State & Local Tax (SALT)

Fredrikson’s SALT team offers comprehensive guidance on a multistate basis from advice and planning through voluntary disclosures, audits, appeals, and litigation.

Advice and Planning

• Preparation for examination, including process and compliance automation to create “audit ready” files
• State and local tax exposure analysis, including nexus studies, P.L. 86-272, unitary, business/nonbusiness, taxation of foreign entities and foreign income, and taxability research and determinations
• Mergers, acquisitions, and divestitures SALT support, including due diligence
• Energy SALT memoranda, tax opinions, tax modeling, and permitting support
• SALT tax opinions
• Residency planning, audits, appeals and litigation for individuals and trusts
• Worker classification (employee/independent contractor) analysis

Pre-Controversy

• Negotiating voluntary disclosure amnesty and agreements
• Property valuation analysis

Controversy and Litigation

• Tax refund review and claim preparation
• State and local agency examination and audit
• Agency administrative appeals
• Tax court and tax tribunal hearings
• Litigation before trial and appellate courts

Throughout our representation, we strive to obtain fair and thoughtful review of the dispute to achieve the best possible result for our client at the earliest opportunity. Frequently, our involvement prior to or during the examination or protest stages permits us to help the taxpayer marshal the critical underlying facts and to define the arguments most likely to prevail. Our attorneys have extensive experience with state and local tax agencies throughout the United States. In addition, we bring the benefits of attorney‑client confidentiality and privilege to the relationship.

When litigation is advisable or necessary, we draw upon our trial experience to choose the appropriate court, develop the case through formal and informal discovery, and aggressively advocate the taxpayer’s position. Our tax litigators have extensive experience in state administrative appellate commissions and tribunals, state tax courts and state appellate courts. We know tax law, but more importantly, we have the experienced advocate’s ability to develop and present the most persuasive arguments and themes.

We represent publicly owned and privately held corporations, partnerships, cooperatives, individuals and fiduciaries in tax disputes and litigation of all types against state taxing authorities. Our clients are well-recognized national, regional and local businesses. We regularly negotiate and litigate tax disputes involving corporate and personal income taxes, sales and use taxes, excise taxes, estate and gift taxes, employment taxes, property taxes, withholding taxes and healthcare provider taxes.

Sales and Use Tax

• Represent numerous marketplace providers in negotiating favorable results for sales and use tax refund claims, audits, administrative appeals, and litigation on a multistate basis.
• Assist taxpayers in obtaining qualified data center (QDC) refund claims from the Minnesota Department of Revenue by helping prepare well-supported refund claims, navigating audits and administrative appeals of such refund claims, and representing a taxpayer in litigation before the Minnesota Tax Court relating to whether software purchased by the taxpayer and loaded or used at the taxpayer’s QDC was exempt from Minnesota sales and use tax.
• Advise taxpayers regarding class action and qui tam risk and represent taxpayers on a multistate basis when qui tam or class actions are filed against them.

Representative Cases

• Assisted several clients with multistate nexus and taxability analysis for sales and use tax purposes and represented clients in voluntary disclosures on a multistate basis.
• Assisted a large financial services company (Fortune 50) in obtaining multimillion dollar sales tax refunds from South Carolina related to direct mail purchases which were incorrectly sourced.
• Successfully represented subcontractors in appealing Minnesota sales tax assessments related to projects where the subcontractor acted as a purchasing agent for exempt consumers.
• Represented a telecommunications provider (Fortune 100) in a sales-and-use tax dispute relating to sourcing of telephone calls as well as the taxability of free phones given away with purchases of services.

Corporate Income and Franchise Tax

• Represent several large manufacturers before the Minnesota Department of Revenue and in litigation in Public Law 86-272 disputes.
• Assist clients with alternative apportionment petitions and related appeals and litigation.
• Assist clients with nexus and sourcing analysis and represented them in voluntary disclosures on a multistate basis.
• Represent clients in corporate franchise tax disputes before the Minnesota Department of Revenue and the Minnesota Tax Court relating to nexus, sourcing for sales factor purposes, the unitary business principle and unconstitutional distortion.

Representative Cases

• Represented a multi-tiered pass-through entity in a dispute before the Minnesota Department of Revenue regarding whether related lower-tiered partnerships that were controlled by an unrelated third party were unitary with the parent holding company.
• Represented an air carrier in an income tax dispute before the Minnesota Tax Court in which the court held that the Minnesota Minimum Fee’s inclusion of Minnesota sales or receipts for airlines is preempted by the federal Anti-Head Tax Act, 49 U.S.C. § 40116, which prohibits states from taxing the gross receipts of airlines.

Residency of Individuals, Trusts, and Estates

• Represent individuals, trusts, and estates before the Minnesota Department in residency disputes.
• Assist clients with planning and executing individual and trust residency changes from Minnesota to other states, including understanding taxation of nonresident individuals, trusts, and estates.

Representative Case

• Represented an individual before the Minnesota Tax Court in a residency dispute in which, following a trial, the Minnesota Tax Court held that the taxpayer was a domiciliary of Florida and not Minnesota, even though his wife remained a Minnesota resident.

Property Tax

Exemptions

• Assist clients with obtaining exempt status for property tax purposes, including public hospitals, purely public charities, educational institutions, mental health clinics and museums. Assist clients with preparing exemption applications and represent clients in exemption matters before the Minnesota Tax Court and Minnesota Supreme Court.

Centrally Assessed Property

• Assist clients with appeals of centrally assessed property, including in administrative appeals before the Minnesota Department of Revenue and appeals before the Minnesota Tax Court. 

Property Tax Valuation

• Assist clients with reducing the assessed values of commercial, industrial, and large multi-family properties, including but not limited to office buildings, hotels, department stores, shopping centers, retail strip malls, medical-office buildings, industrial and manufacturing buildings, office warehouse properties, office showroom properties, parking lots, senior living facilities, assisted living facilities and apartment buildings.

Classification and Other Issues

• Assist clients with other property tax issues, including challenging the classification status of a property and equalization issues.

Representative Cases

• Hospitals & Medical Clinics: Successfully obtained a tax exemption for three clinic properties owned and operated by a hospital district, resulting in a significant tax savings to the client.
• Mental Health Facility: Successfully obtained exempt status for mental health clinics throughout Minnesota.
• Group Home: Negotiated the exemption status of property owned by a group home on the basis that the group home was an institution of purely public charity and the property was used in furtherance of the group home’s charitable purpose.
• Museums: Successfully prepared exemption applications and obtained exempt status for several museums, including an art museum and a history museum.
• Pipeline: Appealed assessment of centrally assessed pipeline to Tax Court and negotiated a multi-million-dollar reduction in value.
• Transmission Line: Successfully reduced assessed value of a transmission line by over 50% at the administrative appeal level.

• Major Retail Center: Successfully negotiated a multi-year settlement for a major retail center that reduced the assessed value by more than $19.5 million and resulted in a tax savings in excess of $700,000.
• Office Property: Successfully negotiated a multi-year settlement for an older, unique office property that resulted in an overall reduction in assessed value of more than $6.5 million and a tax savings of approximately $235,000.
• Continuing Care Retirement Community: Successfully appealed the assessed value of a CCRC, resulting in tax savings to the client of nearly $1 million.

• Golf Course Classification: Successfully appealed the classification of a golf course from a commercial classification to a golf course classification, saving the client over $90,000 in taxes.

Other Tax Types

• Represent clients in MinnesotaCare Tax audits and appeals before the Minnesota Department of Revenue, the Minnesota Tax Court, and the Minnesota Supreme Court. Recently, the Minnesota Tax Court held that price adjustments provided by Dakota Drug (a wholesale drug distributor) to their customers should be included (as a reduction) when calculating the wholesaler’s MinnesotaCare Tax base.
• Assist companies with understanding the various state and local tax implications resulting from renewable energy projects (wind, solar, transmission, storage, etc.), regularly providing memoranda, tax opinion letters, property tax models showing the total property tax and payment in lieu of taxes (PILOT) over the life of a project; conducting diligence surrounding Inflation Reduction Act credits; and navigating conversations with local governments and communities regarding the tax benefits of a project.
• Regularly represent companies in worker classification audits and appeals before the Minnesota Department of Revenue and the Minnesota Tax Court.

Representative Cases

• Successfully argued that Minnesota’s qui tam statute prohibits qui tam actions relating to fees and charges for 911 services provided by Qwest because such fees and charges are “taxes.”
• Assisted companies under multistate escheat (i.e., unclaimed property) audits.
• Successfully argued before the Minnesota Supreme Court that rebates provided by Dakota Drug (a wholesale drug distributor) to its customers (pharmacies) are not part of the distributor’s “gross receipts” for purposes of the MinnesotaCare Tax.

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