check out our STATE & LOCAL TAX
State audits are a different animal. We handle them too.
State and local tax disputes are roughly a fifth of our practice. We represent businesses and individuals in Texas sales tax audits, California residency audits, and a wide range of state controversies across the country.
WHAT WE DO
State tax is not federal tax with a different name.
The rules are different, the procedures are different, and the appeal rights are different. A Texas Comptroller sales tax audit, a California Franchise Tax Board residency audit, and a New York unincorporated business tax case have almost nothing in common — except that each one has to be handled inside its own deadlines.
We represent clients through state and local examinations, administrative appeals, redetermination hearings, and judicial review where the controversy survives administrative remedies.
Texas sales and use tax
Texas Comptroller audits are records-driven and unforgiving. Sampling methodology, taxability of mixed transactions, and exemption documentation determine the outcome. We represent retailers, restaurants, contractors, oil-and-gas service companies, and other businesses through the audit, the redetermination hearing, and the State Office of Administrative Hearings.
California residency audits
California’s residency rules turn on the closest-connections test and a long list of factual factors. We represent former Californians, part-year residents, and dual-residence individuals in FTB residency examinations and protests — including cases involving deferred compensation, equity events, and post-move income sourcing.
Matters we handle
- Texas sales and use tax audits and refund claims
- Texas franchise tax controversies and apportionment disputes
- California residency and source-of-income audits (FTB)
- California sales and use tax (CDTFA) audits
- Multi-state nexus, apportionment, and combined-reporting issues
- State income tax audits and protests in other jurisdictions
- Sales tax voluntary disclosure agreements
- Responsible-person assessments at the state level
- State tax court and administrative hearing representation
Frequently Asked
Frequently Asked Questions
What does state and local tax (SALT) include?
SALT covers state income tax, state sales and use tax, franchise tax, local property tax, severance tax, and various industry-specific levies. Each state has its own rules, and businesses operating across state lines often have exposure in places they did not realize.
Do I owe Texas franchise tax?
Most entities formed in or doing business in Texas owe franchise tax once revenue exceeds the no-tax-due threshold (currently $2.47 million annually). The tax is calculated on margin, not net income, which can produce surprising results. We help businesses navigate filing, audits, and disputes.
What is sales tax nexus and why does it matter?
Nexus is the legal connection that allows a state to tax your business. After the Wayfair decision, economic activity alone — not physical presence — can create nexus. Many remote sellers and SaaS businesses now have collection obligations in states where they have never set foot.
Can I appeal a state tax assessment?
Yes. Each state has its own administrative appeals process, often with short deadlines. Texas, for example, has a redetermination process within the Comptroller’s office and the option of district court litigation. We handle disputes in Texas and coordinate with local counsel in other states.
How do I challenge a property tax appraisal?
In Texas, you file a protest with the appraisal review board (ARB) by the May 15 deadline (or 30 days after the notice). If the ARB ruling is unsatisfactory, you can appeal to district court or pursue binding arbitration depending on the property type.
What happens if I have unfiled state tax returns?
Most states offer voluntary disclosure programs that limit lookback periods and waive penalties for taxpayers who come forward before being contacted. The window closes once the state initiates contact — so timing matters. We evaluate exposure and negotiate disclosure terms.
Do you handle multi-state tax matters?
Yes. We handle Texas matters directly and coordinate multi-state matters — nexus studies, voluntary disclosures, audits, and appeals — working with local counsel where needed.
Received a state tax notice?
Whether it’s a Texas Comptroller engagement letter or an FTB residency questionnaire — the earlier we are involved, the more we can do.