At Brotman Law, all we do is tax. We get our clients out of trouble, we keep them out of trouble, and help them optimize their tax situations to save a bunch of money through our process.
What to expect:
Satisfied Client
In 2018, the Supreme Court held that state laws permitting taxes against business without physical presence in that state were constitutional. This groundbreaking decision overturned sixteen years of past precedent.
Unbeknownst to many, California passed Revenue and Taxation Code 6203 in 2012. Under the law, businesses with presence in California are obligated and liable for state sales/use tax and potentially state income tax. Many other states have had laws like this on their books for years.
The major issue with the Supreme Court's decision is that it did nothing to address retroactivity. Translation: California's law is valid and your business may have exposure in California since 2012.
The states, short on revenue, have responded to the Court's decision by aggressively targeting out of state businesses. California, in particular, famously went after 4.5m small businesses selling products through Amazon and other online marketplaces.
California faces a 35b budget shortfall this year. It is widely expected that enforcement efforts against out of state businesses will only increase in the current post-coronavirus economy. The laws are complex and ever-changing and small businesses are facing hundreds of thousands or even millions in past tax liability. Do not get caught in the crossfire.
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This was the key issue involving that do business through Amazon and other marketplace facilitators. The California Department of Tax and Fee Administration held under Revenue and Taxation Code 6203 that the storage of property in California is a nexus creating activity, even if it involved a 3rd party and even if that business did not physically move its inventory into California. This has broad impacts for retailers, wholesalers, distributors and manufacturers.
The mere presence of any of these individuals in the state of California can constitute doing business here and can avail you to California's tax laws. This is true even if their presence in the state is only temporary or transitory, if you do not consider them doing business here, or if their presence in the state is largely unrelated to their activities for your company. One of the biggest problems with nexus creating activities, particularly surrounding employees, is that the smallest activity can bind the entire conduct of a much larger organization.
This was the issue in the Supreme Court's decision in Wayfair v. South Dakota. In spite of a lack of contact with the state, the Court held that companies need not have a physical connection with a state to subject themselves to tax here. The broader issue is that the states, including California, have expanded this concept to include a variety of activities, which on their face may not seem like they subject your company to tax jurisdiction here.
California may be one of the most aggressive, if not the most aggressive state against out-of-state businesses, but do not make the mistakes and think that similar states do not have laws on their books similar to California. The problem is that each state may do things differently or may have different interpretations when it comes to the activities and tax exposure of your business. Additionally, the laws are confusing, complex, and ever-changing.
These issues are technical and difficult to address and are a speciality within a speciality within the area of tax law. Very few firms have the experience being on the front lines of this issue and in dealing with the genesis in this area of law. In order to deal with these issues effectively, you need a specialist who understands not just how the law is written, but how it is enforced.
At the end of the day, legal decisions must be analyzed within a business framework or they are of little value to an organization. Yes, the laws are harsh and the cost of compliance can seem daunting, but this is where our firm excels. You need a team that can think outside the box and who is similarly focused on cost/benefit, risk/exposure, and can help you weigh the best path moving forward.
What do you get with us? A team small enough to provide individualized and personal service for our clients with the ability to really get to know their business. But little hinges can swing some pretty big doors. Our firm is nationally recognized for excellence in tax law and are often quoted by major media publications. We have a wide range of experience guiding organizations across industries and those who range in size from start-up to hundreds of millions in annual revenue. That lead us in 2018 to be recognized as the 14th fastest growing law firm in the United States.
As I like to say, our tax experience is an inch wide and a mile deep. We only focus on a few select areas in tax, but we have a depth of experience in our chosen areas of practice and in helping navigate the deep and complex waters that exist in this area of law.
I look forward to meeting you, discussing your company's situation, and, at the very least getting you pointed in the right direction.
At Brotman Law, all we do is tax. We get our clients out of trouble, we keep them out of trouble, and help them optimize their tax situations to save a bunch of money through our process.
What to expect:
Brotman Law
402 W Broadway, Suite 2900
San Diego, CA 92101
Phone: 619-378-3138
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IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, I must inform you that any U.S. federal tax advice contained in this website is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter contained in this website.