State and Local Taxation

We assist our clients in establishing priorities, developing strategies, negotiating methodologies, designing statistical samples and implementing the details of a client’s audit plan, all with a watchful eye on tax laws and the client’s specific situation.  We are experienced in recognizing even subtle differences in methods, facts and circumstances which allow us to assist clients in achieving favorable audit results.

We appreciate that the best litigation strategy often is litigation avoidance.  Our attorneys 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 audit level, ahead of formal notices of assessment.  Our attorneys regularly work with taxing authorities, at all levels, to achieve reasonable resolutions of tax disputes without the need for litigation. 

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, use 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 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 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

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.

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).  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 evaluating issues raised by the initial CAT statutes and developing new legislative proposals to address those issues. 

We 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.

Our attorneys regularly counsel our clients, in Ohio and elsewhere, on employer withholding issues at the state and local tax level.  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.

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.  Vorys also helped draft Chapter 5726 of the Ohio Revised Code, focused on Financial Institutions Tax.

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.

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.

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.

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.

Vorys has a unique combination of experience involving the state’s oil and gas laws from both a regulatory perspective and a tax perspective.  For that reason, Vorys represents some of the largest oil and gas producers actively working within the state and routinely advises them on a variety of tax matters. 

Numerous tax issues 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), how oil and gas reserves are valued and reported on Forms 6 and 6A and severance taxes.

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.

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.

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 are 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.

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 have a long history of 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 valuation dispute procedures and economic development incentives.

Vorys attorneys also 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.

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.

Vorys regularly works with nonprofit organizations, educational institutions, including universities and charter schools, and public entities to review and advise on real property tax exemption opportunities.  We work primarily in Ohio, but have advised clients throughout the country on the applicability of real property tax exemptions.  Our attorneys prepare and file applications requesting real property tax exemptions and, as necessary, file appeals to boards/courts of appeal.  The firm regularly appears before the Ohio Board of Tax Appeals and the Ohio Supreme Court on real property tax exemption matters.  In addition, Vorys has worked with nonprofit organizations to amend and clarify real property tax exemption statutes in Ohio.  To learn more about our real property tax practice, click here.

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.