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.

Disposition

At the conclusion of the hearing, the real work begins.  Generally, the hearing officer or ALJ will instruct each party as to how to submit their proposed order or disposition within a prescribed timeframe.  The proposed order is your time to persuade the decider in writing.

Similar to the other phases of the hearing, drafting a clear proposed order is one of the key roles of the sales tax professional.  The best orders should be clear, concise, and to the point.  The purpose is to focus the ALJ on the facts that support your case and apply them to the relevant law to get the ALJ to rule on your side.  There is no better feeling than when the ALJ uses chunks of your artwork in his or her final disposition.

The procedure of the final disposition of the administrative court or tax court varies from state to state.  However, following the conclusion, the non-prevailing side can appeal the case.  Further, there may circumstances in which the prevailing party can recoup some of its fees and costs from the other side.

As explained above, most states do not require a state-licensed tax attorney to represent a business before the agency. Having a power of attorney with a qualified representative is often adequate to represent your business with a sales tax issue in the state. More important than the letters after their name is whether your sales tax professional is well versed and has extensive experience with state sales tax issues, is what really matters. While our team is not licensed attorneys in the state, our team has former auditors, accountants, CPA’s and experienced sales tax attorneys that have decades of experience fighting state sales tax issues.

In the end, you get decades of sales tax know-how at a fraction of the price. Instead of traditional hourly rates charged by traditional tax lawyers, we offer fixed-fee pricing and you only pay for what you need. Unlike run of the mill tax lawyers, who often only have experience with federal tax issues, our team’s expertise is with sales tax issues and state sales tax laws.

At Sales Tax Helper we help those in need of sales tax audits , protests , and administrative litigation . More importantly, we provide services equivalent to tax attorneys at the price of a sales tax consultant . Simply put, this is what we do, and we will work hard to reach a reasonable resolution for your business’s sales tax liabilities. We welcome the opportunity to handle your sales tax issues and be part of your team!