Oct. 16, 2014
Silverstein & Pomerantz LLP
See more on Silverstein & Pomerantz LLPSan Francisco, Denver | State and local tax controversies
The six-lawyer firm - three in San Francisco and three in Denver - relishes challenging taxing schemes on constitutional or other "out-of-the-box" grounds, she said.
For instance, Silverstein and her San Francisco colleagues are representing several companies battling the flat fee the state Franchise Tax Board assesses on LLC registrations, arguing it violates the due process, equal protection and commerce clauses of the U.S. Constitution plus several state constitution provisions. Now on appeal, the cases have been grouped into a coordinated proceeding. FTB LLC Tax Refund Cases, A140518 (Cal. App. 1st Dist., Dec. 2, 2013).
They are also taking on an aspect of the unitary business principle that California uses to tax multistate companies. Representing some Harley Davidson Inc. special-purpose financial companies, the firm is arguing the state can't treat out-of-state subsidiaries differently from in-state subsidiaries.
In Denver, Neil I. Pomerantz defeated a city's novel expansion of its sales tax to cover manufacturing equipment, arguing it amounted to a new tax in violation of Colorado's Taxpayer Bill of Rights. Public Service Co. of Colorado v. Commerce City, CV12-1405 (Adams County Dist. Ct., Nov. 22, 2013).
The firm began in 2003, when both lawyers were partners in their respective Morrison & Foerster LLP offices. They had similar ideas about practicing state and local tax. "It felt like something we could do on our own without the trappings of a large firm," Silverstein said.
Initially, they were the only employees. "I joked that we were the only national firm with [just] two attorneys," Pomerantz said.
The goal, he said, was flexibility. Besides pushing the envelope in its arguments, the firm is flexible in what it requires of its lawyers and of its clients. It allows its lawyers to put time into building a client relationship or learning an up-and-coming area of law without stressing about billable hours, he said.
"We don't scrutinize the numbers. There's no hours or revenue requirement," Pomerantz said.
They can be equally flexible in billing. In the LLC fee case, Silverstein said, "we figured out a way to cobble together some modest fees" from a number of smaller clients. The firm can "take a little more risk" and be more creative in "how we find cases and get paid," she said.
The firm only handles state and local tax issues, including sales, use, franchise and income taxes. It only handles litigation and tax disputes at the administrative level. "We're not doing any tax planning at all," Silverstein said.
Its principal competitors are large law firms with state and local tax practice groups, such as MoFo, Reed Smith LLP and Pillsbury Winthrop Shaw Pittman LLP. There are very few other boutiques in the field.
The firm is holding its own. Of the 29 matters listed by the California Franchise Tax Board on its latest report of public litigation, Silverstein is the taxpayer's counsel in 12 of them.
- Don J. DeBenedictis
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