ExperienceState and Local Tax Advocacy
Legislative and Administrative Tax Advocacy
Nielsen Merksamer has unparalleled experience in legislative and administrative tax policy matters. Among our seven registered lobbyists are lawyers who have participated in some manner on most major tax policy issues in California over the last decade.
- In response to Cutler v. Franchise Tax Board, 208 Cal. App. 4th 1247 (2012), the Franchise Tax Board proposed to retroactively tax hundreds of California entrepreneurs who had benefitted from the Qualified Small Business Stock exclusion. On behalf of California Business Defense, a coalition of those entrepreneurs, partner Eric Miethke was the chief strategist and lead lobbyist for the effort that led to the passage of AB 1412 (Gatto/Bocanegra) and SB 209 (Ted Lieu) which gave full relief to the entrepreneurs from all taxes, interest and penalties.
- On behalf of the Motion Picture Association of America, Nielsen Merksamer helped lead the lobby effort and was the chief technical consultant for the industry on AB 1839 (Bocanegra), which established the $1.6 billion California motion picture production tax credit program.
- A significant number of recent California advances in the area of taxation were the result of bills lobbied by Nielsen Merksamer, including: SB 657 (Maddy) (1995) -The Omnibus Property Tax Reform Act; AB 315 (McDonald) (1995)-Established that “Entrepreneurial Profit” in the Income approach to value must be established with “market evidence”; AB 272 (Kuykendall) (1995)-The Employment Taxpayers Bill of Rights; AB 2798 (Machado) (1998)-Extension of the MIC to software manufacturers; AB 934 (Hertzberg) (2002)-Allowed independent judicial review of assessment appeals board decisions; AB 809 (Harman) (2001), AB 2561 (Vargas) (2002), AB 2590 (Campbell) (2004) and AB 1037 (Frommer) (2006)-Single sales factor apportionment; AB 1823 (Alpert) (1993)-Local-option personal property tax rebates on “economic revitalization manufacturing property”; AB 2747 (Wesson) (2002) and AB 777 (Nuñez) (2006)-Motion picture production tax credit. SB 209 (Lieu)/AB 1412 (Gatto/Bocanegra) (2013)-Preservation of Qualified Small Business Stock exclusion for prior periods and elimination of retroactive assessments.
- We have also successfully stopped legislation that would have increased taxes for a wide variety of businesses in California.
- We have also represented several significant business coalitions before the Legislature, including the California Unitary Tax Council and Business for Economic Growth in California (the Single Sales Factor Coalition).
A number of key California tax regulations in the income, property, and sales tax areas have been successfully lobbied by Nielsen Merksamer on behalf of a broad variety of industries including automotive, technology, graphic art and advertising, food processors, motion picture and entertainment, manufacturers, medical device and pharmaceuticals, and petroleum.
- Property Tax Rules: Rules 20-25 (Possessory Interests).
- Sales and Use Tax Regulations: 1528 (Photographers); 1529 (Motion Pictures); 1532 (Motion Picture Post Production); 1540 (Advertising Agencies); 1541 (Printing and Related Arts); 1543 (Publishers); 1583 (Modular Systems Furniture); 1584 (Membership Fees); 1587 (Animal Life, Feed, Drugs and Medicines); 1589 (Containers and Labels); 1591 (Medicines and Medical Devices); 1595 (Occasional Sales-Sale of a Business–Business Reorganization) and 1706 (Drop Shipments).
- Bank and Corporation Tax Regulations: 25137-10 (General Financial) and 25106.5 (Combined Reporting); 25110(d)(2)(F) (Non-Effectively Connected Income).
Multistate Tax Commission: We have also represented taxpayers on regulatory issues before the Multistate Tax Commission.
Administrative Tax Controversy:
Nielsen Merksamer lawyers argue a significant number of income, sales, insurance gross premiums, excise and property tax cases before the State Board of Equalization, the Franchise Tax Board and local assessment appeals boards every year. Nielsen Merksamer lawyers have had significant experience working for and with California’s revenue agencies and as a result have a thorough and unique understanding of the inner workings of those agencies. Our representation has included:
- State Assessed Property Tax: We have represented the state’s largest gas and electric and telecommunications companies before the State Board of Equalization on their appeals of state-assessed property taxes.
- Sales and Use Tax: Our firm has argued many sales and use tax controversies on issues as varied as drop shipments, bad debt allowances, property sold for resale/manufacturing aids, foreign commerce, transportation charges, sales of assets in a reorganization, aircraft parts, leases of motion pictures and printed sales messages.
- Local Property Tax Appeals: We have represented technology, entertainment, manufacturing and air transportation companies in local property tax appeals and in negotiations with county assessors. We are familiar with a number of significant issues in the local property tax arena including change of ownership, valuation of high technology equipment (depreciation), possessory interests and local property tax audits.
- Personal Income Tax: We have represented a number of high-wealth individuals on a variety of personal income tax issues including the property treatment on gains from “small business” stock and residency disputes with the Franchise Tax Board.
- Local Taxes: As local governments and their private contractors have become more aggressive in pursuing different types of taxes, so too has the magnitude of problems these taxes present for taxpayers. Nielsen Merksamer has had a great deal of expertise defending taxpayers in transient occupancy taxes, utility user taxes and business license taxes in a number of local jurisdictions in California.
- Employment Taxes: As California regulators and tax officials take aggressive steps to restore the near-bankrupt Unemployment Insurance Fund to solvency, employers face unprecedented challenges on employment tax issues. Nielsen Merksamer has represented clients before the Employment Development Department on a variety of employment tax issues, including employee/independent contractor status disputes, employer determination and temporary employee rules.
- Special Taxes and Fees: We have represented clients with disputes on the growing array of special fees, taxes and charges collected or administered by the State Board of Equalization.
Nielsen Merksamer lawyers have also been involved in a direct or amicus capacity in a number of high profile tax cases decided by California courts. These include
- General Motors v. Franchise Tax Board, 39 Cal. 4th 773 (2006) (because a repurchase agreement had the characteristics of a loan, only the interest received in such transactions could be treated as gross receipts when calculating the income tax apportionment of a unitary business group under the Uniform Division of Income for Tax Purposes Act).
- Heather Preston v. State Board of Equalization, 105 Cal. 4th 197 (2001) (only portion of income attributable to temporary transfer of tangible artwork was subject to sales tax. Transfer of copyrights using technology transfer agreements was not taxable though tangible personal property was also transferred).
- Sinclair Paint v. State Board of Equalization, 15 Cal. 4th 866 (1997) (the seminal California case setting forth the test for distinguishing between taxes requiring two-thirds legislative approval and regulatory fees requiring simple majority legislative approval).
- Rossi v. Brown, 9 Cal. 4th 688 (1995) (though the California Constitution prohibits referenda against tax statutes, voters could use the initiative power to repeal a tax and prevent its readoption).
- Title Insurance of Minnesota v. State Board of Equalization, 4 Cal. 4th 715 (1992) (payments made by an underwritten title company to satisfy its obligation to pay certain portions of policy claims were not income for purposes of calculating the title insurer’s tax burden).
- Colgate-Palmolive, Co. v. Franchise Tax Board, 512 U.S. 298, 129 L. Ed. 2d 244, 114 S. Ct. 2268 (1994) (upheld constitutionality of California’s worldwide reporting system for allocating income of domestic-based multinational corporations, as we urged in an amicus curiae brief).