Taxpayer Advocacy with Olga Goldberg: Part 2

Hosts & Guests

Olga Goldberg, SALT Partner at Pierce Atwood LLP

Meredith Smith, State and Local Tax Senior Manager

Alex Korzhen, Leader, Senior Manager, J.D.

What You Will Discover:

In this episode of SALTovation, we continue our conversation with Olga Goldberg, SALT Partner at Pierce Atwood LLP. They discuss the importance of taxpayer advocacy and the surprising stance taken by the New Hampshire Department of Revenue Administration in a recent tax case and delve into the topic of taxpayers litigating against tax assessments, even when the amount at issue may not be significant. They highlight the importance of pushing the issue to get answers and establish precedents for future cases. They also touch on the uptick in battles over disclosing information in recent years and emphasize the need for clients to be prepared for the additional costs and challenges that may arise in tax litigation.

Topics Discussed in this Episode:

  • Potential risks associated with disclosing confidential taxpayer information
  • Additional costs and risks associated with public disclosure
  • How states like Massachusetts and Connecticut handle residency and income tax
  • Maine’s recent confidential taxpayer decision
  • Challenges businesses face in protected information during legal proceeding


    • “Maine has a court-created second avenue to an exemption, which is that you can just file a declaratory judgment requesting an exemption, whether or not you have filed an application or whether or not you have requested abatement. So, you have two options, you can go the abatement route or you can go this declaratory judgment route.” -Olga Goldberg [20:22]
      • “To establish a true answer, like Wayfair, it’s probably not a big deal. Just go ahead and collect. You can agree on something, but at least you have that public answer that in theory, you know, people are going to be held to or states or businesses or whatnot.” -Olga Goldberg [02:51]


      • “One of the recent battles that we’ve had which is not even a tax issue is confidential. The attorney general or the assistant AGs have been really pushing for the disclosure of confidential taxpayer information, like tax returns, and then just confidential information of the taxpayer, like details, of contracts and other information.” -Olga Goldberg [04:40]


      • “Luckily, at least so far, trial courts seem pretty skeptical of the AG’s arguments, they’ve been ruling in our favor, and they’ve been protecting this information. So, that’s the good news, that it’s not getting out there, but the bad news is that it’s adding to the costs of a case that might not have a ton of evidence.”  -Olga Goldberg [08:07]



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    Meredith: [00:00:00] 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. Well, and certainly because like Massachusetts and Connecticut aren't going to say like, okay, well, New Hampshire says this, so then we're just going to give up on your residency when we have like a true income tax, you know, at nine to, you know, six to 12 percent or whatever their individual rates are.

    So, yeah, that's interesting. And we, we don't deal, you know, with a lot of individual domicile issues just from our area of practice just because it's, so it's really interesting to hear, you know, something new, especially again from like states that you generally don't hear as being like the bad guys.

    Right. Certainly, when you're low, you know, being in Maine, you get that, but.

    Olga: Yeah. And, you know, I think New Hampshire, um, in our experience, and [00:01:00] I'll say something nice about the Department of Revenue Administration in like our, We're not kidding on them. Oh, this is, They are, like, they are quite reasonable, and they're, they're good to work with, and they will, like, have conversations with you.

    And, and for whatever reason, this, This case they have just sort of dug in and it's a little bit surprising because this is a tax that's going away in like a year.

    Meredith: So talk about it. But like when you think about like interest and dividends, like the materiality, like what are they, how much money are they actually going after?

    Particularly if they're kind of focusing on this one year and you know, is it more of like a principal? out of principle this is wrong to take, you know, to litigate versus, you know, fighting, and this is kind of an overarching conversation too, is like, when do you actually get to, or should you [00:02:00] take something to court and bear those costs for, you know, how much tax is at issue?

    But one, it's kind of regardless, you know, admirable for your clients to kind of push the issue because that's how you get answers. Right. Audit settlements don't give answers to the general populace,

    Olga: right? And I think we, we lucked out with the client. Um, I think he perceives. How, how unfair this entire audit is and, um, you know, he has the willingness to litigate.

    So it was a good client. Um, really? Yeah. Well, some of

    Meredith: the, some of the more recent cases that I've read, it's kind of like, it's like 100, 000 on tax for like a large corporation, right? Yeah. That's really not that big of deal. But, you know, to establish a true answer, you know, kind of like Wayfair, right? It's probably not a big deal.

    Just go ahead and collect. [00:03:00] Big deal. You can agree on something, but at least you have that public answer that in theory, you know, people are going to be held to or states or businesses or

    Olga: whatnot. Yeah. Yeah. No, I think you're right. And that's an issue that You know, practicing in a relatively small state, we run into that issue quite a bit, where the, the tax issue itself might be very interesting and very needy, but the amount at issue is just, it's not that much.

    You're not going to have your biggest tax assessment in Maine. I mean,

    Alex: you know, it's just, it's so, I agree. It's so nice to, to see taxpayers willing to go after it. Right. I mean, Um, Halstead Beat is another kind of company that comes to mind that, that is, is, is pushing back, right, publicly, and, uh, and it's, it's, I think, fantastic that they are, um, so whenever I hear about [00:04:00] taxpayers doing that, even when the materiality might not be there, right, from a, from a cost But from a, from a cost benefit perspective, cost of litigation, right?

    Risk of loss, uh, perspective, um, they're doing it anyway and that's, that's

    Olga: amazing. Right. And to maybe like switch topics a little bit again on, on that cost issue in our litigation. So, so the way that the things work and I think this works. The same way in a lot of states is that, um, by the time you reach either the board of tax appeals or superior court, um, you're dealing with the attorney general's office and they have a few attorneys over there who, who focus primarily on, on tax issues.

    And one of the, you know, recent battles that we've had, which is not even a tax issue is, is about, um, confidential information. So in. Many of our recent, uh, corporate income tax [00:05:00] cases, primarily the, the attorney general or like the assistant AGs have been really pushing for disclosure of confidential, like confidential taxpayer information, like tax returns, and then just like confidential information of the taxpayer, like details of, of contracts.

    And I think Maine, like a lot of other states, has a statute on the books that protects taxpayer confidential information, like tax returns, things like that. Um, but there's this carve out that it allows the production, like the language is like production in court of so much and no more of the information that is pertinent.

    And the assistant AGs have been taking the position that this language that says, you know, the production in court is permitted, and they've taken that to mean the production to the public. Um, so not only to like the [00:06:00] court, but to the court in a publicly accessible manner. Which is, you know, from my perspective, not at all what the statute says, um, and this kind of originated, I don't know if you guys remember, there was a, there was a big Apple case out of Maine a couple of years ago, it was a sales tax case about what, you know, the, the correct purchase price of, of a phone when it was sold with a, with a long term contract and a side issue in that case, was the fact that the parties had agreed to a confidentiality order, which is actually a form order that the, that the business court here has.

    And, um, the Assistant AGs really wanted disclosure of, um, contract pricing, which is, you know, obviously like very sensitive business information and has nothing to do with the case. At all. You know, it doesn't like the [00:07:00] tax bill, the tax price has nothing to do with like the actual number at issue or the sales price has nothing to do with the with the actual contractual payment amount.

    Um, it either it either is part of the sale price or it isn't. And the, the law court, which is what we call our Supreme Judicial Court, so the law court essentially ruled like, yeah, this confidentiality order is pretty, it's pretty broad, but it's not an abuse of discretion for the, for the trial court to agree to seal that information.

    And so since that case came out, we like in every single litigation we've seen. The AG is like trying to disclose like contract pricing, they're trying to disclose like tax returns, they're trying to disclose customer names, like things that are really tangential, tangential to the issues involved. But we have kind of a mini litigation that's.[00:08:00]

    to the side of, of the, the main show. Yeah, and, and luckily, at least so far, trial courts seem pretty skeptical of the AG's arguments, and they've been ruling in our favor, and they've been protecting this information. So, I, that's the good news, is that it's, it's not getting out there, but the bad news is that, again, it's, it's adding to the costs of a case that might not have a ton of evidence.

    tax dollars involved to begin with.

    Alex: Can you share any theories as to why you think they're doing this? Is it just a litigation strategy or or do you think

    Olga: there's something else? Um, so we've talked to them about it At least we've talked to one of one person within the office and you know His position is that you know The public should have access to the courts and the public should have access to what's going on in the courts And I won't speculate on that That doesn't answer

    Alex: the question but I [00:09:00] mean, not my question, but

    Olga: the question. Yeah. Yeah. I mean, I can only talk about, you know, what the effect is on, on our clients, which is like, you have to have sort of a tolerance for the additional costs of, of that.

    Meredith: How long have you seen that they're kind of picking on that? Like in the, is this like a, the last five years, the last like six months, or is this

    Olga: just a, Yeah.

    I would say in the last like two to three years, there's really an uptick of, of battles over what to disclose and what, what not to disclose. Yeah. And I mean, it, it goes towards. You know, a lot of it goes towards, uh, like voluntary compliance issues. You know, you want your clients to feel comfortable turning over documents, um, in an audit that will support their position, even if those documents include information, um, and not have those documents [00:10:00] included in public filing.

    Yeah, I think

    Meredith: that's a really interesting issue that I don't know that we've really heard many people bring up kind of in, in conversation. So we appreciate that insight and something new. You were honored this year, um, with the Lancaster pro bono attorney of the year award for pro bono hours. Would you just like to share a little bit of that as we say congratulations and, you know, that's all.

    Like, just congratulations. Thank

    Olga: you. Um, yeah, so almost all, if not all of those hours were dedicated to a pro bono property tax case, um, for an organization called Peace Ridge Sanctuary, which is located in. And I am, I get really, really excited talking about this case because I don't think we get a lot of opportunities as tax lawyers to take on these like really [00:11:00] big pro bono litigation opportunities.

    Uh, so, so thank you for asking about it. Um, I, I was excited to receive the award, but I was more excited that we won the case. So, so I will tell you about the case and the organization and what happened. So. So Peace Ridge, like I said, it's, it's a non profit, um, animal shelter that houses and cares for like all kinds of farm animals.

    And when I say farm animals, I mean like every single kind. There's like, there are horses and pigs and donkeys and cows and birds, um, and goats, like very, very cute goats. And also they have dogs. They have rescue dogs. Um, and So, so that's what they do. They, they're one of the largest animal shelters, um, in the state and I think actually in the country because of this property that was the subject [00:12:00] of litigation.

    And so, so Maine as a state, they have, we have, um, an animal welfare program where if there are animals that are being mistreated or neglected, there are humane agents that have authority to seize the animals. And then there's like a civil or even a criminal potentially court proceeding. And so this animal welfare program essentially relies on Peace Ridge.

    To take in the animals that are seized and and house them, provide them medical care, provide them some rehab, food, shelter, everything that the animals need. And when I'm talking about they rely on Peace Ridge, it's not like sometimes it's, you know, we'll see like a horse. kind of standing out that might be like malnourished, for example, but in a lot of cases, it'll be like a flock of 40 sheep.

    Um, so it's, it's big, big numbers. Um, and the state really couldn't do this work without the support of Peace Ridge. [00:13:00] And in a lot of the cases, the animals are ultimately relinquished by their owners, you know, as, as part of the court proceeding and Peace Ridge will house them for the rest of their natural lives.

    So, so this all started in, in late 2015. Peace Ridge received some donations that allowed them to buy this really, really huge 800 acre property in the town of Brooks. Before that, they were on a pretty small property, um, in a, in a different town. And so this property allowed them to take in tons of animals.

    Like at this point, they have hundreds and hundreds of animals on this property, but they, they had a dual mission. And so part of the mission was. Um, animal sheltering and then the other part of the mission was that they really wanted to like conserve a good chunk of this property for wildlife habitat.

    And there's, there's a lot of like cool, diverse habitats on the property. There's a wetland, like if you like bird watching. It's kind of a paradise, [00:14:00] um, lots of migratory birds there. And so, so the legal issue was, you know, is Peace Ridge entitled to a property tax exemption for this 800 acre property? And Maine law allows the exemption for, uh, benevolent and charitable organizations.

    That owner use, I'm sorry, that own and use or occupy the property for their own purposes. Um, like this seems like a no brainer. I think, you know, they are an animal shelter. They're not for profit. They're using their land to house all of these animals. They, um, they also do like a lot of programming.

    They'll open the property up to the public every once in a while. Um, so they're doing a lot and, um, It seems like the answer is obvious. But...

    Alex: Olga, can I interrupt you? Who's the

    Olga: villain? I'm about to tell you about the villain. So the villain is... I mean, it's not the villain, but the elf. [00:15:00]

    Alex: I'm being dramatic because I'm stuck in.

    I'm emotionally invested in easement.

    Olga: Anyway, yeah, yeah. As far as I know, there are no bodies on this land. So, so the, so they applied for the exemption their first year, 2016. The town just like, was dead set against it. Um, right from the start, you know, the town like, just kept denying the exemption, kept denying the exemption. And so, like, When Peace Ridge's executive director went to a select board meeting to kind of talk about their work and all the good that they're doing, the selectmen responded by taking a pool on her age.

    They all went down the line and they all tried to guess how old she was. And this came out in testimony [00:16:00] from some of the select men, so this is an undisputed fact in this case. Um, So, so that's kind of how it started with like really egregious behavior by these folks. And there were comments made during this meeting about how they needed to escape.

    Simulate that they needed to like cut down all the trees on their property to pay their property taxes, which is pretty Antithetical to an organization that's trying to conserve wildlife habitat um and And they're they're just all All kinds of side discussion and nothing about what main law actually required for the exemption that that really never came up, um, in any of these meetings and, you know, I think it's it's small town issues.

    Feelings get hurt. People sort of get entrenched in their positions. And so we this went to trial. There was, there's was really nothing to do but, but go to trial and the [00:17:00] trial got, um, canceled a few times. We were supposed to go to trial, I think like March 17th, 2020, um, the court at like 10 PM the Friday before saying that all the courts were closed, then they got rescheduled for late summer and canceled again because they couldn't find enough marshals to protect the judge.

    Um, to protect the judge from what? Anything, anything at all. COVID? Like you need to have marshals just to keep the order in a court. Yeah. And so we finally had the trial in May 2021, and it was mostly on Zoom. So that solved all of the issue, except that I say mostly on Zoom because one morning of the trial, all of us Carpooled and caravanned over to Peace Ridge for a site visit.

    And I will say that this was [00:18:00] 100 percent at the suggestion of the town. I think they, they just wanted to go look at what was going on at Peace Ridge. So it was like all of us on the Peace Ridge team, a bunch of select people, um, the assessing agent for the town, their lawyer, the judge, and his marshal. So, so they got a marshal for the site visit and we just like spent this morning walking around the property looking at like really, really cute animals.

    It's the way I describe this property is it's basically like a petting zoo, but the animals are like friendly to humans because they've learned that humans are good because they receive such good care at this place. And there was this one moment where there's a, there was a three legged goat and She hopped over to one of the selectmen and like nuzzled in like she was a puppy.

    And the selectman like completely fell in love with her and was just on the ground petting her little [00:19:00] head for the next 20 minutes. And at that point the judge turns to me and he said, Counselor, did you plan this?

    Um, like obviously we didn't but I I feel like maybe that was the moment where if there was any doubt, uh that result It sounds like somebody had a

    Alex: check with that goat.

    Olga: Yeah, I don't know. Um, and so, so from just like a factual perspective, I think things were like, it was very clear, like, there were like dogs being walked on trails in the woods.

    They were, they were clearly using the property for this, for this animal shelter purpose. But there actually were legal issues involved that might be of interest. So, one issue was Can they, can Peace Ridge even qualify for an exemption? So like, in the normal course, you have to submit an exemption application.

    If you don't get it, [00:20:00] you file an abatement application. You go through the abatement process. So Peace Ridge did submit an application the first year, but it didn't submit applications the next two years. So there was this big question of like, can we even procedurally be here right now? And maybe this is another interesting thing about Maine, where Maine has court created a court created second avenue to an exemption, which is that you can just file a declaratory judgment requesting.

    an exemption, um, whether or not you have filed an application or whether or not you have requested abatement. So you have two options. You can go the abatement route or you can go this declaratory judgment route. So we, we went the declaratory judgment route and the court just affirmed that that it was an option for

    Alex: us.

    So in a, in a, in a different [00:21:00] state without that court created avenue, you may have. Lost on

    Olga: procedural grounds? I think so. I think we would have been shut out because we didn't, because they didn't timely appeal. It's

    Alex: tough when you kind of have to fall back on equity, huh?

    Olga: Yeah, um, but it was It was very nice for us that we did, you know, we had that option because they, they came to us after all of these years had passed and, you know, we took over the case and we started like filing all of the abatement applications on their behalf for the later years, but the deadlines were just long, long gone.

    at that point. Um, but we have, it's like, it's a long line of cases at this point in Maine that just continually affirm that it's, it's kind of a unique position that you can get an exemption through a declaratory judgment. Um, so that was kind of the first question. And then the second question was, okay, so did Peace Ridge meet that user occupy standard?

    So [00:22:00] like, It's April. The, the date at issue was April. The assessment date is April 1st, 2016. They bought the property in late 2015. Um, if you know anything about Maine winter, which I imagine is very similar to Minnesota winter, our winter goes long past. April 1st. So not a whole lot of work was done by April 1st, 2016.

    Like they had gotten a few quotes and there were like some dogs living on the property. There were some pigs on the property and they were fundraising to do more, but they like, they couldn't move the animals on the property because the roads were posted. So they had to wait until the summer until the weight weight limits were lifted.

    Um, so like. The question is, look at the huge 800 acre property, like, is it enough to just like have a few dogs and have a few pigs over here and just have all of this work kind of going on in the process, [00:23:00] um, in the background and, and we, that's another issue that, that we want because the standard that applied to, um, the user occupied standard was, um, did the organization actually appropriate the, the property for its charitable purpose?

    Um, and the court found that Peace Ridge bought the property with this definite intent to relocate and expand. So so we went on that issue as well. And then the final issue, and I think like maybe the issue that has the biggest impact for other main organizations and organizations across the country was, okay, so what about this conservation land?

    Like, is conservation a charitable use of property? And the courts around the country are really, like, all over the place on that issue. Um, some say yes, some say no. And we had, um, so the town was arguing that, [00:24:00] um, Peace Ridge had to basically, like, open up this conservation land for public use. In order to qualify for the exemption, and that was based on this Holbrook Island sanctuary case, which is a beautiful sanctuary.

    By the way, I was there like two weeks ago, and it's really lovely. Um, but in that case, the. The Sanctuary did not get the exemption because the court found that it was a game preserve and because it didn't allow hunting consistent with Maine public policy, it didn't qualify for the charitable exemption.

    Like you have to be in line with Maine public policy, um, in order to qualify for the charitable exemption. So some years after that, we had another case on that same issue called Francis Small Heritage Trust. And in that case, the, the law court essentially held that, hey, Maine actually has a public policy supporting land [00:25:00] conservation incited to like all these statutes where Maine can, um, has the public policy.

    And especially when The land conservation is coupled with some sort of public benefit. So, so we made the argument that number one, conservation by itself is enough. But number two, um, Peace Ridges is not only conserving the land, it's also using the land for its sanctuary activities. Like there were like dog walking trails around, um, around the woods.

    And, um, we had one of the humane agents testify that these, the animals. who are brought in in such distress, need those woods as a like a quiet buffer for their peaceful recovery and rehabilitation. And the court completely adopted that. They, you know, they said that it was enough that we had like a few trails running through the woods.

    It was enough that, that this buffer land existed [00:26:00] to, to create some quiet for the animals. So, and I think the interesting thing is that the court said, you know, with respect to parcels where there's those activities weren't going on, that like if those parcels were like in a conservation easement or a trust of some sort, that would probably be enough to get those parcels exempt.

    So, so I thought that was, that was a pretty interesting decision, and, and the judge really got it right. So, big win, um, Peace Ridge got its refund. The court actually ordered the town to pay our costs, which was a nice little bonus. It almost never happens. Um, so yeah, thank you for letting me share that.

    Meredith: Absolutely. Thank you for sharing that. And thank you for, you know, your time in this conversation, and we got to talk about a few things. Thank you. Differently that we don't. So yeah, thank you for your perspective and you know, also being a friend of the firm. And [00:27:00] until next time, this is Saltation. This podcast is for educational purposes only and is not intended, nor should it be relied upon as legal, tax, accounting, or investment advice to consult with a competent professional to discuss specifics of your situation and the applicability of the information

    Olga: presented.