Hosts & Guests

Judy Vorndran, Leading Partner, SALT

Meredith Smith, Senior Tax Manager

Leah Robinson, Attorney, State and local Tax Partner with Mayer Brown in New York


Litigating SALT Cases with Leah Robinson (Part 2)

[00:00:00] Introduction: Welcome to SALTovation. The SALTovation show is a podcast series featuring the leading voices in SALT, where we talk about the issues and strategies to help you make sense of state and local tax.

Welcome back to the second part of our episode with Leah Robinson. If you didn't get a chance to listen to the first part, check your podcast feed.

[00:00:24] Judy Vorndran: Obviously when you find a case that you take forward to have some meat and we have the standing power to make it through the process. Right. I mean, do you kind of think you take a case and the thing I'm going to push to settle the sooner, you're not really intending to go all the way to the mat. You're hoping just by lawyering up threatening to sue, they'll take a step back as a government and say, well, maybe they mean business and we can't ramrod them.

[00:00:51] Leah Robinson: I've been on both sides of that. That keeps that I argued in front of the Missouri Supreme court right before COVID. $5,000 a day. $5,000 of issue, you know? And, and so there are times that the amount of money does not matter, right? It's a ball or some other reason to keep going. And then I've been involved with sheet dollar numbers where the company is just like, let's see how far we can go to get a settlement.

We're not going to litigate, or like we might file in litigation, but we're not actually going to go to the end. That actually is probably the much rarer. Appearance, you know, I think lots of companies go into litigation hoping to settle, but fully expecting or willing to go all the way. Um, I've only had a small number of situations where we went through, you know, we started litigation knowing there's no way we were going to go to the end of litigation.

And we were just going to push for a settlement and we were going to try and get something and then, you know, just end it, like, that's really been the exception. And oops to settle. Right. Well, I shouldn't say that there definitely are cases where we want an answer. We need the answer, and if we can have a settlement that also gives us a going forward answer, fine.

Um, but you can't always get that. Sometimes the attorneys litigating the case, don't want to talk about additional years. They're not in front of them. You know, they're technically not a part of what the adult. For most of the time we can bring audit back into the conversation so that if we reach a settlement, it includes how the issue would be treated by both sides going forward.

But yeah, I don't know, probably a third of the case. If I litigate settle and the rest go to decision of, I don't know how that compares to others, but,

[00:02:38] Judy Vorndran: and after being at the IRS and then kind of going on the other side of going and states are going. That's a bad word going against, but representing clients in the interest against the state.

How do you feel about that? Like at the IRS versus the state that view of, we need to do we need to clarify the taxpayer or do we need to beat the taxpayer up? Like where is the mentality? Do you think that, that, yeah,

[00:03:03] Leah Robinson: I don't know. I'm, I'm thinking, I'm thinking about that. I definitely think that a lot of the people I work to directly with at the IRS.

Thought that taxpayers were liars. Okay. I think that was sort of a theme. And I, I remember when I announced that I was leaving to go to private practice. I remember somebody who is now pretty senior in the IRS office of chief counsel, like coming to me and commenting about I was going to the dark side.

Yeah, partly it's only partly joking. I mean, I got, I loved chief counsel and I'm still close with a number of people there. You know, multiple people from chief counsel were in my wedding, which happened years after I left council. So I am incredibly fond of. My time there. That being said there was definitely that mentality, state side.

I don't know that I see that mentality as bluntly. I also don't know that they would say to me, right. I think your calling is a G I think, you know, I think there's just general skepticism at the audit level, which is appropriate, but often in matters, I'm involved in, we go above the audit level and senior audit management.

And I think that for the most part, senior audit management are very smart, very practical people who want to take that to the right answer, whether that always trickles down is, is another question. You know, I think auditors are looking to find adjustments, you know, that's their job. I don't fault them for it.

That's their job. Sometimes I wish they would be more open-minded about the types of evidence. We are like the documents we provide. Or the proxies like, oh, this document doesn't exist, but we have this other thing. Other thing is just rejected flat out because it's not what they're hoping to see, but I, you know, I'm often dealing with more senior people and, you know, I think most of the more senior people I deal with really are, are trying and, you know, often succeeding and trying to get to the right answer, do the right thing, because you're only

[00:05:06] Judy Vorndran: going to get cases where it's really dead.

There's a line that's not black and white, or we wouldn't take it for it. Cause I feel like sometimes otters misclassify the character of a business. Right. Are you a service provider? Are you software? Are you, what are. Right in the digital space, in the real world space. And Nope, we just treat you as, because if you deal with tangible personal property, I just had a conversation with the city Otter yesterday.

If you sell tangible personal property, like a maintenance person, and it involves hands supporting your retailer, I'm like, I'm not a retailer. I'm out there wrenching on things. And I might have a screw and a bolt and a knife, and I might have to wire something, but I'm not. I'm not a retailer. I'm not selling them the bolts.

I mean, yes, they're going to get left there because I needed this big some bar, but it's just to me, I thought really you're going to put it in that category and then say, basically all services are subject to sales tax. Right. So that feels like an overreaching. Um, and that space. And I think definitely, you know, you're working in the digital economy and there a lot of, in my opinion, challenges.

Working through what the heck you're selling. Cause even within software, like you were saying that client they're adding all kinds of stuff to make the software more robust and they don't tell the customer that they just add to it because it's SAS. And then it has all these bells and whistles within it that make it higher functioning.

[00:06:24] Leah Robinson: And then you look at their website, right? You look at the company's website. Oh, the website advertising it or more on the corporate tax side, you look at the company's 10 K drive themselves. And. I mean, I feel like every auditor is going to the website and printing off the descriptions and, you know, it's and I get it, the business folks that a company wants to describe themselves a certain way.

Right. They want to appeal to their client base. But that doesn't mean that that's what the technology really is doing. And, you know, I think that's like a very constant conversation with auditors is sure. The website says, blah, blah, blah. But if we'd look at how the product actually functions, what it does, you know, from a technology point of view, you know, they're not delivering software that, you know, just in the SAS space, right?

Like New York in order for there to be a lease of tangible personal property. Which is how the state classifies remote access software. They say it's constructive possession of TPP. Well, what's the TPP, the TPP is the source. Right, right, right. I I've always said like, at least in new York's position, which a few other states adopt as well, um, is very schizophrenia.

They, for purposes of tax ability, They treat it like tangible personal property, but then for the source thing, they treat it like a service, right. And New York law doesn't work that way. It's either a TPP where delivered or a service, which is more like a benefit received concept. But if it's TPP, if the actual TPP is the source code, those zeros in one.

Where is it? If the software is actually delivered, it's sitting on a server wherever the company's server is. And if that's not in New York, then sure it might fall into your taxable category, but you don't get the sourcing New York on the other hand says, well, it's, it's software, it's zeros and ones, which we consider TPP. But since I can see it on my screen, You know, and I'm controlling it from here. You know, I think that the technology behind that sort of falls apart and I think taxpayers have been very successful in New York matters on this when they do challenge it, there's, you know, I think a very high success rate in challenging it.

The problem is you have lots of folks who don't challenge it. You have lots of vendors who say. Pushed down to the customer, right? So I'm just going to collect there's enough guidance that I can point to, to show why it might be taxable. So I'm going to collect, and then the customers are like, but we don't think this is taxable, but maybe their total charge is their total taxes.

Five grand, 10 grand. Right. We're going to litigate over five grand, 10, probably not. Right. And so, or are they not, even if it's more money, are they going to file a refund claim, but. You know, bring more intention to maybe some of their own, you know, tax profile. Like I think, you know, so I it's, unfortunately I think one of those gotchas where the state, you know, and not, and not just New York, you know, a number of states have a lot of guidance out there that's enough to cause you know, most of those smart charts, right?

You go to any research engine, you do a smart chart and you find SAS is taxable in all these different states. Yeah. If you then go into some of those states and look at court decisions. You see a different answer. And so it it's, um, you know, it it's a mish-mash and whether or not it's worth taking on the risk is, is, uh, is a discussion to have, right?

Sometimes, sometimes if you're just going to push it out to your customers, you know, why take on the risk? On the other hand, if the law is, if the, if the courts have signaled an answer different than what the departments have signaled, you know, maybe. You should challenge him. Yeah, no, it's just, I just

[00:10:27] Judy Vorndran: feel like there is a lot of overreaching in this space and it's been, uh, you know, and even like healthy, like information as a service is a great one storage, Amazon web services.

You're paying for security. You're paying for redundancy. You're paying for oversight. I mean, there's a lot that has rolled up in your ability to store stuff on the internet. It's not. Storage of a sled or a slide or whatever they're called the computer power drive. And that site is somewhere right. And it's transmitted all over the place, but there's all kinds of things wrapped in that service that don't almost have a sighted.

So I think it's really hard to source some of this just besides bill too, cause shipped to is not really anywhere anymore. So I think that is really an area that is challenging

[00:11:12] Leah Robinson: to tax. I agree completely, but the problem with ship too is you still see a lot of old fashion invoices. The invoice still has a bill toolbox.

That's right. It does. And even when it's something that is very clearly electronically delivered. Or remotely accessed, meaning no delivery. You often still see information in the ship too. And it's like legacy invoicing software know, puts information in there and now you're fighting it. Right. You're fighting your own documents because they have a ship to list spit.

That's right. This issue for one of the big insurance companies in New Jersey right now on information services and soft, you know, there's a darn ship to, and it'll say lower on the invoice. Electronically delivered to.

[00:12:03] Judy Vorndran: And then the thing is there's shared services vendors in New York. So bills are processed.

They're billed in Minnesota, whatever Texas. I mean, you have situations where there's somebody going through all the AR AR AP, and they're just processing invoices. And then it's being used across IBM multinational company. Right? So there are shared services centers. Well, so of course it's a bill to there, but they're not getting shifted.

They're shifted if you want to ship it. So that is a real problem to overtax in New York. When you're billing hundreds of thousands of dollars, a license fees to a shared service center, that's just paying the bill so that all of the people in the company can have access to these.

[00:12:41] Leah Robinson: And, and I think that's an area where there's probably a lot of refund opportunity for companies to software and information services.

And we're seeing more and more cases where the courts are agreeing that you get a source those purposes, right. There was a reason. Case on software. Um, you know, there there's other states guidance that, you know, really mean, you know, if you're buying a lot of software remote software, or if you're buying a lot of information service that is delivered electronically or access to electronically, it's worth taking a look.

Now I am not a huge fan of reverse audits. I've seen reverse audits come back. Right. But. On a, on a thoughtful, you know, item by item basis. There, there certainly are times when it makes sense to go back and look and see, did you assign your information service a hundred percent. It was state the taxes information services, because that was the billing or the shipping address.

And in fact your users are elsewhere. Yeah, that's right. And sometimes it's just good to keep that in your back pocket for when you have an audit to raise it as, you know, a subcut of an arbitrage. Well, and then w that what we

[00:14:01] Meredith Smith: have conversations with our clients about is the opposite, right? It's like, okay, well, if we're pulling this specific invoice out of New York, it's like, well, remember, there's like this handover here that you need to put into New York.

They're like, Oh, yeah. So we're just going to ignore it all the way, because at some point it might wash sometimes, sometimes it won't, but then it's like, yeah, we can't just pull things out without thinking of the opposite and putting things back

[00:14:23] Leah Robinson: in. Yeah, no, absolutely. And, but, but it's sometimes it's worth checking because that might not tax it or that other state might have guidance that says we assign this to billing address.

All right. Well then you're fine in that state because the building address was somewhere else. But in, you know, but in some other state where it's not clear, it should be billing address, but rather where the users are. Right. Then it does make sense because you're not going to just move it from one state taxability to another state.

You have a strong basis in the other state to say, Your rules say we assign it somewhere else. Right? We're not playing games here. We're just following your rules. But this other state says we can look to actual use standard. Sometimes it doesn't always work, work out that, right? Yeah. Well, and we've kind of been

[00:15:10] Meredith Smith: talking about this all along is kind of this like idea of overreaching and whatnot.

But I think what we wanted to kind of hear from you, Leah, is if you see and where you see

[00:15:20] Leah Robinson: kind of.

[00:15:21] Meredith Smith: Governments overreaching kind of beyond what may be allowable under the constitution. And if, you know, you can speak to some of those items, if, or, you know, maybe you don't agree with that statement, you know, from some of the constitutional limitations that there may be some, like we're getting real, real close to this just isn't allowed by the constitution and whatnot.

[00:15:46] Leah Robinson: I think post-Wayfair there's been an assumption that economic nexus is the end of the story, right? If you have, I'll make nexus your taxable for income tax purposes for sales tax purposes. And, and I don't know that that's actually been answered yet, at least some texts around, but.

There's another side to Wayfair that I think doesn't get that much attention. And that is, you know, w w what did Wayfair do? Right. Wayfair basically told us the Quill is not good law. And what it quilts say, Quill said physical presence was enough. Right. Um, so if we get rid of that, if we say kill Quill, right?

So that champs that we all remember from a few years ago, if Quill was killed, um, that means that the concept that physical presence is enough. It's gone. Where does that leave us? Right? Where if Quill is no longer good law, what's left as good law. And, um, I'll tell a little story and then I'll say, what I think is left is, uh, a number of years ago, um, this case came out in New Jersey called tele bright and the decision, and this is while Quill was still good law.

The decisioning in the issue in tele bright was, uh, the company had one. The income tax case one work from home employee who was a tech person. And the state said that one full-time employee in the state, his physical presence. And therefore you have next. And that's what the court agreed on. And a few months after the case came out, I was presenting with a person who was my partner.

We were presenting together at some event talking, you know, just case updates and celebrate was on my list of cases, uh, to give the update on. And I get up there and I say, you know, a lot of people were, were surprised by this decision, but like, I think it's the right answer, right? Physical. It doesn't matter one full-time employee that's physical presence.

Like why are people so surprised by this case? And my partner who I'm presenting with is like, Leah, are you crazy? That case is completely wrong.

[00:18:00] Leah Robinson: And like, like what physical presence? And she's like, no, the person was back office. The person was not doing things to solicit clients, to establish and maintain a market.

And so their presence shouldn't have counted. And I was like, but physical presence. Right. Like, like I am a firm believer in physical presence, I think celebrate it was right. So she and I are having this whole argument kind of forget, like from the argument. Um, but kind of forgetting that we have an audience we're partners at the same firm and we're arguing and it was all in good fun.

And afterwards people were like, oh, that was the best part. And I'm like, it was embarrassing that my partner and I are arguing with each other and I'm like, no, no, that was the best part at the time. I thought I was absolutely. Because of well, but now that I look back now that Quill is gone, I look back and I realized that she was right.

And, and I think the answer is without Quill physical presence, isn't enough. What do we do if we cross krill? You know, if we think about the list of Supreme court cases, dealing with nexus, if we cross Quill out, right, Quill is gone, where do we go to next for determining what an appropriate next standard is?

Because Wayfair didn't write Wayfair remained. Right. It killed Quill, but it reminded on whether or not that test was a good test. And then, um, so if we look at what the Supreme court has actually said, next in line, we look to script though. And Tyler pipe, right script and Tyler pipe were two separate cases that both supported the concept that it doesn't matter if you have your own in-state physical presence.

Or somebody else in the state, if there is an in-state body establishing and maintaining your market, that is nexus. So fast-forward now right. Think about that. The tele bright fax, do you have one person in the state and all they're doing is back office. It Quill tells us that their physical presence is not relevant.

So we're left with Tyler pipe and script out. Is that one person who's just doing it, work, establishing and maintaining your in-state market. And I think under those facts, the answers are pretty clear and know that yes, you have a physical presence, but we don't care about that. But what you have is somebody establishing and maintaining your in state mark.

And I think this is sort of the next generation of nexus challenge that we should expect to see. And that is where you have a physical presence. But that physical presence is really not, is not related to managing and maintaining their in-state market you're out. But is

[00:20:42] Meredith Smith: that back office development person creating your website that is putting cookies on someone's computer that is constantly pushing content to people that brings them to their website and is keeping that person.

Perpetually buying. So by, you know, going here to here, is it establishing a market,

[00:21:03] Leah Robinson: but that is

[00:21:04] Judy Vorndran: establishing a market in the state in which the person is domiciled. That's the bigger issue to me. Like what really is happening is you're open for. And so you're going to sell to anybody if you can get it to them.

And it doesn't matter where you are, cause the boundaries of, you know, your location is no longer your limits. So I think that's the challenge of is the intention behind, even that marketing guy in the state. Really at that particular state? No,

[00:21:30] Leah Robinson: that's a marketing person in a state who's assigned to.

[00:21:34] Judy Vorndran: Right.

You're marketing to anybody who will buy from you and you have the ability to sell to them. So I do think

[00:21:39] Leah Robinson: that's a problem. Yeah. So I, I think there's a lot of overreach there. We, we are litigating an issue in a Southern state where we initially raised. Exactly this argument, they had, you know, one to three in-state people who were marketing people, but they were not assigned to marketing for that state.

They both had, they were there at different times, but they had different regions. And so we initially took this particular matter to court. We raised exactly this argument. In fact, we have. We had finished our petition a few days before Wayfair came out, but it wasn't due yet. And then Wayfair came out and we added this argument.

We're like, what? But it was gone. So now, like we weren't even going to challenge nexus because of Quill. And we had one to two people in the state or one to three people in the fate. So we weren't going to challenge an access. Wayfair comes out and we threw in a challenge to nexus saying under Tyler pipe and script out these people weren't establishing and maintaining the in-state market in that particular state.

And we. Pulling an excess argument from that matter, because we think it distracts from, from the, you know, the, the primary issue. But I do think it's going to be litigated. I actually was speaking at the MTC annual conference. The year Wayfair came out. So Wayfair came out in late. June 20th, 2018. I spoke at the MTC conference in August and in front of a room that is almost all government officials.

I make this argument. I, you know, I say, look, I get it waivers great for you guys. But there's also an angle that, you know, maybe some of our company physical presence, um, doesn't give nexus and there has to be actual. Purposeful.

[00:23:22] Judy Vorndran: Availment not just open for business, sending something via FedEx

[00:23:26] Leah Robinson: or via the internet.

Yeah. So the thing that's in front of a room of almost all government folks, and this was actually reported, uh, this, this, this little argument and conversation that I'm about to say was reported by state tax news cause they weren't there. So, so I say this and there's, you know, a very well-known, uh, government person from, uh, Northeast states sitting there shaking his head.

No, and a very well-known government person from a Southern state. Yes. You know, we get into an argument, um, and he is agreeing with me, uh, and that's sort of the public conversation, but then at the same conference, you know, as I'm having coffee, somebody from a different state comes by and says, you know, You might be on to something.

And then it dinner that night, another government official actually invited me to fly out to their state, meet with their senior management, to talk about issues like this so they can think about them. So even though a lot of state government folks, initial reaction to what I just said is likely to be.

Absolutely not. We've got you. If you have a physical and we've got you to get back to our state, some of them take a step back and think not what they want the answer to be. But if we look at what the Supreme court has interpreted your process and commerce clause, if you think about what's left, Tyler pipe, crypto are still good law, and those cases did not extend next.

Except where there was establishing and maintaining of an engineer. Now, I think to Meredith's point where her question was coming is can't you do that through technology? And do you think that that's a difficult area that the courts haven't gotten into yet? You know, cooking access? Honestly, I, I have less of a problem with cookie next.

With the South Dakota Wayfair standard, I would rather see cooking next. This was the standard because I Googled

[00:25:20] Judy Vorndran: you. So I'm in state, you reached out to me, that's an affirmation that we've connected, not just as random, like I got stuff. Right.

[00:25:29] Leah Robinson: Well, so I, I mean, for me, it's a little bit more of a, because

[00:25:32] Judy Vorndran: you're tracking in marketing to me.

[00:25:34] Leah Robinson: Well, no, so I still think the sickle presence is, is an easier standard and cookies, even though they're intangibles. They still take up space, right? Right. Has a limited amount of space. So even things that are intangible, like soft bear, they still think of space on a server five, et cetera. So I have less, you know, like, you know, that's my approach to things.

Let's get to the technology. We not how we think things work. Because what do we know? All right. Let's talk to the it folks and understand how the technology actually works. And so, you know, cookies are data files that are saved in your computer. Um, so I have less of a concern with something like cooking access versus.

Um, I just, I'm making sales to customers in a seat. Like my website is not limited to that state anybody in the U S or maybe anybody in the world can access my website. You know, that shouldn't in my mind, pull me into a state. But if, if I have decided to set up my website in a way that it will seek to put cookies on your website, I think I have, I have taken that next step, taking

[00:26:44] Judy Vorndran: that next step to really go

[00:26:45] Leah Robinson: do that person.

Yeah. That's still insubstantial, right? Or, you know, like maybe that's not enough, but if I'm aligned, if, if there's a spectrum, right. If nexus is a spectrum, Cookies to me are closer to nexus than just the way, you know, the South Dakota standard of having sales into a state. You know, to me, that's farther afield from what the right answer should, should be.

And, you know, we don't have a right answer. The Supreme court absolutely knocked Quill out of the running, but he didn't say that the South Dakota test was itself the right answer it remanded. And then that issue didn't go back up. So, you know, but, but what they have. Was Tyler pipe was scripted. And so, you know, I think that there's more, I'm

[00:27:33] Judy Vorndran: still out there possibly.

Yeah. I thought about that too. Well, I have clients that say to me, we just don't want to sell to these states anymore. I'm like, you're open for business. How are you going to do that? How are you gonna tell your wife's side? If you're in this state, you're not getting anything. Technologically then it's sort of an interesting issue because people do get frustrated and then there's that whole thing of like, well, we're already collecting like 15 states.

What's another two. I mean, at some point you put the system in place to manage the compliance. It doesn't really kill you to add a couple more states. You do get some volumes, you know, benefits, critical mass. So it is really an

[00:28:05] Leah Robinson: interesting push ball. So the interesting thing about like the compliance effort, right?

Like if you look at all the states. Briefs that were filed as Amicus in Wayfair, you know, the states and not every state, you know, again, I'm, I'm being a little too general here, but a number of states signed onto briefs that said compliance is easy, right? These cheap software things you get. Right. But then take a step back.

And then the states were saying, oh, wait a minute. We can't, we can't stop. Um, applying Wayfair yet the South Dakota case yet. Um, because we need to fix our technology. It's going to be,

[00:28:44] Judy Vorndran: no, we can't adjust the data. Colorado was location-based reporting. They couldn't collect on behalf of all these other cities.

They will like one Ollie and then they, and then the department of revenue was saying to us, just pick the ones you need. I'm like, you're kidding me. I don't know what I need. Have a remote seller. I could need this one. And that one next one. Not a need at all. Of course. I need to put the money in the right bucket.

So I have to open them all. So

[00:29:06] Leah Robinson: it's interesting. So I don't, I don't fault the states for wanting Quill to fall and I don't fault the states for supporting a South Dakota standard. I mean, I don't personally agree with it, but I get it right. But I do fault them for signing onto briefs that talk about how easy it is is because it's just not to me, you know, as somebody who's worked in this area and probably half the work I do is sales tax.

There's nothing easy. We litigate sales tax all the time. We litigate stability. We litigate it under streamline. We litigate it in non streamlined states. It's not clear in the states, but a lot of effort into advisory opinions. And so just the taxability determinations. Aren't easy. You know that the technology of compliance is not easy.

So I, you know, I've always been very upset at how easy it was, like how it was presented to the Supreme court in Amicus briefs, simple, straightforward. If somebody has never probably filed a return to the word, don't even go to the filings of the returns. Like some states you can't even fill out the form to get the license.

[00:30:12] Meredith Smith: Like we couldn't get a New York state license. Because they're online system, which is the only way to get a sales tax in New York has to have two responsible parties, but this woman is a sole proprietor operating as an LP. That is her and a business, but the other responsible party is not a human. So we can't officially get our license.

[00:30:40] Leah Robinson: The systems aren't even set up to even like give you the chance to even send you money or like foreign companies who.

Right. Great social security numbers. Yep.

[00:30:55] Judy Vorndran: Yep. Like, sorry we want your Ford money, but we can't take it. You don't have the right numbers.

[00:31:02] Leah Robinson: Yeah. It's um, sales tax is always going to be complicated because you don't tax everything. Right. There's there's taxable items and exempt items and taxable services always going to be complicated and that's fine.

Right. That's not like, okay, we just, it's going to be complicated. But to under, to undervalue how complicated it is to me just too results driven. And that's not what I think departments are supposed to do. Right. Change, you know, to do things the right way. Be above board, admit, Hey, this is going to be complicated to do, but we think there's appropriate reasons to do it.

Right. I would have preferred that message sent to the Supreme court. Like, yes, this will cost companies, a lot of money as you've come into compliance with. And it will cost us states a lot of money to change our systems to accommodate, but we think there are reasons to do it anyway, right. That, you know, the change I'd like to see in the sales tax world is I'd like to see combined reporting as an emotion.

[00:32:08] Judy Vorndran: Right. You mean for all today's multi own and not FEI and driven?

[00:32:11] Leah Robinson: Yeah. So like in the income tax world, we have a combined report and in some states you determine the separate and taxable income of each entity and you push them all together. And it's one report that gets by on signature. Some of them requires answers, but you know, one audit.

Et cetera. Why don't we have that on the sales tax world? Right? You have, you have a corporate group with tons of different entities that are each, you know, I talked to some tax directors, it companies who are signing hundreds of returns. You know, why not have combined reporting for sales tax? I don't think it would impact the total dollars at all.

It would just be a, it would ease, compliance and ease. The state's complete their intake of the returns, their audit, et cetera. You know, I I'd really like to see a movement. You know, behind that, I've talked to a few directors like tax tax, department of revenue, tax directors about it. And they're like, oh, that sounds like a good idea.

Like we should do that. And then the conversation never goes anywhere else. We're set

[00:33:20] Judy Vorndran: up an old antiquated way. And we just can't

[00:33:23] Leah Robinson: pivot from that. But, but I, I would like, you know, I don't know. I think like, like what are things that can make tax payers lives a little bit easier? State revenue. And in fact, maybe save the state some money as well.

You know, combined reporting on sales tax would be at the top of my list for that. Yeah. Yeah. Well, and the, I think

[00:33:44] Meredith Smith: that's the kind of perfect noodle to let us, you know, sit on as we wrap up this conversation. We had a long list of things we wanted to talk to you about and we got to one and a half of them.

So we really appreciate kind of this, this really interesting conversation. Some, you know, Judy and I are not litigators. So some of that insight, we really appreciate your time. So, thank you so much for being here. And that's another episode of SALTovation. Until next time.

[00:34:18] Closing: This podcast is for educational purposes only and is not intended, nor should it be relied upon as legal tax accounting or investment advice.

You should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.

Questions asked and answered in this Episode:

  • How Leah approaches each case
  • After being at the IRS and then representing clients against the state, how does she feel about the mentality with the IRS and the state?
  •  Where she sees government overreach beyond what is allowable under the constitution

What You Will Discover:

  • [00:24] How Leah decides how to approach each case
  • [02:38] The mentality between the IRS vs the state
  • [06:24] Looking how a product functions from a tech point of view
  • [10:27] Examples of overreach
  • [15:09] Where she sees government overreach
  • [28:06] An interesting thing about the compliance effort


  • “There definitely are cases where we want an answer. We need the answer, and if we can have a settlement that also gives us a going forward answer, fine, but you can’t always get that.”– Leah Robinson [01:57]
  • “And I get it. The business folks in a company want to describe themselves a certain way. They want to appeal to their client base, but that doesn’t mean that that’s what the technology really is doing.”– Leah Robinson [06:45]
  • “I think post-Wayfair, there’s been an assumption that economic nexus is the end of the story.”– Leah Robinson [15:45]
  • “I still think physical presence is an easier standard, and cookies, even though they are intangibles, they still take up space, right? My hard drive has a limited amount of space. So even things that are intangible like software, they still take up space on the server, on a hard drive, etc.”– Leah Robinson [25:35]



Relevant Links:

  • Leah Robinson on LinkedIn: