The Recorder:  Tax-Hungry State Creates Work for Lawyers, by Amanda Royal:

Tax lawyers for large corporations and wealthy individuals expect some busy years ahead as cash-strapped states turn to taxpayers for solutions.

Attorneys say the recession has made state and local tax agencies more aggressive, and in the last year, some have begun reinterpreting existing tax code when it brings in more money. "[California] is taking positions to maximize revenue in an aggressive way that they normally would not have done in the past," said Brian Toman, a tax controversy partner at Reed Smith. "They are coming up with theories to issue proposed assessments that appear to be not well-supported in law."

Lawyers say auditors at the California Franchise Tax Board seem to apply tax code differently for different corporations, depending on whether it increases revenue to the state. Examples include counting future contracts as gross receipts in determining total sales, or qualifying a corporation as a unitary business, which changes its tax liability. These changes could benefit some corporations while harming others, but the standards are not applied consistently, lawyers said.

"Many practitioners complain that the board appears no longer to adhere to general principles," said Thomas Steele, a tax partner at Morrison & Foerster. "Good tax policy is consistent application of the principles to all tax questions, regardless of whether they are an advantage to the state or a disadvantage. The FTB appears to take any position that advances the revenue to the state."