I was watching mixed-martial arts (UFC fighting) and as the announcers were describing the game plan or approach to the fight one of the fighters was taking, the announcer said the fighter was focused on "defining the fight." Meaning, he had developed a strategy and trained accordingly before the fight even started. He had studied his opponent to know his strengths and weaknesses. He had also studied himself and recognized his own strengths and weaknesses.

This is how we should approach multistate tax audits and (in my opinion) life in general. We should develop a strategy and prepare for an audit before it even starts. Preparation helps to eliminate surprises. It also helps you know what to do when things start going wrong. Thus, we must work proactively to 'define the fight.'

In that context, I thought I would provide some general guidelines or ways to 'define the fight' when faced with a multistate income tax or sales and use tax audit:

  1. Become acquainted with the auditor's supervisor and the manager of the audit office.
  2. Don't waste time negotiating with the auditor unless you know he has the authority to make a decision. However, don't go over the auditor's head unless absolutely necessary.
  3. Question why you were selected for audit. Find out how long the audit will take.
  4. Prepare an audit plan
  5. Establish ground rules
    1. Timeline
    2. Available resources
    3. Time to prepare documents
    4. Scheduling of in-office visits
    5. Procedures for requesting records
    6. Contact person for auditor (one person)
    7. Status reports by auditor (don't want surprises)
  6. Review statute of limitations
    1. Extending statute of limitations - applies to refunds as well?
    2. Restricted waivers - statute of limitations open to only particular issues
    3. Conditional waiver - waive only if assessment prepared by certain date
    4. Extend statute of limitations only 6 months from date scheduled to come to office
    5. Negotiate limitation on scope of audit in exchange for signing waiver
    6. Don't sign if auditor has wasted time (cancelled appointments, etc.)
  7. Narrow down auditor's request to highest level possible
  8. Review sampling technique proposed by auditor
    1. Make sure it is representative
    2. Statistical sampling?
    3. Block sampling?
    4. Ask auditor to include accounts with possible tax overpayments (may lower estimated error rate by increasing the size of the sample)
  9. Request auditor to submit document requests in writing
  10. Examine prior audit files
  11. Examine current tax related files
  12. Minimize audit adjustments before they happen
  13. Educate company employees
  14. Compile basic info
  15. Perform reverse audit to identify refunds or credits
  16. Ask auditor to identify overpayments
  17. Tax paid in error
    1. Ask for credit within audit or submit refund request
    2. Vendor / Vendee liability state?
  18. Review auditor's preliminary work papers
  19. Exit conference
    1. Know whether the auditor has the power to negotiate
    2. Request waiver of penalties and interest
    3. If we pay today, will interest stop accruing?
    4. Pay tax on agreed issues to stop interest
    5. Give auditor a check with as little interest as possible
    6. Get copy of revised / final work papers
    7. Re-examine with auditor or supervisor if misunderstandings occur
    8. request electronic copy of auditor's work papers/assessment so we can reorganize with reason why exempt 
    9. Mark all as "disagree" (until resolution reached)
  20. Protest (in writing and/or request a hearing)

These are only GENERAL guidelines I have developed throughout my career. They are NOT hard and fast rules. Each case is different and as a result, some guidelines may not make sense. Consequently, please seek the advice of an experienced state tax advisor before implementing any of the ideas provided.

For the most part, I have had great experiences with auditors and built strong working relationships. However, sometimes you are forced to go to appeals to resolve issues and obtain a fair result when the facts or law are being misinterpreted or misapplied. 


LEVERAGE SALT, LLC is a solo state tax controversy and dispute resolution firm founded by me, Brian Strahle. I help start-ups, middle-market companies and Fortune 500 tax departments avoid and resolve state tax controversy.

I work with corporate tax departments, accounting firms, and law firms either on a project basis, as a subcontractor, or co-sourcing arrangement. I also work with middle market companies and smaller firms that do not have in-house state tax expertise. 

I work with companies and organizations across the United States regardless of location. Even though I work independently, I have a personal network of state tax professionals that I can call upon if necessary.

I assist companies through all levels of a state tax controversy that may be caused from notices, audits, appeals, refund claims, amended returns, etc. Specifically, I work with state tax auditors to address issues, analyze accounting and legal documents, and obtain letter rulings to clarify the state's position regarding a company's facts. During any controversy situation, I also examine a company's records to identify potential decreases in tax to offset tax assessments. I work to obtain a non-litigation result. I am not an attorney. If court representation is necessary, I assist companies in engaging representation. After a controversy is resolved, I help companies take corrective action if appropriate.

I daily research complex, non-uniform multi-jurisdictional tax law and developments that impact every business' ability to function and operate. I help companies operating in multiple states, comply, mitigate risk, and defend positions under audit.

I specialize in analyzing, interpreting and applying court cases, rulings, proposed and current legislation to multifaceted fact patterns in a variety of industries across all states. The research may be related to developing support for return filing positions, defending positions under audit, identifying refund opportunities or mitigating risk. The result of the research is customized to the client situation and may be a written memo, audit protest, taxability matrix, refund request, private letter ruling, etc. 

I also provide accounting and law firms with national tax office services and/or ghost-writing of thought leadership. Meaning, I provide technical analysis of changing state tax laws, draft and edit alerts designed for external distribution, provide in-depth analysis of key issues, support for internal and external training programs, and conduct research and drafts memorandums for clients. 

Additionally, I work with tax research publishers to write or review technical material to expand or build out their libraries, collaborate with tax policy organizations on policy statements, studies, articles, reports, comments and testimony, and partner with tax software companies to enhance or build new software tools for state tax compliance or planning.

All services are provided for any state and the following tax types: income tax, franchise tax, gross receipts tax, sales and use tax.


  • Obtained $550,000 sales tax refund related to client's intercompany management fee involving several different types of services in Pennsylvania
  • Provided practical insight to client as to what positions they should take regarding the sales taxation of cloud computing by conducting 40-state research project and preparing custom matrix
  • Technical support for client's creation/implementation of a custom sales ‘tax and fee’ engine (40 states)
  • Multi-year review and analysis of client's sales tax exemption review process (20 states) to determine best practices and provide recommendations whether the client should continue, change or eliminate the current process
  • Identified over $1,000,000 in state income tax refund opportunities and $300,000 in prospective annual state income tax savings while conducting a state income tax FIN 48 reserve analysis for a large middle-market company. These refund opportunities were identified in conjunction with the opportunity to utilize Voluntary Disclosure Agreements (VDAs) in multiple states to not only minimize the company's state income tax liability, but also reduce or eliminate the state income tax FIN 48 reserve.
  • Identified $350,000 in refund opportunities and $100,000 in prospective annual state income tax savings while performing a state income tax nexus look-back review for a middle-market company.
  • Eliminated $1,200,000 sales tax audit assessment by preparing and filing a written protest with the Minnesota appeals office regarding a "mixed-transaction" or "bundled transaction.”
  • Obtained $500,000 reduction in sales tax audit assessment after client received a jeopardy assessment from Washington D.C.
  • Reduced $1 million individual income tax assessment to $20,000 for an individual taxpayer in a Minnesota income tax residency audit
  • Reduced client's income tax liability by 60% by petitioning and obtaining apportionment relief with Minnesota  appeals after audit assessment
  • Mitigated risk and improved compliance for medical device manufacturer operating in 11 states by researching and providing guidance regarding the sales and use tax taxability of the company’s device
  • Provided peace of mind to company regarding the sales tax consequences of its Internet/client portal, (“cloud computing”) etc. used to facilitate the delivery of their service
  • Eliminated $1,300,000 in Washington B&O tax and $1,000,000 in sales tax on 9 real estate projects
  • Obtained $3,000,000 in Florida Enterprise Zone sales tax refunds on 4 real estate projects
  • Obtained $1,000,000 in Arizona Transaction Privilege Tax refunds after performing reverse audits on Arizona real estate sales
  • Obtained $300,000 in California LLC Fee refunds
  • Reduced annual state income taxes by $500,000 for a $200 million Illinois manufacturer by developing restructuring plan for S corporations and pass-through entities
  • Identified and obtained a $700,000 refund and annual state tax savings of $150,000 for a $150 million Illinois manufacturer by applying P.L. 86-272
  • Reduced sales tax audit assessment by $75,000 related to ‘canned vs. custom software’ in Minnesota


  1. Developing and writing new California income tax and sales tax library (includes all sections, issues, topics)
  2. 50-state research project to update sections on "Consent to Be Taxed" related to composite returns and withholding for non-resident owners of partnerships
  3. 50-state research project to update sections on Net Operating Losses
  4. 50-state research project to provide additional clarification and analysis regarding the sourcing of services and intangible property; specifically, the application of market-based sourcing, and utilization of market sourcing methodology within costs-of-performance statutes and regulations
  5. 23-state research project to add additional insights and commentary on related party expense add-back provisions
  6. 50-state research project to analyze and document each state's treatment of Interest Charge Domestic International Sales Corporations (IC-DISCs)
  7. 50-state research project to identify and explain each state's throwback and throwout rules
  8. 50-state research project to clarify whether each state follows Joyce or Finnigan rule
  9. 50-state research project to provide technical instruction on each state's law regarding the taxpayer's ability to request, and the state's ability to impose, alternative apportionment
  10. 32-state research project to provide the technical details of each state's franchise tax regime
  11. 49-state plus NYC research project regarding each state's conformity with the Internal Revenue Code as it relates to mergers and acquisitions, changes in ownership, etc.


I currently serve as a subject matter expert for Bloomberg BNA Software's new state income tax modeling tool (BNA State Tax Analyzer) by performing research, providing state-by-state tax rules and technical review, comments, and suggestions for improvements. The project involves 50-state research to provide tax law support and guidance regarding the following for multiple tax years (1998 to current):

  1. Separate / Combined / Consolidated filing methods
  2. Pre or Post Combination 
  3. Apportionment methods and formula
  4. Federal income tax deduction 
  5. State income tax deduction / addback
  6. Bonus depreciation adjustments
  7. Estimated payment safe-harbors
  8. Tax rates
  9. Minimum taxes
  10. Net Operating Loss tracking and utilization
  11. Foreign Source Dividends
  12. Royalties
  13. Industry apportionment formulas (manufacturing, retail, financial organizations, insurance, transportation, oil/gas, telecommunications, etc.
  14. Mixed-industry combined reporting
  15. Franchise Tax
  16. IRC Sec. 382 Limitations on NOLs