State Taxes

In addition to federal taxes, the great majority of states levy a separate tax on individuals. Unlike federal taxes, there are no standard rules applicable to state taxes. Some states choose to follow federal rules while other states employ entirely different laws and rules for determining tax liabilities. Income tax rates imposed by the states vary greatly as do the rules governing time extensions to file state tax returns.

In some cases individual taxpayers have to file income tax returns in more than one state and incur state tax liabilities arising in multiple jurisdictions. Failing to properly file a state tax return can be a very costly mistake, for example; by not taking the credit allowed by one state for another state's tax when a taxpayer is subject to multiple jurisdictions in the same calendar year, a person may pay taxes in both states when the law does not require the individual to do so.

The attorneys and Certified Public Accountants at the Law Offices of Stephen Moskowitz, LLP have a great deal of experience in preparing multi state tax returns and advising clients on the most advantageous positions to take on their state tax returns.

Besides subjecting taxpayers to a myriad of income tax rules, some states may attempt to tax individuals on all of their income even if they did not live in the applicable state. Some states will cease taxing an individual as soon as he or she leaves the state. Other states, like California, use a 'residence' concept and may attempt to continue to demand and collect taxes on individuals during years they did not even live in the state in question.

We have successfully represented clients contesting assessed state tax liabilities. Below are some representative cases our firm has handled in regards to state tax matters.

• The state of Washington assessed a business owner $180,000 of state sales tax liability. Since the business owner failed to satisfy the assessed sales tax liability, the state of Washington proceeded to collect the outstanding sales tax liability from her former spouse by collecting the sales tax liability by issuing a state tax warrant against her. Through extensive negotiations, our firm convinced the state of Washington to remove the tax warrant against her. This resulted in a savings of $180,000 of the entire original demand from the state.

• Advised clients regarding California tax implication to breaking residence with the state and becoming a resident for taxation purposes in another state.

• Advised a major state government municipality regarding deferred compensation and benefits plan.

• Advised a beneficiary of trusts located outside the state of California regarding taxation of trust distributions and strategies to mitigate tax California state tax liability.

• Advised a California high tech firm regarding the tax benefit of spinning off an entity in the state of Nevada.

• Advised a Delaware corporation on its California tax exposure in the wake of a merger with a California limited liability company.

* The results portrayed in the cases mentioned above were dependent on the facts of that particular case, and the results differ if based on different facts.