settlement negotiations
  • HMB's extensive network of local counsel across the country is a significant asset in assisting our representation of clients nationwide
  • Years of working with various State Departments of Revenue have developed into trusted relationships allowing the development of "best practices" for our clients' respective states. These state-by-state "best practices" are not limited to tax planning, but also involve day-to-day operations
  • HMB's multi-state SALT practice provides structural and transactional planning services that help clients achieve greater tax efficiency in their respective states
  • Our audit strategies enable clients to preemptively identify and resolve potential issues raised by various state and local tax auditors, develop efficient responses to information requests and audit adjustments, and successfully negotiate with state and local revenue authorities 
  • HMB listens first. Our team will take the time to understand the nuances of the deal structure and client objectives before identifying potential state and local tax exposures to income, sales and use, gross receipts, franchise, payroll and other taxes
  • Our closing strategy involves identifying favorable jurisdictions and deal structures while minimizing tax inefficiencies. We begin working on the transaction closing from the start of the transaction planning
  • We partner with our clients post-closing to ensure compliance in new and existing jurisdictions, identify planning opportunities and create audit positions with appropriate reserve recommendations based on national state and local tax trends 
  • Our unique approach to managing tax risk was developed from in-house experience
  • We understand that corporations have different tolerance levels for handling tax controversies and partner with our clients to develop audit and litigation strategies that meet their business goals
  • We provide practical and alternative solutions to complex audit and SALT problems
  • State and local tax issues have become increasingly complex and directly impact financial statement requirements under ACS 740 and FAS 5. A comprehensive legal analysis of respective state tax laws is needed to support the existence of reserves
  • Our team leverages its corporate in-house experience to provide comprehensive legal analysis of issues to determine reserve needs
  • We provide written legal analysis to support the level of reserves while recognizing the need for privilege for the legal analysis
  • Holders of unclaimed property are under constant attack by third party auditors representing the states
  • HMB has extensive experience identifying unclaimed property, pro-actively eliminating liability and defending against aggressive third party state audits
  • We recognize the nature of unclaimed property opens this "non-tax" tax item to unique and often hard to identify legal questions, and partner with clients to proactively identify solutions to unclaimed property issues
  • Most states do not consider the franchise tax a significant revenue generator, but there are a few where the liability can be in the millions of dollars. The Illinois Franchise Tax is unique and full of challenges which include it in this latter category
  • Our reputation for efficiently resolving complex Illinois Franchise Tax matters is a result of a proven track record and trusted professional relationship with the Secretary of State's Office
  • HMB has extensive experience reinstating corporations, resolving allocation issues, identifying and registering for various state franchise taxes and defending against the often archaic rules that generate disproportionate liabilities

Income Tax

Nexus

  • Analysis of the safe harbor provisions of P.L. 86-272, including the analysis of the use of independent contractors; third party representatives; limitations of protected activities and the definition of delivery
  • Constitutional protections including: economic nexus and factor presence nexus; flash nexus
  • Individual residency issues
  • Trust residency issues

Apportionment

  • Analyzing the complex issues that result from the sourcing of services and intangible income including the application of cost of performance methods and market based sourcing;
  • Developing alternative methods of apportionment to address distortive results statutory formulas
  • Unitary business issues including: defining the composition of the group; instant unity; worldwide combination issues
  • Addressing the application of throwback including the Joyce v. Finnigan rules

Tax Base

  • Application of expense add-back statutes to both domestic and foreign operations
  • Addressing transfer pricing adjustments and forced combination issues
  • Challenging the issues surrounding the characterization of income that arise as a result of liquidation of line of business; gains on sale of appreciated securities or flow through interests; sale of non-unitary divisions or investments
  • Treatment of corporate owned flow-through entities;
  • Taxation of captive insurance companies
  • Taxation of captive REITS
  • Utilization of net operating losses and capital losses
  • Characterization of foreign taxes
  • Taxation of foreign source income and tax havens

Procedure

  • Statute of limitation issues
  • Reporting of federal audit adjustments
  • Voluntary Disclosure Agreements
  • Penalty Issues
  • Massachusetts Mediation Program
  • California Settlement Bureau

 

Sales and Use Tax

Nexus

  • The application of the affiliate nexus standards to Internet commerce, including addressing the substantial nexus standards;
  • Taxation of cloud computing by both state and local jurisdictions
  • Compliance requirements for information reporting statutes;
  • Voluntary Disclosure filings and agreements

Tax Base

  • Situs of services and the taxability of the service
  • Lease transactions including location of the taxable event
  • Local tax sourcing
  • Exemptions including resale, manufacturing, processing; medical devices; pharmaceuticals and government agencies.
  • Bundled Transactions
  • Bad debt deductions
  • Software issues including defining canned v. custom and license issues

Local Taxes - City of Chicago and Cook County

  • Personal Property Lease Transaction Tax
  • Chicago Non-Titled Use Tax
  • Hotel Occupation Tax
  • Amusement Tax
  • Motor Fuel Taxes
  • Parking Tax
  • Restaurant Tax
  • Gambling Machine Tax
  • Alcohol Taxes
  • Tobacco Products Tax

Specialty Taxes

  • Motor Fuel tax
  • Hotel Occupancy Taxes
  • Telecommunication Excise Taxes

Procedural Matters

  • Officer Liability
  • Qui Tam and False Claims Act matters

Gross Receipts Taxes

Nexus

  • Address various nexus issues encountered with the Washington Business & Occupation tax and the  Ohio Commercial Activity Tax

Tax Base

  • Sourcing Services and intangible property
  • Digital Services or Digital Products
  • Financial Services
  • Apportionment of gross receipts

How We Do It

The HMB Approach

  • High-touch, sophisticated service with direct access to experienced SALT representatives
  • Multi-state experience and relationships with state and local tax agencies across the country
  • Collaborate with clients to address tax issues that are volatile, uncertain, complex and ambiguous
  • Creative solutions that address the issues at hand and employ foresight into potential future issues
  • Experience navigating tax issues involving emerging technologies and new markets
  • Partnering with companies to proactively plan and develop strategies to maximize the benefits of tax laws and avoid common traps that get organizations in trouble
  • We partner with clients and use our substantive legal experience during the audit process to achieve best results and identify best practices to reduce the risk of exposure to future audits

Why HMB

History

  • Dedicated team of attorneys with multi-disciplinary experience to address SALT planning, audits/litigation and M&A restructuring matters
  • National reputation and multi-state and local tax knowledge and relationships
  • Wealth of experience on addressing multi-state planning issues in 50 states
  • Corporate tax department experience for a Fortune 5 Companies
  • Successfully represented clients in audits or litigation in 48 states and 100's of local jurisdictions
  • Proven track record at administrative cases

Our Clients Enjoy

  • Sophisticated SALT practice in a boutique environment
  • High-touch, high-quality client service without high overhead, staffing pressures and complicated politics
  • Streamlined approach to tax planning and filing - end "ground hog day" approach
  • Ability to provide strategic tax insights to businesses
  • Team knowledge of corporate restructuring to reduced SALT ramifications and capitalize on advantageous SALT structures
  • A deep understanding of the audit process, reduced risk and less pain should one occur
  • Minimized tax liabilities during strategic business expansion
  • Strategic evaluation and proactive thinking about minimizing tax liabilities
  • Legal insights into ramifications of business strategies that involve new geographies, ecommerce and other revenue-generating strategies
  • Growth support: building systems, setting up processes and training individuals on tax-related business needs associated with growth

 

Your Team

Jordan M. Goodman

David A. Hughes

Fred O. Marcus

David S. Ruskin

Breen M. Schiller

Marilyn A. Wethekam

Nick J. Ciaccio

Justin B. Stone

Terri A. Searle

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