State Taxation

In a nation of more than 7,500 taxing jurisdictions, companies doing business across state lines encounter a dizzying array of state and local tax laws.  The varied, ever–changing, and often conflicting tax obligations imposed by different states and localities present challenges for businesses of all sizes.  Understanding how state and local tax regimes designed for traditional markets apply to modern electronic commerce adds further complexity.  These problems create significant risks for businesses.  A company that misinterprets its state and local tax obligations can face potentially crippling liabilities that undermine its business strategies and jeopardize its profit margins.  For public companies, failing properly to investigate and disclose the risks associated with state and local tax obligations, in addition to providing adequate reserves under FAS 5 and FIN 48, may further subject the company, and its executives, to liability. The advice of professionals who understand the complexities of -- and limitations upon -- state and local taxing authority and the environment in which businesses operate is essential. 

OUR STATE AND LOCAL PRACTICE

Brann & Isaacson’s attorneys are nationally–recognized experts in state and local tax law.  As Tax Counsel to the Direct Marketing Association (DMA) for more than 25 years, and the tax professionals of choice for dozens of companies -- including small firms and large corporations, manufacturers and media companies, multi-channel retailers and pure e–commerce vendors -- Brann & Isaacson has the skills, experience, and acumen that clients require in a global economy.  We advise clients on a wide range of state and local tax matters concerning transaction taxes (e.g., sales/use taxes), business activity taxes (e.g., corporate income and franchise taxes), and taxes affecting specific industries (e.g., Internet access and telecommunications taxes).  From pro–active tax planning to vigorous advocacy in contested audits and appeal proceedings, we pride ourselves on combining a deep knowledge of fundamental tax principles with innovative, “outside–the–box” problem solving to provide successful representation that advances not only a client’s tax position, but its business objectives, as well.

NATIONAL IN SCOPE

From our offices in Maine, we assist clients in understanding their tax obligations in states and localities throughout the United States.  We have represented clients in connection with tax issues in every state, including contested tax proceedings in more than 40 states.  As a result, we have established strong working relationships with state and local tax officials and local counsel around the country.   Because Brann & Isaacson has a national tax practice, we excel in helping clients doing business anywhere in the United States to understand the tax laws that may affect them.  And as a smaller firm removed from a major metropolitan market, we can provide first–rate services far more cost–efficiently than larger firms with less expertise in the field.

"SUBSTANTIAL NEXUS"

An important part our practice is assisting clients in determining whether, and where, the nature of their businesses subjects them to state and local tax obligations outside of their home states.  Brann & Isaacson’s attorneys are among a handful of leading experts on the issue of constitutional “nexus” -- the question of whether a state or locality has the power, under the United States Constitution, to impose its tax obligations upon an out–of–state business.  Brann & Isaacson briefed the issue of “substantial nexus” to the United States Supreme Court in 1992 as amicus curiae for the DMA in Quill Corp. v. North Dakota.  Since the Quill decision, we have been at the forefront of the evolving jurisprudence in the area of nexus, confronting the unrelenting efforts of state tax officials to expand their authority to impose complex and disparate tax laws beyond state borders.  No firm is better–suited than Brann & Isaacson to advise companies about the ramifications to their businesses of developing legal doctrines such as “agency nexus” and, more recently, “economic presence nexus.”  Moreover, with numerous legislative proposals introduced in recent years, at both the state and federal level, intended to erode the constitutional protections guaranteed under Quill, companies are confronting new state and local tax obligations with each legislative session.  Our attorneys provide clients invaluable advice about the changing nexus landscape.

TAX PLANNING

By empowering clients through our knowledge and understanding of diverse state and local tax requirements, in addition to our experience in business and accounting principles, Brann & Isaacson’s attorneys are better able to assist our clients’ tax planning efforts.  We consult with clients before the launch of new business initiatives to identify the risks and benefits of a project from a state and local tax perspective.  We also work with clients whose past or ongoing business activities may have resulted in potential tax liability in order to correct course and manage those risks, including establishing adequate reserves.  Whether preparing contracts with potential business partners, reviewing proposed new ventures, advising on corporate structures, or approaching state revenue departments to negotiate arrangements for resolving potential tax exposures, we work creatively to promote our clients’ interests.  We recognize that providing effective legal representation means finding the proper balance between sound tax strategies and broader business goals.

AUDIT MANAGEMENT

Brann & Isaacson routinely assists clients who have been contacted by state revenue departments regarding potential state or local tax liabilities in managing both the communications which precede an audit, and the audit process itself.  Our representation runs the gamut from working with a client to craft a response to a state “nexus questionnaire” to handling audits involving millions of dollars of potential liability.  We understand how the dynamics of communications with tax auditors differ from the more formal procedures that govern an appeal, and because we recognize that tax liabilities are most–effectively managed by striving to prevent them from ever arising, we bring the same innovative approach to working with auditors that we do to every area of our practice.  A strategic perspective, coupled with a deep understanding of the law, often gives us an advantage over other professionals in reducing audit exposure; at the same time, our lawyers and paralegals understand the mechanics and mathematics of an audit, and can “crunch the numbers" when a more technical approach will work to our clients’ advantage.

CONTESTED PROCEEDINGS AND TAX APPEALS

Brann & Isaacson specializes in representing clients in pursuing formal appeals from state and local tax assessments through the administrative appeal process and in court.  Our attorneys have appeared in contested proceedings in more than 40 states.   The tax appeal process is, in many ways, unlike any other kind of legal proceedings, combining elements of both administrative law and traditional civil litigation.  Our expertise in state tax law, coupled with our unparalleled experience in handling tax litigation, allows us to provide more successful representation in most cases than either pure tax firms or pure litigation firms, including local firms practicing in the state or region from which an assessment has issued.  Unlike many larger firms that use their standard, litigation “playbook” for all contested cases, we pride ourselves on identifying imaginative approaches that take advantage of procedural avenues and substantive legal doctrines that other lawyers may not even consider.  For example, in one recent case, Brann & Isaacson successfully challenged a state tax assessment against a client by removing a case to federal district court, we have effectively challenged audit methodologies on constitutional due process grounds, and attacked state tax assessments as violating the requirements of the state administrative procedure laws. It is our philosophy of litigation that every set of circumstances presents different opportunities, and we strive to identify them for our clients.