Current Issues and Opportunities in State Tax Controversy Chicago Tax Club – October 27, 2010 George Barry, Director, Deloitte Tax LLP Jon Cesaretti, Director, WTAS LLC - Moderator Dave Kupiec, Partner, Kupiec & Martin Mike Wynne, Partner, Reed Smith LLP

Outline The Beginning The Decision Makers for the State Endgame The Courts Legislation Revenue Department Advance Resolution Overpayments / Refunds Where is this going? Questions Disclaimers 2

3

The Beginning What are we seeing? – Today – Future 4

5 The Beginning (Cont.) Responding to (or Initiating a) Controversy Different environment? Individuals involved (Taxpayer, State,…) New approach?

6 The Decision Makers for the State Audit / Admin. Procedure / Judicial Process – What are we seeing today? – Basis for Decisions – Future

7 Endgame Time has passed Resources Cost/Benefit – What has changed in this determination? Settlement environment – Now – Future Litigation considerations – Subject matter – Financial statement impact – Legal basis – Pending litigation – State fiscal position – Politics – Other

8 The Courts Administrative tribunals (For example, IL ALJ) Circuit Courts Courts of Appeal State Supreme Courts The U.S. Supreme Court

9 Legislation Does it work…? How and when does it work… Current dynamics

Overpayments/Refunds Timing Alternatives: – Offsets – Legislation – Other possibilities 10

Revenue Departments / Advance Resolution of Issues Does it work? Current dynamics 11

Illinois Amnesty (10/1/2010 to 11/8/2010) 12 This amnesty in perspective Outline – The Stick(s) – The Carrot What does the bottom line appear to be (currently)? Use Tax Amnesty 2011?

Prospective/Retroactive 13 Prospective – What are your facts Retroactive – Federal law – State Law

Where is this going? 14 – Current – Near Future Effect on taxpayers

Questions? George BarryJon Cesaretti Deloitte Tax LLPWTAS LLC (312) Dave KupiecMike Wynne Kupiec & Martin, LLC Reed Smith LLP (312) (312)

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