In a post-COVID world, California is facing astronomical budget deficits. In order to resolve this, the government must broaden the tax base to include more and more out-of-state taxpayers who have connection with California and increase enforcement through tough action against taxpayers.
In 2018, in a case called Wayfair vs. South Dakota, the Supreme Court held that state laws permitting taxes against businesses without a physical presence in that state are constitutional.
Wayfair was a sea change in the area of multi-state taxation (the last major decision on the issue from the Supreme Court had been in the early 1990s), but this area of law has not been dormant before that.
The proliferation of technology, advances in supply chain, and the explosion of the internet has made it easier than ever before to transact business in multiple states.
All of these developments have caused the state governments, especially in California, to rethink the concept of doing business here.
Unfortunately, many state ideas surrounding doing business here in California were for the benefit of the state collecting revenue (both from companies in and outside of California) rather than for the business community.
Translation: your business could have exposure for activities performed in a state several years in the past and you have now exposed yourself to sometimes 5-6 years of past due tax liability for all your sales or income earned in a particular state. For many of our clients, up to 9.25% of all of their sales volume in California and in other states where they have not been collecting tax is not exactly small potatoes.
Many individuals that live in California or do business here are shocked to learn about the tax consequences of major life transition events (moving to a different state but maintaining some connection with CA, sales of companies or other exits, certain investments in companies within state lines, etc.).
A California residency audit is a frightening thing. The Franchise Tax Board takes an aggressive and sometimes arguably unconstitutional position toward residency in favor of collecting taxes for the state of California.
We understand not only the mechanics of a residency audit, but how the state will respond in certain situations given the presence or absence of certain factors. It is less about the individual parts and more about the story that they tell as a whole.
As far as planning goes, we get creative and goal oriented when it comes to business owners selling their businesses. No matter how big your parachute is or which one of the many strategies we employ is the best for you, we work to develop strategies to minimize the tax impact and for you to keep as much of your hard earned wealth as possible.
Your first step in the process is to meet with our concierge team, who is in charge of walking you through in the intake/conflicts process for our firm. Our team will collect some basic information and is trained to gather some facts that our senior legal team will use to sketch the four corners of your tax action plan. For any documents that you wish to submit to us, our team will provide you with a customized link for you to upload your documents utilizing bank level security.
The initial meeting with our team is completely complementary. It is our job to analyze your situation and to make a determination on whether or not you are a good candidate to take the next step in our process. The last thing we would want is for you to make the investment in the tax action plan process and for it not to provide maximum benefit for you.
After your initial diagnostic, our team will make an initial recommendation and connect you with our senior legal team or another resource to assist you.
Note: From the moment you speak with our team, even if you elect not to retain us, everything you tell us is completely confidential under California state bar rules.
Let's get down to brass tacks. We start the meeting knowing that there is something about your situation that has caused the state to target you for a sales tax audit. The ultimate goal of our meeting is ascertain what put you on the radar and how to get you off it.
We usually begin our meeting by going through the basics: who you are, what you have been doing, and, based on this, what your risk exposure is in a sales tax audit. As long as we have been doing this, it always amazes us how the little things about a prospective client can really influence the audit process. As we listen to your answers, we are stress testing your business to see where the weak spots would be in an audit.
If you have submitted any documents to us, we will review them in advance of the meeting and provide feedback based on what we see. However, providing financial documents (tax returns, sales summaries) is not necessary at this point in the process.
We are happy to answer any questions that you may have about the sales tax audit process or about your individual risk and, armed with the information from our interview, we can go much deeper with you about your situation than we can on this website.
By the end of the meeting, we will outline a full plan for your sales tax audit defense and share our full recommendations with you.
The action plan is our opportunity to deliver as much value to you as possible and for you to walk out of our office with a game plan for resolving your sales tax audit. After you sit down with Sam or our senior legal team, we work to finalize your plan in writing and deliver it to you. There is no further obligation to us at this point and your action plan comes with a full 100% money back guarantee. If we do not deliver value for you, you do not pay for your plan: plain and simple.
Our concierge team will put together and send you a summary of our notes from the meeting/call. You will have these for the benefit of your organization, you can share them with others, or we are happy to schedule a follow up meeting to discuss any points of the plan with others.
Simply put: we execute the strategy that we have diligently researched in order to help you or your organization meet its objectives. Obviously the outcome of this execution varies from client to client, but the approach is the same. We work efficiently to manage resources and tackle the solution no matter how small or how complex.
For more complicated issues, we have developed a great network of outside resources who can help implement solutions that require service providers in multiple states or we can leverage your existing resources and team in order to train them how to carry the torch going forward (with us always available in a support role if needed).
Since 2012, multi-state tax law has been one of the biggest areas of taxation. States have come to the realization that they can earn large amounts of revenue by expanding their jurisdiction to include individuals and businesses in different states. State laws are draconian, they are difficult, and frankly, they are a bear in the way they affect small businesses.
Because this area of law is so highly specialized, there are very few people who practice it and fewer people that give good quality advice on the subject.
We designed our practice for all levels of business, so even if you are not a billion dollar company, you can look forward to receiving a comparable level of legal service from our firm in this specific area.
We essentially serve all the people that the largest law and accounting firms do not serve, from the $100 million company down to the small startup, providing guidance where there is currently not a lot of clarity in this area. If you are not a Fortune 50 company, but need help doing business in other states, we are more than happy to help you.