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State and Local Taxation
Our lawyers have significant experience in all aspects of state and local taxation. As a firm founded in Ohio, we are especially active in Ohio state and local tax matters, and have more Ohio-based state and local tax professionals than any other law firm in the state. Our attorneys and tax professionals are in regular contact with senior tax officials of the Ohio Department of Taxation and are leaders in the state and local tax area. Our attorneys have testified before the Ohio General Assembly, have argued before the Supreme Court of Ohio, and have chaired the Ohio State Bar Association’s Taxation Committee. As energy businesses, other businesses and Ohio residents begin to benefit from the exploration of natural resources within Ohio, we are assisting with a variety of tax issues that are arising. Our team of professionals also includes three non-lawyers. One is a former agent of the Ohio Department of Taxation.
Although we are Ohio-based, we regularly provide multistate tax analysis and services to support the operations of our clients with business operations throughout the country. Our lawyers focus on working with our clients to identify and implement planning opportunities, to explain tax consequences, and to develop appropriate approaches to state and local tax issues. We routinely work with our government affairs attorneys to obtain legislative solutions to tax matters, and we also work to identify and minimize the tax effects of pending legislation or administrative policies.
When disputes arise, our attorneys vigorously defend our clients in tax audits and seek to develop creative approaches to resolving tax disputes. If litigation becomes necessary, our attorneys draw upon comprehensive knowledge of the relevant tax laws and firsthand experience in aggressively advocating our clients’ positions at both the trial and appellate levels. Since 1975, our attorneys have represented taxpayers before the Ohio Supreme Court more than 300 times and before the Ohio Board of Tax Appeals more than 1,000 times. No other firm can provide deeper or more experienced legal counsel should state and local tax litigation become necessary. We are intelligent, practical and hard-nosed in fighting for your tax rights.
Audit Defense and Management
Our firm understands that the most favorable substantive and procedural results often are achieved early in the audit process. We assist our clients in establishing priorities, developing strategies, negotiating methodologies, designing statistical samples, and implementing the details of the client’s audit plan, all with a watchful eye on tax laws and the client’s specific situation. Our attorneys’ experience in recognizing even subtle differences in methods, facts and circumstances allow them to assist clients in achieving favorable audit results.
We appreciate that the best litigation strategy often is litigation avoidance. Our attorneys and other tax professionals routinely assist clients in creatively resolving areas of potential dispute, with a view toward establishing effective and efficient tax compliance procedures to apply in the future. Often, issues may be defused at the agent level, before it develops into a full-blown dispute, and our attorneys regularly work with taxing authorities, at all levels, to achieve reasonable resolutions of tax disputes without the need for litigation. Our firm also constantly seeks approaches and methods that may minimize the potential tax assessment, within the priorities set by our clients.
Business Income and Franchise Tax
We routinely counsel our business clients on various income and franchise tax compliance and planning issues related to activities in Ohio and in other states. Our services range from sophisticated planning in connection with large corporate restructurings and transactions to individual state nexus analysis and voluntary disclosure activities. In addition, our lawyers have significant experience in skillfully representing our clients with respect to income and franchise tax issues during audits, or in litigation.
Commercial Activity Tax
In 2005, the Ohio General Assembly enacted significant tax reform legislation that made many important changes to Ohio tax law, including the creation of the new commercial activity tax (CAT). Before that legislation was enacted, our attorneys were active in evaluating the CAT’s potential impact on clients and in drafting and revising the CAT legislation. Since the CAT has become law, our attorneys have counseled many clients on matters related to the CAT, including transactional structuring, filing options and strategies, application of tax exemptions, deductions and credits, and evaluation of nexus and situsing issues. Our firm also has participated in the evaluating issues raised by the initial CAT statute and developing new legislative proposals to address those issues.
Although the CAT is a relatively new animal, our attorneys have the background and depth of knowledge that allow them to provide sound and strategic legal counsel to our clients on any CAT issue that may arise. Our firm prides itself on being a recognized leader in this area.
We routinely counsel our clients on various state and local tax compliance issues, as well as compliance issues involving multi-state tax reporting. Often, clients encounter problems because they have failed to fully understand an ongoing tax compliance issue or requirement. In other instances, compliance issues are an outgrowth of mergers, acquisitions, expansions, divestitures, or other, specific “one-time” transactions.
Our attorneys have significant experience in identifying tax compliance issues, in providing sound, strategic legal counsel with respect to those issues, and in devising approaches and programs to ensure that additional compliance problems do not arise in the future.
Dealers in Intangibles
A number of our attorneys are experienced in addressing Ohio’s tax on dealers in intangibles, a tax that presents significant issues for certain corporations. Our attorneys have advised our clients with respect to that tax and its interplay with the Ohio corporation franchise tax, especially as it relates to financial institutions.
Employer Withholding Tax
Our attorneys regularly counsel our clients, in Ohio and elsewhere, on employer withholding issues at the state and local tax level. Many jurisdictions, including Ohio, have enacted personal liability statutes for responsible parties, making employer withholding a key compliance issue.
Common topics on which we have advised clients include the treatment of qualified and nonqualified deferred compensation, severance and other post-termination payments, pension and retirement payments, situsing of wages for multi-jurisdiction withholding purposes, payments made to non-residents, payments made in connection with the settlement of litigation, and special pass-through entity withholding obligations.
Financial Institutions Tax
Although the Ohio franchise tax on most corporations is being phased out, financial institutions remain subject to that tax. We frequently counsel financial institution clients on various franchise tax compliance and planning issues, and our attorneys have represented such clients in litigating franchise tax matters before the Supreme Court of Ohio and other tribunals.
Insurance Companies Tax
Our firm frequently advises clients on various planning and compliance issues relating to the franchise tax applicable to insurance companies, also known as the premiums tax. In addition, our attorneys are experienced in matters relating to the surplus lines tax, which generally arises in connection with transactions involving foreign insurers not registered in Ohio.
Legislation and Policy
Our attorneys routinely monitor federal, state and local legislation affecting state and local tax matters and advise our clients on the potential impact of such legislation. Our tax lawyers also work with our government relations attorneys to develop and advocate for legislative solutions to the particular state and local tax needs of our clients. In fact, some of our tax lawyers also are registered lobbyists.
We also work with legislative and administrative officials in developing and drafting general tax legislation and administrative rules. Our attorneys often are called upon to provide proponent or opponent testimony related to pending legislation.
Litigation and Dispute Resolution
Our lawyers defend or prosecute our clients’ interests in actions involving all types of state and local taxes. We represent taxpayers before the Ohio Department of Taxation, county boards of revision, the Ohio Board of Tax Appeals, municipal agencies, municipal boards of review and the Ohio courts, including the Supreme Court of Ohio. We also have represented state and local taxpayers in the federal courts, including the United States Supreme Court.
Since 1975, our attorneys have represented taxpayers before the Ohio Supreme Court more than 300 times and before the Ohio Board of Tax Appeals more than 800 times. No other firm can provide deeper or more experienced legal counsel should state and local tax litigation become necessary. We are intelligent, practical and hard-nosed in fighting for our clients' tax rights.
Motor Fuel Tax
Our firm has significant experience in representing clients in all aspect of motor fuel taxation (i.e., gas tax). We represent refiners, terminal operators, jobbers, and retail dealers on such matters as audit defense, tax refunds, licensing, marine fuel, dyed fuel, bio-fuels, blending, certificates, sales to government agencies, business transferee liability, and personal liability. We also have represented trade associations in legislative and administrative lobbying efforts relative to motor fuel taxation.
The pervasive municipal income tax system in Ohio presents our clients with many challenges. Our attorneys have extensive experience in dealing with net profits tax and employer withholding tax issues, including defending audits and litigation in forums ranging from local boards of review to the Ohio Supreme Court. We also have been active in the legislative arena, pursuing state-mandated uniformity for the municipal income tax system to help ease compliance burdens for companies operating throughout the state. Our experience includes assistance with other unique local tax structures as well, such as local admissions taxes levied by some municipalities.
Oil and Gas Tax
As energy businesses, other businesses and Ohio residents start to benefit from the exploration of natural resources within the Utica and Marcellus shale formations in Ohio, Vorys attorneys will continue to assist with a variety of tax issues that are arising. The firm has a unique combination of experience involving the state’s oil and gas laws from both a regulatory perspective and a tax perspective. Vorys represents the largest oil and gas producers actively working within the state and routinely advises them on a variety of tax matters. Our firm also has extensive contacts with producers and local officials in the Eastern Ohio area that encompasses the Utica and Marcellus formations.
Numerous tax issues commonly arise as companies work to extract, transport and process the state’s oil and gas reserves. Vorys is well-positioned to advise companies on all aspects of oil and gas taxation, including sales and use taxes on both purchases and sales of tangible personal property, ad valorem taxes on oil and gas reserves, public utility tangible personal property taxes (when applicable) and severance taxes.
Vorys attorneys regularly counsel producers and operators on sales and use tax planning opportunities and all sales and use tax-related aspects of sale and purchase transactions. We offer precise and comprehensive advice on such topics as transactional structuring, application of sales and use tax exemptions and exceptions, taxation of services, property classification, construction contracting certificates, licensing, equipment leasing and nexus and interstate sales issues.
Oil and gas producers also regularly encounter a number of questions regarding ad valorem tax issues associated with oil and gas production. Our state and local tax lawyers routinely assist clients with determining the valuation of oil and gas reserves. In fact, Vorys attorneys helped write the law that determines how oil and gas reserves are valued and reported on Forms 6 and 6A. We also assist oil and gas clients with strategies to lower their ad valorem tax burden through the use of common real property tax exemptions and filings with local boards of revision to seek reductions in value of oil and gas property.
Vorys also assists energy businesses with public utility tangible personal property tax matters, including taxpayer classification, property valuation and tax reduction strategies. Our state and local tax attorneys collectively have more than 60 years of experience with assisting public utility clients and others regarding potential public utility tangible personal property tax liability and with effective strategies for reducing that tax burden through commonly-used economic development incentives.
Companies that sever oil and gas reserves in Ohio also are subject to the state’s severance tax. Our attorneys are experienced with all aspects of the severance tax and through our governmental relations work on behalf of oil and gas industry leaders, we have been on the forefront of efforts by the governor to amend the severance tax statutes. We continue to closely monitor such developments and advise our oil and gas clients about how those potential tax changes affect their severance tax liability and other Ohio tax liability.
Personal Income Tax
Ohio's personal income tax – coupled with local income taxes, such as municipal and school district income taxes – is substantial, and presents challenging issues for Ohio residents and non-residents alike. Our firm has wide experience in assisting business owners and executives and counseling them on tax-efficient approaches to personal income tax issues. For example, our attorneys have been instrumental in developing and refining Ohio’s residency tests, and have helped clients to successfully navigate these tests, through careful planning and timely execution. We also routinely advise clients with respect to the income tax implications of investments in pass-through entities, and the intricacies of the Ohio trust tax that affects grantors and beneficiaries.
Personal Property Tax
Our firm has an extensive real and personal property tax practice. On the personal property tax side of our practice, our lawyers routinely assist clients with planning and compliance issues, audit defense, dispute resolution, and litigation, both for general business taxpayers and public utility taxpayers. Our real property tax practice includes the filing of valuation complaints and representation of clients before boards of revision, the Ohio Board of Tax Appeals, and Ohio courts. Our firm also regularly files real property tax exemption applications, and we have broad experience in litigating exemption disputes. We also regularly assist clients in claiming exemptions for exempt facilities (e.g., thermal efficiency and pollution exemptions).
Careful and effective state and local tax planning is important to any business. Our attorneys offer our clients the attributes that are essential to successful tax planning – comprehensive knowledge of existing and developing tax strategies that can be supported in the law, creativity in selecting and tailoring those strategies to our clients’ needs, identification and proper implementation of the steps necessary to implement the selected strategy, and the experience and resources to fully support and defend that strategy against any challenges, including litigation. We also advise our clients as to the merits or risks of tax planning opportunities presented by other service providers, and work with other service providers to develop and implement tax planning strategies.
Public Utility Tax
We represent all types of traditional and quasi-public utilities in state and local tax matters. Recent changes to Ohio’s tax code have transformed the way many utilities historically have been taxed, with the result that more and more utilities are treated, and taxed, like general business taxpayers. Our attorneys have participated in this transitional process and are assisting our clients in addressing the unique state and local tax issues and opportunities presented by that process.
Our firm has performed reverse audits for many clients. In some cases, the audits focus on payment issues and seek to quantify the amounts of apparent overpayments or underpayments. In other instances, clients simply want to review and confirm compliance accuracy.
Our experienced attorneys and other tax professionals assist our clients in designing and implementing effective and efficient audit procedures to best achieve the intended purpose of the audit. The lessons learned and the information gathered during such reverse audits can be used to formulate audit strategy, establish audit methodologies and defend compliance in the event the client later experiences an actual audit by tax authorities.
In our experience, properly performed reverse audits can provide great value to our clients, long after the fieldwork is completed. Our attorneys take great care to analyze, explain, and document findings so clients can apply those findings to its current, and future, operations.
Sales and Use Tax
We often counsel clients who are contemplating sale and purchase transactions on sales and use tax planning opportunities and consequences. We offer precise and comprehensive advice on such topics as transactional structuring, application of tax exemptions, taxation of services, property classification, construction contracting certificates, licensing, equipment leasing, electronic sales, direct payment permits, single rate compliance, standard and managed audits, reverse audits, aircraft and vessels, business transferee liability, and nexus and interstate sales.
Our experience teaches that sales and use tax often accounts for the majority of the tax amount assessed with respect to a particular transaction or series of transactions. Our attorneys use their sales and use tax knowledge and experience creatively, to minimize the taxes imposed on our clients and to support our clients’ compliance positions.
Our firm’s representative engagements in the sales and use tax area includes the following matters, among others:
- We assisted a Fortune 500 company with managing 15 separate use tax purchase audits and with converting the results to single rate compliance procedures.
- Our attorneys represented a client in successfully defending a personal liability assessment that exceeded $20 million.
- We assisted a client in avoiding sales tax by helping to prepare commercial documents that controlled the purchase of more $100 million of technology services.
- Our firm represented a client in amending pending legislation in order to preserve a use tax exemption that saves the clients millions of dollars each year.
- We represented a client in negotiating and implementing a Voluntary Disclosure Agreement, helped to determine a use tax deficiency, and established a payment schedule that allowed the client to avoid an audit.
Unclaimed Funds (Escheat)
Reporting and compliance issues with respect to unclaimed funds often are overlooked. The legal issues presented by such situations can be complex and difficult to apply, but the potential exposure for failing to comply with the relevant rules and regulations can be significant. Our firm has attorneys who are experienced in this area and who provide our clients with sound and strategic counsel in connection with unclaimed funds compliance and audit defense matters.