State & Local Tax Resolution

State and local tax problems can feel like a separate universe from federal tax issues. The letters often look different, the deadlines can be shorter, and the rules that control your exposure may depend on where you live, where you work, where your customers are, and even where your inventory sits. A business can be fully “compliant” in one state and still face a surprise assessment in another because of nexus, sourcing, withholding, or sales and use tax rules that were never on the radar. Individuals can end up dealing with residency disputes, wage withholding problems, or local tax notices that escalate quickly if they are ignored.

Frazier Law helps individuals and businesses resolve state and local tax disputes with a practical approach that combines legal strategy and accounting reality. Led by principal attorney Charles R. Frazier and certified public accountant (CPA) Rick Miller, our firm has helped clients with tax controversies and IRS defense since 2009. We bring the same disciplined, evidence-driven mindset to state revenue agencies, local tax authorities, and multistate compliance disputes. Charles R. Frazier is a former IRS agent and holds an LL.M. in Taxation from The University of Alabama (Tuscaloosa). He is also a Chartered Financial Consultant (ChFC) through The American College of Financial Services. Our practice is built for complexity, including multistate matters that require coordination across jurisdictions and careful documentation.

Why State & Local Tax Problems Escalate So Fast

Many people expect state tax agencies to operate like the IRS, but state and local systems often move faster and use different enforcement tools. Notices can arrive with short response windows. Penalties and interest may accrue automatically. Collection activity can begin while you are still trying to understand what triggered the problem. It is common to see a simple mismatch or filing oversight turn into an assessment that includes multiple tax periods, layered penalties, and a request for records that your business has not organized in the way the agency wants to see them.

State and local tax exposure also tends to spread. A sales tax audit can lead to income tax questions. A payroll issue can trigger withholding and unemployment scrutiny. A residency dispute can lead to inquiries about where your income was earned, how your employer reported it, and whether a local tax applies. When multiple agencies are involved, it is easy to say the wrong thing, provide incomplete records, or miss a procedural step that limits your options later.

Who We Help With State & Local Tax Resolution

We represent people who need a plan, not just a reaction. That includes business owners facing audit notices or assessments, employers dealing with withholding problems, professionals with multistate income, and individuals who are trying to stop collections while also correcting the underlying issue. We also help new and growing businesses that are expanding into additional states and want to address exposure proactively before it becomes a formal audit.

Some clients contact us after receiving a notice of proposed assessment. Others have already reached the stage of tax liens, bank levies, wage garnishments, or license holds. Many have a mixture of issues, such as unfiled returns, misapplied payments, estimated tax underpayments, or a disagreement about classification of workers. Our role is to stabilize the situation, define what the agency is claiming, and build a resolution strategy that fits your facts and your cash flow.

Common State and Local Tax Issues We Resolve

State and local tax controversies show up in predictable patterns. The details vary by jurisdiction, but the underlying disputes often fall into a few categories.

Sales and Use Tax Audits and Assessments

Sales and use tax problems are among the most common and most expensive state tax disputes. Businesses may collect sales tax correctly in one state and still be assessed in another for periods when they did not realize registration was required. Others collect tax but struggle with exemption documentation, product taxability rules, bundled transactions, or marketplace and delivery scenarios that complicate reporting.

In a sales and use tax dispute, outcomes often depend on documentation. A missing resale certificate or exemption certificate can turn a legitimate non-taxable sale into an assessed liability. Sampling methods can inflate exposure if the sample period does not reflect your real operations. A resolution strategy may involve correcting documentation, challenging taxability assumptions, negotiating sampling, pursuing penalty abatement, and setting up a payment arrangement that stops collections while the dispute is addressed.

State Income Tax, Franchise Tax, and Gross Receipts Disputes

Businesses can face state income tax or franchise tax assessments based on nexus, apportionment, and sourcing rules. A company may assume it only owes tax where it is headquartered, but states can assert filing obligations based on in-state activity, property, payroll, sales, or other connecting factors. When agencies believe a return understates in-state income, the assessment can include years of tax, penalties, and interest.

Resolution may require a careful review of how income was apportioned, how receipts were sourced, and whether the state’s position aligns with the business’s actual footprint. Sometimes the best solution is a corrected filing strategy that reduces risk going forward while negotiating a reasonable settlement of past periods. In other cases, the dispute is procedural, such as an agency disallowing deductions or credits based on a documentation issue that can be fixed with a targeted submission.

Payroll Withholding and Employer Compliance Problems

Withholding issues tend to escalate because states view withheld taxes as trust funds. If an employer fails to remit withholdings, agencies may pursue collection aggressively and may attempt to impose personal liability on responsible individuals under the state’s rules. Even when the problem is caused by cash flow strain rather than intentional misconduct, you need to act quickly and carefully.

We help clients address delinquent payroll filings, correct reporting, respond to agency inquiries, and negotiate resolutions that protect the business and reduce the chance of personal exposure. The goal is to restore compliance, stop the bleeding, and create a plan that is actually sustainable.

Residency and Domicile Disputes for Individuals

Residency audits can be stressful and invasive. States may claim you were a resident for tax purposes based on where you spent time, where you maintained a home, where your family lived, and where you kept financial and personal connections. The difference between resident and nonresident status can have major tax consequences, especially for high earners, remote workers, and people with multiple homes.

A strong residency case is built with facts, records, and consistency. We help clients organize documentation, respond to information requests, and present a coherent narrative that matches the law and the record. Where appropriate, we also explore settlement options that limit exposure and avoid prolonged disputes.

Local Taxes and City or County Assessments

Local tax issues often arise from business licensing taxes, gross receipts taxes, local income taxes, occupancy taxes, or industry-specific rules that are enforced at the city or county level. These matters can be overlooked because attention is usually focused on federal and state systems, but local agencies can impose meaningful penalties and can coordinate with state authorities in some cases.

Resolution typically involves confirming the local authority’s basis for the tax, determining whether the business is properly classified, and addressing back periods with an eye toward reducing penalties and preventing repeat issues.

Unclaimed Property and Related Compliance

Unclaimed property audits can create serious exposure for businesses that have not tracked dormant accounts, credits, gift cards, refunds, or other reportable property categories in the manner required by a state. These audits often look back many years and can involve third-party auditors who work on contingency.

We assist with audit response strategy, documentation, and resolution planning, including voluntary disclosure options where available and appropriate. The key is to reduce risk while addressing the state’s concerns in a way that is manageable for the business.

How State and Local Tax Agencies Collect

State and local collection tools vary, but the goal is the same: secure payment. Depending on the jurisdiction and the type of tax, collection actions may include tax liens, bank levies, wage garnishments, offsets of refunds, and restrictions that affect business operations, such as license holds or the inability to renew registrations.

When a matter has reached collections, it is not enough to argue about the underlying tax. You need an immediate plan to prevent further disruption while you work toward resolution. That may involve requesting a hold, entering into a formal payment arrangement, or filing an administrative protest within the required timeframe. Timing matters because missing a deadline can reduce your options and turn a dispute into a fixed debt.

Our Resolution Approach

State and local tax resolution is not a one-size-fits-all service. The best outcomes usually come from a structured approach that addresses both procedure and substance.

Step One: Stabilize and Define the Problem

We start by clarifying what the agency claims is owed and why. That includes identifying the tax type, periods, and the assessment basis, as well as confirming whether returns were filed, whether payments were applied correctly, and whether the agency used estimates. We also look for deadline-driven opportunities, such as protest periods, appeal rights, or administrative review procedures that can pause collections or preserve leverage.

Step Two: Build the Record

Many state disputes are won by building the record. That could mean reconstructing sales tax exemption files, producing payroll reports, correcting sourcing schedules, or documenting residency factors. It may also involve identifying where the agency’s assumptions are wrong or where a sampling method does not reflect actual operations.

The goal is to respond with the right amount of information. Too little can look evasive and lead to unfavorable estimates. Too much can create new issues or expand the audit unnecessarily. We focus on relevance and strategy.

Step Three: Choose the Right Path to Resolution

Depending on the facts, a resolution may involve one or more of the following approaches. We keep the focus on what actually ends the dispute and prevents a repeat.

A matter may be best handled through an administrative protest or appeal if the assessment is incorrect or procedurally flawed. In other cases, the numbers are largely accurate, and the primary objective becomes negotiating manageable payment terms and seeking penalty relief. Some disputes benefit from a voluntary disclosure approach, particularly when exposure is discovered before an audit begins. When the case involves multiple jurisdictions, we also develop a coordinated plan so that a concession in one state does not create unintended consequences in another.

Multi-State Practice and Where We Can Help

Multistate tax issues require coordination, consistency, and an understanding of how one state’s position can affect another’s. Frazier Law is structured to handle complex matters that cross borders, including disputes that involve nexus questions, multistate filings, and residency or sourcing challenges.

Federal Authority: Licensed in Tennessee, Michigan, and Texas, we handle complex federal tax matters regardless of location. For state and local tax issues, our involvement may include direct representation, strategic support, and coordinated work with local counsel when a particular jurisdiction requires in-state representation for a hearing or court matter. The point is to give you a single, organized plan rather than forcing you to manage multiple disconnected efforts.

What You Can Do Right Now If You Received a State or Local Tax Notice

If you have an open notice, the most important step is to avoid delay. Many state systems move on default timelines, and an ignored notice can become a final assessment quickly. It is also wise to preserve what you have. Save envelopes, keep copies of all correspondence, and gather the records that relate to the issue without altering them. If you are unsure what the notice means, do not guess in writing to the agency. A casual response can lock you into a position that is difficult to unwind later.

It also helps to identify whether the issue involves unfiled returns, a proposed audit adjustment, a payment application error, or a collections action. Each category triggers different strategies and deadlines. The sooner you identify which track you are on, the more options you generally have.

Why Clients Choose Frazier Law for State & Local Tax Resolution

Clients come to Frazier Law because they want counsel that understands both the legal structure of a tax dispute and the accounting mechanics that drive the numbers. Our leadership team reflects that combination. Charles R. Frazier brings perspective from his experience as a former IRS agent and advanced tax training through his LL.M. in Taxation from The University of Alabama (Tuscaloosa). Rick Miller brings CPA experience that helps ensure the records, schedules, and reporting logic hold up under scrutiny.

We also recognize that a tax controversy is rarely just a tax controversy. It affects cash flow, credit, licensing, reputation, and sleep. Our job is to reduce chaos, protect your rights, and move your matter toward a concrete outcome.

Start Your State & Local Tax Resolution Plan

State and local tax disputes are manageable, but they are rarely forgiving when deadlines pass or when the record is incomplete. Whether you are facing a sales tax audit, a proposed assessment, delinquent filings, a residency inquiry, or active collections, the right strategy can protect your business and limit long-term damage.

Frazier Law has been helping clients since 2009 with tax controversies and IRS defense, and we bring that same level of discipline to state and local matters. If you are dealing with a tax notice or an unresolved state or local tax issue, contact Frazier Law to discuss a resolution plan built around your facts, your priorities, and a clear path forward.