State & Local Tax
State and local governments are focusing increased resources on audits and forensic investigations to discover non-filers and other businesses with nexus. As a Texas-based firm, we understand the specific tax issues that affect companies doing business here, and we have extensive experience helping those firms navigate the complexities of state and local tax (“SALT”) laws. We help companies minimize their exposure to tax liabilities, successfully resolve tax conflicts and qualify for incentives or exemptions for new development when available.
Our attorneys are among the state’s foremost authorities on the Texas sales tax and franchise, or “margin,” tax with one notable example being our client’s victory in a Texas franchise tax apportionment case before the Texas Supreme Court. The court’s decision marked a significant taxpayer win with important implications for other Texas businesses.
We are regularly involved in state tax planning, Texas Comptroller audit defense, and tax litigation at the state and local level. Additionally, we have knowledge of key state taxation issues including sales tax on data processing and other taxable services, aircraft sales and use tax compliance, insurance premium and retaliatory taxation, and the Texas margin tax. We are skilled in helping clients qualify for valuable tax exemptions and incentives, and we serve as an advocate for our business clients by monitoring and providing advice on pending and proposed Texas tax legislation and policy.
Texas Franchise tax
We have been actively engaged in the evaluation and interpretation of the franchise tax since 1991, and have been heavily involved in the original interpretations of the current Texas franchise (a.k.a. “margin”). This practice includes structuring and planning to allow efficient compliance with the new tax, as well as qualifying for exempt “passive” status in some cases. We provide important franchise tax guidance in merger and acquisition transactions to take advantage of “location of payor” and other valuable apportionment conventions. Qualification for research and development credits and historical structure renovation credits are important franchise tax planning tools.
Texas Sales Taxes
Texas sales tax compliance is greatly complicated by the taxation of 17 taxable services, whose scope is very often encountered in unexpected scenarios. We have long-term experience in helping clients spot potentially taxable transactions and comply with sales tax collection responsibilities or work to legitimately avoid the application of such taxes. We provide due diligence and sales tax compliance with respect to corporate reorganizations and merger and acquisitions, with emphasis on the appropriate contractual allocation of transfer tax liability and scope and availability of the Texas occasional sale exemption. In the post-Wayfair landscape businesses have to navigate today, multistate tax planning, voluntary disclosure agreements, remote worker compliance issues, and economic nexus compliance for sales tax and state income and gross receipts taxes is critical. The SALT aspect of merger and acquisition due diligence is an important part of the practice and a critical support role to our firm’s corporate attorneys for both buy side and sell side clients.
Tax Incentives
JW has a depth of experience navigating and negotiating the property tax and sales tax incentives in Texas. We counsel clients with legacy Chapter 313 agreements and stand ready for 2024 applications under new provisions in Chapter 403 of the Texas Government Code added by HB5 from the 2023 Texas Legislature (becoming known the “JETI” Act). We have negotiated many Chapter 312, 380 and Chapter 381 agreements with cities and counties across Texas as well as qualified hotel projects under Chapter 351 of the Texas Tax Code. The new Texas CHIPS Act will be an important tool for qualifying businesses. We have represented multiple large data centers in their qualification for important sales tax exemptions under Section 151.3595 of the Texas Tax Code.
Energy-specific tax practice
Working closely with attorneys in the Energy and Renewable Energy practice groups, we provide state and local tax solutions that add value for our clients in this burgeoning sector. We are also skilled in advising on the scope of the manufacturing exemptions from sales and use taxes for the purchase and lease of certain types of natural gas, wind, solar, battery and other energy facilities.
State Tax Hearings and Judicial Appeals
Jackson Walkers’s SALT practice has deep experience with The State Office of Administrative Hearings (SOAH) and state tax litigation in Travis County District Court, the Third Court of Appeals, and the Texas Supreme Court.
Local Counsel
We recognize that many major firms with SALT capabilities may not have established offices or Texas SALT experts here in Texas, and we take pride in serving as local counsel and supporting lead counsel client relationships.
Property Tax
The Texas Tax Code creates a patchwork of complex qualification standards for charitable, church, and school exemptions and we have decades of experience representing churches, schools, and charitable organizations apply for and qualify for property tax exemptions. Business personal property renditions and agricultural valuation are also an important part of Jackson Walker’s state property tax practice.
Aircraft Taxes
As government budgets have tightened over recent years, the Texas Comptroller’s Office and local property tax authorities have stepped up sales, use, and property tax enforcement on aircraft, the sales of which are well documented by the Federal Aviation Administration (FAA). We help companies and individuals structure aircraft acquisitions, sales and ongoing operations to comply with current Texas Comptroller policy and to achieve the best possible sales tax treatment.
Texas Insurance Premium Tax
We are one of the few law firms in the state with extensive experience in this state-specific tax, which is imposed on all insurers and health maintenance organizations that provide coverage in Texas. As a result of our knowledge and experience, we have represented many of the largest U.S. life and property and casualty insurers and have helped many of these firms successfully resolve Texas premium tax and retaliatory tax audits. We also provide advice on planning and compliance with insurance taxes.
- Represented client in leading Texas franchise tax apportionment case to the Texas Supreme Court (TGS Nopec v. Combs).
- Represented client in a State Office of Administrative Hearings (SOAH) hearing with a favorable proposal for decision on the interpretation of franchise tax exemption applicable in the renewable energy industry (currently under appeal).
- Represented client in judicial appeal of Texas franchise tax assessments based on the applicable rate and deductibility of cost of goods sold under the Texas “margin” tax.
- Successfully resolved premium tax audit assessments and sales tax assessments for clients in the construction industry.
- Represented client with defeating enforcement of “informal” rules not properly adopted under the Texas Administrative Procedures Act.
- Represented oil and gas seismic company in a major Texas franchise tax apportionment before Texas Supreme Court. This case is quite significant to IP licensors because it will determine the situs of license revenues for state franchise tax purposes.
- Represented client at the State Office of Administrative Hearings regarding applying the Texas franchise tax exemption in Section 171.056 of the Texas Tax Code to certain renewable energy wind farm contractors. Jackson Walker obtained favorable proposal for decision.
- Represented various clients in several successfully resolved audits including an insurance premium tax audit dealing with the sourcing of premiums on certain credit enhancement insurance products.
- Successfully prevented a material audit assessment against a commercial construction firm based on the contractor’s use of joint-payee checks to subcontractors.
- Successfully negotiated Texas retaliatory tax audit abatements for out-of-state insurers that were not notified of asserted new retaliatory tax calculation formulas in accordance with the Texas Administrative Procedures Act.
October 3, 2023
Attorney News
Ali Andrews Expands Jackson Walker’s Tax Practice in Austin
Jackson Walker is pleased to announce the addition of Ali Andrews as senior counsel in the Austin Tax practice. Joining from an international firm, Ali concentrates her practice on handling state and local tax disputes, state tax audits, unemployment tax matters, equal taxation, multi-state tax planning, and other administrative law matters.
January 21, 2021
Mentions
Texas to Adopt Franchise Tax Rule on Apportionment | Bloomberg Tax
“I believe the Comptroller is trying to provide guidance for 2021 knowing that if the Texas Supreme Court takes the Sirius case it is likely to take months or even a year or more before a decision is issued,” said Steve Moore, an Austin-based partner at Jackson Walker LLP.
July 18, 2019
Speaking Engagements
Argyrios Saccopoulos Represents State Bar of Texas at IRS Hearing on Proposed Qualified Opportunity Fund Regulations
On July 9, 2019, the IRS held a public hearing on proposed regulations related to investing in qualified opportunity funds. The hearing included testimony from 19 speakers – including Argyrios Saccopoulos, who spoke on behalf of the State Bar of Texas Tax Section.
