Stites & Harbison, PLLC

Erica L. Horn

The challenges faced by SALT practitioners are growing as state revenues decrease and budget deficits increase. A review of recent case law, legislation, pending legislation and actions of tax authorites reveals two means of "protecting the fisc" - (1) a "never say die" approach to litigation, and (2) implementation of stautes, regulations and agency informal guidance on a retroactive basis. After a brief examination of the projected economic conditions and the current political footing of the states, the outline focuses on the battle between states and taxpayer over refund claims, the use of retroactive statutes and regulatory actions and considerations for taxpayers on the edge of litigation. The outline closes with FAS 109 considerations related to retroactive statutes and other retroactive state actions.

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This article is reprinted with the permission of Institute for Professionals in Taxation, Income Tax Report, Copyright 2009.