State Tax Audit and Collection Procedures: General Principles provides an analysis of the issues facing taxpayers in relation to state tax audits, assessments, and the collection of state tax liabilities. Written by Jeanne E. Gorrissen, Esq., this Portfolio begins by reviewing general planning activities taxpayers can take in advance to minimize potential tax liability or predict tax consequences and to create opportunities for later negotiation with the taxing agency as to tax liability. This Portfolio discusses requesting tax agency rulings on proposed transactions and obtaining advance declaratory judgements in view of anticipating possible tax liability. 

State Tax Audit and Collection Procedures: General Principles further discusses the broad statutory power behind tax agency audits and the methods states employ during audits, including the states' authority to review a taxpayer's books and records and to issue subpoenas to the taxpayer and third parties. It discusses administrative protests, judicial appeals, and procedural defenses to the assessment.

Further, this Portfolio reviews the means a state has to secure and collect a delinquent tax once the assessment is final. The creating of a statutory lien, its force and effect, and the placing of priorities among competing state liens and federal liens are also covered. 

This Portfolio's discussion of states' tax collection powers is broken down into two sections based on the type of power employed: either coercive or non-coercive. State Tax Audit and Collection Procedures: General Principles explores non-coercive powers such as the abatement of penalties and interest, reasonable cause for the delinquency, and tax amnesty programs. Coercive powers covered by the Portfolio include levy and seizure of property, personal liability of corporate officers, piercing the corporate veil, and payment set-offs. 

Because the audit and collection mechanisms employed by the states, and the issues raised with respect thereto, are generally the same from state to state, this Portfolio limits its scope and focus in order to be a comprehensive yet succinct discussion of those matters. As a result, State Tax Audit and Collection Procedures: General Principles examines the tax collection systems of six states—California, Florida, Illinois, New Jersey, New York, and Texas—and concentrates on the administration of the sales tax laws of those states.

State Tax Audit and Collection Procedures: General Principles allows you to benefit from: 

• Hundreds of hours of original research on specific tax planning topics from leading practitioners in this area.
• Invaluable practice documents including tables, charts and lists.
• Plain-English guidance from world-class experts.
• Real-world and in-depth analysis that lets you explore various options.
• Time-saving access to relevant sections of tax laws, regulations, court cases, IRS documents and more.
• Alternative approaches to both common and unique tax scenarios.

This Portfolio is part of the Premier State Tax Library, a comprehensive series, which covers major state tax transactions and issues with expert, in-depth analysis, and offers commentary on a wide range of multi-state and state-specific taxation topics, including Sales and Use, Corporate Income, Individual Income, Property, Gross Receipts, Limitations on States' Authorities to Tax, Credits and Incentives, Electronic Commerce, Mergers and Acquisitions, Procedure and Administration, Special Industries, and more.

Detailed Analysis

1720.01. INTRODUCTION

1720.02. ANTICIPATING THE TAX

Introductory Material

A. Review of the Tax Agency's Publications

B. Tax Agency Rulings on Proposed Transactions

C. Advance Declaratory Judgments

1720.03. TAX AGENCY AUDITS

Introductory Material

A. Audit Power

1. Statutory Authority

2. Review of Taxpayer Books and Records

3. Tax Agency Subpoenas to the Taxpayer

4. Third Party Subpoenas

B. Audit Methods

C. Administrative Protests and Judicial Appeals

D. Procedural Defenses to the Assessment

1. Invalid or Absent Regulation

2. Lack of Notice

3. Equitable Estoppel

4. Equitable Recoupment

1720.04. SECURING THE DELINQUENT TAX

Introductory Material

A. Creating the Statutory Lien

B. Force and Effect of the Statutory Lien

C. Priorities Among State Lien Holders

D. Competing Internal Revenue Service Liens

1720.05. COLLECTING THE DELINQUENT TAX

A. Non–Coercive Powers

1. Abatement of Penalties and Interest

a. Reasonable Cause for the Delinquency

b. Agency Mistake

c. Tax Amnesty Programs

2. Compromise of the Tax Debt

3. Payment Upon Sale of the Business

B. Coercive Powers

1. Levy and Seizure

a. Levy Procedure and Effect

b. Pre-Levy Notice to the Taxpayer

c. Fourth Amendment Protections

2. Personal Liability of Responsible Corporate Officers

a. Determination of the Responsible Officer

b. Effect of the Corporate Assessment

c. Notice to the Responsible Officer

3. Piercing the Corporate Veil

a. Forfeiture of the Corporate Charter

b. Disregarding Form for Substance

4. Jeopardy Assessments

5. Licenses and Security

6. Attorney General Suits

7. Set-Off From Payments Due the Taxpayer

Working Papers

Item Description Sheet

Worksheet 1 Pennzoil Co. v. Texaco Inc., 481 U.S. 1 (1986)

Opinion

Worksheet 2 State Tax Administrations

Worksheet 3 State Tax Administration Newsletters & Publications

Worksheet 4 [Reserved]

Worksheet 5 Limitation Periods for Assessments of Corporate Income Taxes

Worksheet 6 Interest Rates on Underpayments of Tax

Worksheet 7 State Statute of Limitations for Assessments of Income Tax

Bibliography

Bibliography