About State Tax Negotiations
State Tax Negotiation Services are generally provided in conjunction with disputes or potential disputes involving state and local taxing authorities. A successful negotiation is always much less time-consuming and far less expensive than litigation. If litigation is already in progress, negotiations can help limit the scope, thereby saving time and money. Anonymous negotations on behalf of non-filers is commonly used to protect identity until agreement is reached and potential prior-year obligations are resolved.
State tax negotiation services typically involve strategic communications with tax authorities regarding:
- Nexus, Voluntary Disclosure and Private Amnesty
- Sales Tax Audit Sampling Methods and Procedures
- Personal and Real Property Tax Valuations
- State and Local Tax Incentives
- Pre-litigation Conferences and Agreements
Audit negotiations range from agreements regarding sampling methods and procedures (for sales and use tax audits) to compromises regarding apportionment factors ("factor relief" for income tax audits). Negotiated audit agreements can prove useful for many years after they are initially negotiated and put in writing.
As negotiations and agreements are completed, companies can often book benefits related to reserves under ASC 740, Income Taxes (formerly FIN 48) and ASC 450, Contingencies (formerly FAS 5).
How We Can Help with State Tax Negotiations
Our state tax negotiation services, like all of our State Tax Services, involve careful and complete research that complies with the AICPA's Statements on Standards for Tax Services (SSTSs), which are enforceable tax practice standards for members of the AICPA. State tax administrators trust that we are competent and thorough in our fact-gathering, research, assessment and formulation of proposed resolutions. We are familiar with the way state tax administrators handle various types of state tax controversies, and we utilize a synergistic approach, rather than the combative or confrontational approach that many attorneys and other consultants use.
In performing state tax negotiation services, our tax professionals consider all of the following:
- Relevant facts that may lead to favorable dispute resolution
- Company objectives and desired outcomes
- Company history of state tax conflicts and resulting outcomes
- Company history of compliance with applicable state tax law
- State history of conflicts and resolution involving similar issues
- Recent changes in state tax law or administrative procedures
- Many other items that indicate potential for resolving state tax conflicts
Audit liabilities can be reduced and further negotiations conducted to mitigate the effects of any potential future liabilities. In addition, we can assist clients in obtaining state tax letter rullings from various state tax authorities. These letter rulings can be valuable in protecting the client from potential liabilities that would otherwise apply due to a change in tax administration or audit personnel.