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Fortifying Your State Tax Plans Against Audit Attack


Product Code - TMW106
Speaker(s): Kendall Houghton and Matthew Hedstrom with Alston & Bird LLP
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The recent congressional hearings regarding Apple’s tax planning strategies highlighted some of the methods that companies are using to reduce their federal tax burden. Last year, a story in the New York Times focused on the company’s strategy for avoiding taxes in California and several other states.

Of course, devising plans to avoid taxes is as old as taxes themselves. The states have adopted various methods for combating corporate tax planning strategies that they deem to be abusive. Among the weapons in many states’ arsenals is the economic substance or sham transaction doctrine, which allows them to ignore or re-characterize certain transactions.

But it is often unclear to taxpayers which type of corporate reorganizations or other transactions will fall prey to the sham transaction doctrine. The lack of certainty in this area can cast a cloud over legitimate planning techniques.

The speakers will cover:

  • Federal and state common law doctrines that limit taxpayers ability to reduce or avoid taxes
  • Specific components of the economic purpose and business substance doctrine
  • “Substance over form” doctrine
  • Federal codification of the economic substance doctrine
  • State codification of the economic substance doctrine
  • Application of the state economic substance doctrine in various state tax cases
  • Best practices for avoiding or withstanding scrutiny under the economic substance doctrine

By attending this webinar attendees will be able to:

  • Understand the limitations imposed on their right to avoid taxes
  • Identify the key components of the economic substance or business purpose doctrine, including the genesis and development of these legal theories
  • Learn about the federal and state codification of the economic substance or business purpose doctrine
  • Gain a working knowledge of the “substance over form” doctrine
  • Apply the doctrines discussed to relevant business transactions or planning concepts

Who should attend the webinar:

  • Tax directors for large corporations
  • Tax staff of large corporations—attorneys and accountants, involved with mergers and acquisitions work
  • Tax staff of large corporations—attorneys and accountants, involved with state tax planning
  • Attorneys performing state tax work for large corporate clients
  • Accountants performing state work for large corporate clients
  • Tax staff working for a state tax agency involved in tax policy, auditing, or other activities aimed at the enforcement of state tax laws.

Prerequisite: None
Level: Intermediate to Advanced
Delivery method: Group Interactive Live
Recommended CPE credit: 1.5 credits 

Kendall Houghton and Matthew Hedstrom with Alston & Bird LLP

Kendall Houghton is a nationally recognized expert whose practice focuses on state and local tax planning, tax controversies and unclaimed property/escheat matters. She previously served as general counsel to the Council On State Taxation (COST), where she filed U.S. Supreme Court briefs in cases impacting state taxation of multistate commerceand led a tax policy initiative addressing taxation of Internet transactions. Ms. Houghton has represented clients on a multi-jurisdictional basis with respect to significant tax disputes; negotiated favorable settlements with state and local jurisdictions; developed and advocated state tax policy and legislative positions that benefited client interests; and collaborated with clients to design transactional and organizational structures that have optimized direct and indirect tax burdens.

Ms. Houghton also advises clients with respect to unclaimed property/escheat compliance, voluntary disclosure initiatives, planning opportunities, single- and multi-state audit defense, and litigation of state unclaimed property assessments.

Ms. Houghton is co-author of Bloomberg BNA’s Multistate Tax Management portfolio entitled “Unclaimed Property.” She is a Georgetown University School of Law instructor and a featured speaker at national state tax conferences and schools hosted by COST, TEI, IPT, and the Unclaimed Property Professionals Organization, Georgetown University School of Law and the New York University School of Law.

Matthew P. Hedstrom is a senior associate based in the New York office. He focuses his practice on state and local tax planning and controversy and addresses clients’ multistate tax issues, including state income tax apportionment, tax base, business/nonbusiness income determinations, telecommunications and sales/use tax nexus, sourcing and taxability issues.

Matthew also advises clients on the state and local tax implications of restructuring, mergers, acquisitions and dispositions, in addition to unclaimed property matters, including multistate compliance, voluntary disclosure, planning, audit defense and legal options. He also has tax controversy experience at the audit, administrative and appeals level in several jurisdictions.

Matthew has been published on a wide variety of state tax topics in different journals, including State Tax Notes and Journal of Multistate Taxation and Incentives. He regularly speaks on state and local tax matters and has spoken at events hosted by Council On State Taxation (COST), the Tax Executives Institute (TEI), New York University’s Summer Institute in State and Local Taxation and Bloomberg BNA, and the Unclaimed Property Professionals Organization.

Matthew is a member and on the executive board of the State and Local Tax Committee of the American Bar Association’s Tax Section.