The Sales Tax Litigation Process

Administrative Court vs. Judicial Court

Whether you go to administrative court or judicial court is a tough decision — and for most businesses, we recommend administrative court.

It is Quicker: Administrative courts generally only hear cases involving state agencies, so there are far fewer cases. Matters move faster.

It is Cheaper: Less time means lower cost. In administrative court — unlike judicial court — you generally do not need a licensed sales tax attorney. A qualified sales tax professional can represent your business at significantly lower cost.

Judge Expertise: Most administrative law judges regularly hear state tax cases and are genuinely interested in understanding the dispute. A disinterested judicial judge is more likely to default in favor of the state.

Pay to Play: In most states, you do not have to pay the assessment to fight it in administrative court. Going to judicial court usually requires paying the assessment first — and then fighting to get it back.

The Administrative Court Procedure

Most states have adopted all or a majority of the Administrative Procedures Act. This means minimum standards apply: fair notice must be given, clear statements with deadlines must be provided, and your business has the right to a hearing.

Administrative court is similar to a real court: evidence is submitted, witnesses are examined and cross-examined, and a transcript is kept. Not knowing how to get evidence into the record or examine witnesses can seriously jeopardize your ability to reduce or eliminate an assessment.

Pre-Hearing Conference

Most states allow or require a pre-hearing conference — either in person or by phone. The goal is to settle the case or refer it to mediation before a full hearing. Our team actively uses this phase to negotiate favorable resolutions for our clients.

Witnesses and Evidence

Sales tax cases have witnesses and evidence — just like trial court. Typically, the taxpayer calls someone familiar with the business to explain their side of the story. The state attorney will have the opportunity to cross-examine.

Lack of credible, well-organized evidence is one of the most common ways non-specialist attorneys fumble a sales tax dispute. Understanding the audit, preparing witnesses, and presenting organized documentation are all critical to winning.

Keys to a Winning Case

Prepare, Prepare, Prepare: Know your case inside and out. Nothing presents better than a prepared representative who knows the facts and can quickly find evidence.

Know Your Strengths, Master Your Weaknesses: The key is highlighting your strengths, pointing out the opponent weaknesses, and developing a reasonable explanation for your own weaknesses.

Practice Makes Perfect: Prep your witnesses. While you cannot encourage false testimony, there is nothing wrong with walking witnesses through potential questions so they are not caught off guard.