Procedure
How a state tax matter moves: audits and the notices that follow them, protests and appeals, refund claims, voluntary disclosure, and the elections and filings that have to be made correctly the first time. The entries below follow that lifecycle, and each stage builds the record for the next.
68Procedure articles
Alabama
1 articleCalifornia
28 articles- How does a taxpayer petition the Franchise Tax Board for alternative apportionment?A taxpayer petitions California's Franchise Tax Board Chief Counsel in writing under Revenue and Taxation Code section 25137, proposing a substitute method.Law as of Sep 28, 2026
- Can a California service subsidiary of a foreign parent amend prior years to market sourcing, and where does the parent receive the benefit?Yes: a California service subsidiary can amend open years to market sourcing, to the extent its foreign parent receives the benefit outside California.Law as of Oct 15, 2026
- Must a California business file a property statement when the assessor asks, even if every asset was expensed?Yes: under California Revenue and Taxation Code section 441(a), the assessor can require a property statement; expensed equipment is reported at full cost.Law as of Oct 17, 2026
- Can a taxpayer use the installment method for California but not for federal tax purposes?Yes: a taxpayer that elects out of the installment method federally can still use it for California under section 17024.5(e) or 23051.5(e), on Form 3805E.Law as of Oct 13, 2026
- What happens in a CDTFA sales tax audit of an out-of-state seller?A California Department of Tax and Fee Administration audit of an out-of-state seller is often a sample projected across a period of up to eight years.Law as of Oct 8, 2026
- How does the FTB evaluate a claimed change of residency out of California?California's Franchise Tax Board tests a claimed move out of state with evidence, not declarations, using the Appeal of Bragg closest connections factors.Law as of Oct 10, 2026
- What happens in an EDD worker classification audit?A California Employment Development Department audit reviews everyone paid without a W-2 and may propose payroll taxes for workers reclassified as employees.Law as of Oct 8, 2026
- Does a federal accounting method change automatically apply for California?Per Franchise Tax Board Notice 2024-01, a federal accounting method change generally applies for California only if the state conforms to the underlying law.Law as of Oct 8, 2026
- What happens in the first sixty days of an FTB business entity audit?A California Franchise Tax Board business audit opens with a contact letter, an opening conference and numbered document requests with 30-day response limits.Law as of Oct 9, 2026
- What should be done when an FTB Notice of Tax Return Change is wrong?A wrong California Notice of Tax Return Change carries no protest right; the fix is to contact the Franchise Tax Board quickly, or pay and claim a refund.Law as of Sep 28, 2026
- Can California's large corporate understatement penalty be waived?No: California's large corporate understatement penalty under Revenue and Taxation Code section 19138 is strict liability, with no reasonable cause exception.Law as of Oct 10, 2026
- What resale documentation survives a California sales tax audit?In a California sales tax audit, a resale certificate holds up when taken timely and in good faith, complete on its face, and matchable to the customer.Law as of Oct 8, 2026
- What actually happens in an FTB residency audit, from first letter to protest?California Franchise Tax Board residency audits run mostly by mail: contact letter, document requests, position letter, proposed assessment, 60-day protest.Law as of Oct 14, 2026
- How are days counted in a California residency audit, and what evidence wins?California's Franchise Tax Board counts residency days on a day-by-day calendar built from card, flight, cell and toll records, which stands unless rebutted.Law as of Oct 10, 2026
- What happens after an S corporation files a California refund claim?A California S corporation refund claim may be examined by the Franchise Tax Board; shareholders must file their own claims, on their own deadlines.Law as of Oct 8, 2026
- Does buying a vehicle, vessel or aircraft through an out-of-state entity still avoid California use tax after SB 1406?Senate Bill 1406 makes a shell company a California resident for vehicle, vessel and aircraft use tax if any owner is; its officers can be personally liable.Law as of Oct 14, 2026
- When does a disregarded LLC file a short period California Form 568?A disregarded single member LLC files a short period California Form 568 when its owner closes its books mid-year, because it has no taxable year of its own.Law as of Oct 12, 2026
- When is a stay in California for a temporary or transitory purpose, and which visitors does the regulation name?California's residency regulation treats transit, vacations and brief engagements as temporary; long or indefinite work, recuperation or retirement are not.Law as of Oct 14, 2026
- Can a website defeat California throwback?When other states treat website cookies and chat as beyond Public Law 86-272, a California seller may be taxable there, so its sales escape throwback.Law as of Oct 14, 2026
- How does California enforce unclaimed property, and is there a way back into compliance?California enforces unclaimed property with 12 percent interest, tax return questions and Attorney General action; voluntary compliance can waive interest.Law as of Oct 14, 2026
- What happens when a California assessor never enrolls reported construction in progress, and how long should the reserve stay?A California assessor's failure to enroll reported construction in progress leaves escaped property, assessable for four years without interest or penalty.Law as of Oct 17, 2026
- Does filing an extension disqualify a taxpayer from California's voluntary disclosure program?An extension should not bar California's Voluntary Disclosure Program, which excludes entities that already filed a return, registered or were contacted.Law as of Oct 12, 2026
- Can a foreign-owned group that finds years of unfiled California returns still elect water's edge?A foreign-owned group cannot elect California water's edge for a year already past due, because the election requires an original, timely filed return.Law as of Oct 13, 2026
- What makes a water's edge election valid when the return and the election disagree?A California water's edge election needs a timely original return that computes tax on a water's edge basis; a late or amended return cannot make one.Law as of Oct 9, 2026
- Who decides a California tax appeal? The post-2017 landscapeFrom 2018, California's Office of Tax Appeals hears income and sales tax appeals; the Board of Equalization keeps insurance and alcoholic beverage appeals.Law as of Oct 9, 2026
- What property tax relief can a California wildfire victim claim?A California wildfire victim with at least $10,000 of damage may seek reassessment under Revenue and Taxation Code section 170 or transfer base year value.Law as of Oct 14, 2026
- What happens when California withholding credits do not match the K-1?California credits a partner with the withholding actually remitted for it, so a K-1 that understates withholding does not forfeit the difference.Law as of Oct 14, 2026
- How does a taxpayer protest a Notice of Proposed Assessment in California?A California Franchise Tax Board Notice of Proposed Assessment is protested within 60 days of its mailing date (Revenue and Taxation Code section 19041).Law as of Oct 12, 2026
Delaware
2 articles- What does Delaware's 90-day unclaimed property letter mean?Delaware's 90-day letter invites a holder into unclaimed property voluntary disclosure; with no reply in 90 days, the holder must be referred for audit.Law as of Oct 14, 2026
- What happens in a Delaware unclaimed property audit?Delaware unclaimed property audits often run three to seven years through outside audit firms and estimate liability where the holder's records are missing.Law as of Oct 14, 2026
Multistate
23 articles- Does buying a business's assets trigger sales tax, and can the buyer inherit the seller's unpaid sales tax?Asset-sale equipment often bears sales tax; California, New York, Texas and Washington make a buyer skipping withholding and clearance liable for unpaid tax.Law as of Oct 14, 2026
- Which group member must file a state's combined corporate return?Connecticut and the District of Columbia have a taxable common parent file; if not, Connecticut's group chooses and the District uses its most active member.Law as of Oct 13, 2026
- Which state gets withholding and unemployment insurance when an employee works in more than one state?Income tax withholding follows where the work is done, with the home state as a second layer; unemployment insurance goes to one state under a four-step test.Law as of Oct 17, 2026
- How does Georgia credit nonresident withholding passed up through tiers of partnerships, and why does real property withholding get stuck?Georgia moves nonresident withholding up tiers on Form G2-A; the buyer remits real property withholding on Form G2-RP, and a misnamed credit can get stuck.Law as of Oct 17, 2026
- How does Pennsylvania tax an investment partnership and its corporate partner, and when does it impute 100 percent apportionment?Pennsylvania taxes individual partners by income class and corporate partners on apportioned business income, and reads an empty sales factor as 100 percent.Law as of Oct 22, 2026
- Do a lower-tier partnership's apportionment factors flow up to its partners?A lower-tier partnership's factors flow up only in aggregate-method states; separate-entity states pass up a sourced amount and entity-level states nothing.Law as of Oct 15, 2026
- How does a lower-tier withholding credit reach the right partner, and what restores one a state has disallowed?States credit nonresident withholding to the taxpayer named on each tier's statement; a disallowed credit returns when the issuer supplies the right document.Law as of Oct 15, 2026
- How is a software license sourced for sales tax when its users sit in several states?It depends on the state: some let a business buyer certify multiple points of use and apportion tax by users, and others source the whole sale to one place.Law as of Oct 14, 2026
- Which states require a payment with a partnership's extension, how should a tiered partnership size it, and when are the penalties abated?California, New York, Georgia and Massachusetts extend a partnership's return but not its payments; Texas and New Jersey extend only with a payment.Law as of Oct 23, 2026
- Does a seller owe use tax on items it gives away with a purchase?California treats a premium given with a purchase as sold; New York, Tennessee and Massachusetts make the seller the consumer, generally taxed on its cost.Law as of Oct 14, 2026
- Should a company protected by P.L. 86-272 still file state returns?A Public Law 86-272 protected seller may file a no-tax return to start the limitation period, but filing can trigger minimum taxes; the choice is per state.Law as of Oct 14, 2026
- If a partnership elects a pass-through entity tax, does it still withhold for nonresident owners?Unless state law coordinates the two regimes, yes: a pass-through entity tax election does not by itself end the duty to withhold for nonresident owners.Law as of Oct 13, 2026
- Must a partnership withhold state income tax for its REIT partner, and how is each state's exemption claimed?Maryland and Utah exclude real estate investment trust partners, Kentucky and Ohio any corporate partner; New York and Illinois withhold absent a certificate.Law as of Oct 15, 2026
- Which states penalize an undisclosed reportable transaction on a partnership return, and who files the disclosure?A missing reportable transaction disclosure costs a fixed sum in New York, Illinois and Minnesota and a tax-based penalty with a floor in California.Law as of Oct 23, 2026
- What does a second review of state tax returns look for, and when is it worth doing?A second review of filed state returns, by someone who did not prepare them, looks for refunds and understatements, most usefully before refund periods close.Law as of Oct 12, 2026
- What happens to a state net operating loss when the loss company merges out of existence?States following IRC section 381 pass a merged corporation's net operating loss to the survivor; Tennessee and New Jersey (outside a combined group) do not.Law as of Oct 14, 2026
- How do apportionment factors roll up through tiers of partnerships, and what happens when a lower tier's data is late, partial or missing?Each tier passes its share of lower-tier apportionment factors up, using the lower tier's year that ends within the owner's year.Law as of Oct 23, 2026
- Must a state finish an unclaimed property audit within the statute of limitations?Not in Michigan: per Dine Brands (2025), an unclaimed property audit need only start within the limitation period; Washington sets a deadline for the result.Law as of Oct 14, 2026
- Who owes the sales tax a seller failed to collect, the seller or the buyer?The seller stays liable for tax it was required to collect, and the buyer is often liable too, unless the state imposes the tax on the seller alone.Law as of Oct 14, 2026
- What use tax is owed on equipment bought from a related company that charged no tax, and how is the exposure estimated?A buyer of equipment from an affiliate that charged no tax owes use tax on the price paid in California, Texas and Washington, sized from the asset register.Law as of Oct 15, 2026
- Entering voluntary disclosure? What a state-rate-only exposure estimate missesA state-rate-only sales tax exposure estimate for voluntary disclosure misses local and district taxes, understating the liability and hiding local returns.Law as of Oct 13, 2026
- Do nonresident withholding exemption certificates expire, who keeps them, and why will a tax-exempt partner not sign one?State withholding exemption certificates lapse by date, yearly or on changed facts; exempt partners resist certifying no unrelated business taxable income.Law as of Oct 17, 2026
- What happens when every apportionment factor is zero and a state imputes 100 percent?Imputing 100 percent when apportionment factors are zero usually misreads the return; Illinois allocates in full only income derived solely from Illinois.Law as of Oct 14, 2026
New Jersey
1 articleNew York
3 articles- When can a taxpayer use alternative apportionment in New York?New York allows alternative apportionment if the statutory fraction misreflects New York business income or capital, shown by clear and convincing evidence.Law as of Sep 28, 2026
- Which New York filing fee does a disregarded LLC or limited partnership owe, and when does it owe none?A disregarded LLC with New York source income, gain, loss or deduction owes $25; a disregarded limited partnership owes none under $1 million of gross income.Law as of Oct 23, 2026
- What happens in a New York sales tax audit of a software company?New York sales tax audits of software companies open with a records request, typically for all open quarters; customer verification letters then remove sales.Law as of Oct 9, 2026
Tennessee
3 articles- Why does Tennessee assess a federally disregarded LLC for franchise and excise tax after it registers for sales tax?Tennessee franchise and excise tax disregards a single-member LLC only if its owner is a corporation; an LLC that files no return can be assessed.Law as of Oct 15, 2026
- How does Tennessee's single article tax and local option cap apply to sales of high-value equipment?Tennessee taxes a single article at 7 percent of the full price plus 2.75 percent from $1,600 to $3,200, and local tax usually reaches only the first $1,600.Law as of Oct 13, 2026
- Is Tennessee use tax due on equipment stored on site before a facility is placed in service?Absent an exemption, Tennessee use tax on equipment bought for a Tennessee facility attaches when it is stored there, not when it is placed in service.Law as of Oct 15, 2026
Texas
5 articles- How should a business respond to a Texas business personal property appraisal that ignores its ledger?A Texas business protests to the appraisal review board by May 15 or 30 days after the notice, if later, and proves value from asset cost and age.Law as of Oct 15, 2026
- What happens when a Texas combined group's extension, affiliate list and member reports disagree, and how is it put right?Texas combined group affiliate lists and reports that disagree post as missing or duplicate member filings; new schedules or amended reports cure most.Law as of Oct 17, 2026
- How does an out-of-state entity end its Texas franchise tax account when nexus ends?An entity leaving Texas files a final franchise tax report by the 60th day after nexus ends, pays any tax, and withdraws or notifies the Comptroller.Law as of Oct 17, 2026
- Can an LLC be a Texas passive entity, and what does an upper-tier partnership owe when its lower tiers already pay?An LLC cannot be a Texas passive entity, and an upper-tier partnership outside a combined group owes no franchise tax on income from taxable lower tiers.Law as of Oct 17, 2026
- How does a foreign-owned company register for a Texas sales tax permit when its officers have no Social Security number?A Texas sales tax permit applicant with an owner, officer or director lacking a Social Security number files paper Form AP-201 by mail, email or fax.Law as of Oct 15, 2026
Utah
1 articleWashington
1 articleNothing here matches that yet.
The full library search on the Practice and Procedure page looks inside every article.