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State & Local Tax

Overview

Parker Poe’s State & Local Tax (SALT) team includes seasoned legal professionals armed with decades of experience. We have developed firsthand knowledge of state and local tax laws and professional relationships to better serve clients in this complex and rapidly changing area.

The SALT team works with clients in numerous industries, including automotive, banking, tobacco, alcohol, biotechnology, equipment rental, energy, franchising, food and grocery, manufacturing, pharmaceutical, retail and real estate. Our services cover a broad spectrum of matters, including tax planning, tax controversy, alcoholic beverage and tobacco taxation, tax incentives for economic development, and tax-efficient structuring of mergers, acquisitions and disposition transactions.

With a practice that extends throughout the U.S., Parker Poe’s SALT representations include clients presenting issues and controversies from a range of states, such as California, Florida, Indiana, Kentucky, Louisiana, Maryland, North Carolina, South Carolina, Tennessee, and Washington. Our experience also includes regular appearances before local boards of equalization, litigation of appeals before property tax commissions in various states, and presentations of tax appeals in the appellate courts of various states.

Working relationships with key governmental personnel, as well as our thorough knowledge of state and local laws and policies, allow us to effectively and efficiently resolve critical matters for our clients.

Ray N. Stevens, who heads our SALT team, was previously the director of the South Carolina Department of Revenue, a post he held in Governor Mark Sanford’s cabinet for five years. Ray served as a judge for the S.C. Administrative Law Court for 10 years and as a litigation attorney for 15 years in the S.C. Attorney General’s Office, concluding as the chief deputy attorney general, tax division director. He has a wealth of experience in dealing with tax controversies at both the trial and appellate levels. In addition, he served on the South Carolina Tax Realignment Commission (TRAC) in its completion of a study of the state’s taxing system and submission to the General Assembly of a comprehensive tax restructuring plan.

Kay Miller Hobart practices in all areas of state and local taxation with particular experience in corporate tax, tax controversies and appeals. As former special deputy attorney general for the revenue section of the North Carolina Department of Justice, she led all of the state’s tax litigation, advised the revenue secretary and senior state officials on matters of tax law and policy, and defended the state’s tax laws against constitutional challenges. She has extensive experience handling every part of a state tax controversy, beginning with the audit, through the administrative review, trial and appeals. She advises clients in all aspects of state and local tax, including tax planning and tax incentives for economic development. She has served as North Carolina correspondent for State Tax Notes, where she currently writes a regular column. She was appointed to the Governor’s Commission to Modernize State Finances and served as a member of former Governor Jim Hunt’s Institute for Emerging Issues Financing the Future task force.

Representative Experience

Our SALT lawyers routinely:

  • Evaluate and implement state tax planning advantages
  • Represent clients in tax controversies at either the audit or judicial level
  • Obtain tax incentives for project development
  • Accomplish due diligence analysis in M&A transactions through finding SALT opportunities or uncovering pitfalls
  • Obtain favorable private letter rulings from various state departments of revenue
  • Evaluate property tax assessments of both real and business personal property
  • Submit schedules of values and their application to property
  • Pursue exemptions of property from ad valorem taxation
  • Establish present use valuation

Highlights of our specific experience include:

  • Represented a Fortune 500 company in the banking industry in successfully negotiating a settlement with a state taxing agency seeking $37 million in income taxes and license fees. The agency alleged nexus over REITs and REIT shareholders by arguing dividend income to REIT shareholders was taxable by the nonresident state.
  • Represented a Fortune 500 company in the financial services industry in seeking a refund of $5 million of corporate income tax due to improper taxation of exempt federal interest income in violation of 31 USC 3142.
  • Represented a Fortune 500 company in the automotive supplier industry in which the taxing agency sought $1.5 million in corporate income tax. The agency alleged the taxpayer sold an intangible, creating a gain that should have been apportioned while the taxpayer asserted the gain should have been allocated to Michigan.
  • Represented a Fortune 500 company in the medical diagnostic industry in seeking a settlement in which the taxing state sought corporate income tax of $1.6 million under a forced combination of affiliated and centrally controlled corporations.
  • Represented a Fortune 100 company in the financial services industry by successfully negotiating a settlement with a state taxing agency seeking $13 million in license fees and corporate income taxes. The taxing agency sought nexus over banks, credit card companies, and securitization companies, plus the taxing agency sought to apportion taxable income using a “market based” apportionment (based on the location of the customer) rather than a cost of performance basis.
  • Represented a privately held nationwide retailer with annual sales of $150 million in a proceeding seeking state sales and use taxes of approximately $800,000 involving issues of nexus of a remote seller making sales into the taxing state when the seller had no physical presence but an affiliate operating a different business did have a physical presence in the state.
  • Served a Fortune 300 company in the retail apparel industry as an expert witness for the taxpayer in preparation for an evidentiary hearing challenging the use of a pricing method that included an alleged “embedded royalty” in an arm’s length purchase and sale between related entities.
  • Served as an expert witness for a privately held company in the real estate development business seeking to challenge the constitutionality of a state’s law triggering a revaluation of property under an “assessable transfer of interest.” 

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