The importance of state and local tax planning has risen significantly in recent years. Only a decade ago, federal tax rates were so high and state tax rates and enforcement were so minimal that taxpayers focused their attention, with good reason, on federal tax planning opportunities.

Times have changed. With reductions in federal tax rates, legislative elimination of many federal tax planning opportunities, increases in state and local tax rates, and aggressive enforcement efforts at the state and local level, state and local tax issues frequently push their way to the forefront and affect the business decision-making process. Indeed, when all state and local taxes are combined, the effective rate of such taxes may exceed a taxpayer's federal tax liability.

For years, we have provided extensive advice to clients about state tax planning opportunities. Our work has encompassed many diverse questions, some examples of which include:

• Advising companies on methods for restructuring their organization and activities to minimize state taxes.
• Analyzing the proper framework for the state and local taxation of the rapidly evolving telecommunications industry.
• Analyzing state and local tax considerations involved in the relocation of a taxpayer's business to another state.
• Advice concerning whether and when state "nexus" attaches by reason of telecommuting and the provision of computer-based services.
• Evaluating and modifying a taxpayer's corporate organizational structure to minimize compliance costs and control effective state tax rates.
• Obtaining favorable advance rulings from various state departments of revenue to assist taxpayers in their state tax planning activities.
• Determining the proper states in which taxpayers should file tax returns.
• Reviewing sales tax concerns inherent in the construction of a new manufacturing plant.
• Determining the proper use of net operating losses in particular states.
• Evaluating the potential use tax liability of an out-of-state mail-order vendor that used an alternative to the United States Post Office to deliver catalogs.
• Evaluating the potential liability of non-resident partners for state income tax as the result of professional services performed by the partnership in a particular state.
• Determining the state tax consequences of acquisitions and dispositions of businesses.
• Developing a basis for securing "advance rulings" from the District of Columbia Department of Finance and Revenue.
• Drafting and shepherding passage of state tax legislation for clients.
• Advising insurance companies on the applicability of the "in lieu of" exemption to sales and use taxes.