Since 1959, taxpayers have been relying on a federal law—Public Law 86-272—to protect them from having to file state income tax returns in states where the taxpayers’ in-state activities are limited to just soliciting sales of tangible personal property. On August 4, 2021, the Multistate Tax Commission (MTC) member states voted 20-0 to revise the MTC’s “Statement of Information” regarding Public Law 86-272 in an attempt to eviscerate the federal law’s protections.
Masha represents public and private companies, trusts, estates and high-net-worth individuals in complex tax disputes. She has handled all stages of tax controversies – voluntary disclosures, audits, administrative appeals, tax court, district court and appellate litigation.
Masha’s experience includes resolving and litigating numerous types of tax disputes:
- State Corporate Income and Franchise Taxes, including statutory and constitutional issues relating to physical presence and economic nexus, unitary business group composition, business and non-business income, allocation and apportionment issues (including sales factor sourcing), state tax impact of section 338(h)(10) elections and the section 382 net operating loss limitation;
- Sales and Use Taxes, including nexus, taxation of goods and services (e.g. computer software and software as a service, telecommunication services, sales of electricity, advertising, prepared food), bundled transactions (taxable and nontaxable items or services sold together), sales for resale, definition of “sales price” (e.g. cost of goods sold, services necessary to complete the sale, delivery charges, discounts, consideration received from third parties), sourcing, exemptions (e.g. industrial production, capital equipment, advertising, occasional sales, waste management, purely public charities), qui tam actions and voluntary disclosures;
- Federal and International Tax Disputes, including section 482 transfer pricing, withholding taxes, transferee liability, voluntary disclosures, offshore tax matters (e.g. FBARs, FATCA, foreign pensions, income, trusts and entities), criminal tax matters, responding to IRS summons (including third-party summons), section 469 passive/active and section 183 hobby loss;
- Real and Personal Property Taxes, including state-assessed property (railroads, pipelines) and exempt property (public hospitals, nursing homes, churches and church property and institutions of purely public charity);
- Other State and Local Taxes, including:
- Tobacco Products Tax,
- MinnesotaCare Tax,
- Insurance Premiums Tax,
- Withholding Taxes (including employee versus independent contractor),
- Minneapolis Entertainment Tax; and
- State Individual Income Tax, including residency, personal and officer liability, criminal tax matters, section 469 passive/active and section 183 hobby loss.
Masha serves clients from a variety of industries, including retail, product distribution, manufacturing, financial services, insurance, computer software and hardware, energy, healthcare, telecommunications, aerospace/automotive, hotel, cooperatives, restaurants, entertainment and photographic equipment and supplies.
Masha works closely with our corporate and securities practices in assisting clients with multistate tax planning, advising clients on the state and local tax implications of corporate transactions, including multistate analysis of mergers and acquisitions to achieve state tax efficiencies (including nexus and apportionment issues), conducting due diligence investigations to uncover potential state tax liabilities, drafting state tax provisions in agreements to provide clients with proper protections and recourse regarding state taxes and conducting multistate surveys of the tax treatment of a wide variety of business activities, including drop shipment and dock sale transactions, advertising services, digital goods, software (including software as a service and cloud-based computing) and state thresholds for withholding taxes.
- Represented Ticketmaster in a sales tax matter before the Minnesota Tax Court. Following trial, the court held that Ticketmaster’s convenience charges and processing fees are not subject to the Minneapolis Entertainment Tax.
- Represented a publicly-traded food processing company before the Minnesota Tax Court in a corporate franchise tax dispute. At issue was how to source the client’s “bill and hold” sales to its customer for sales factor purposes when title to the goods transferred to the customer while the products were in Minnesota, but the customer did not physically receive the goods in Minnesota.
- Represented a publicly-traded telecommunications provider (Fortune 100) in a sales and use tax dispute relating to sourcing of telephone calls as well as the taxability of free phones given away with purchases of services.
- Represented a publicly-traded retailer (Fortune 100) before the Minnesota Tax Court, convincing the court, following an evidentiary hearing, to issue a protective order to seal the company’s confidential documents.
- Represented a publicly-traded manufacturer (Fortune 500) in a corporate franchise tax dispute before the Minnesota Tax Court regarding whether a related financial services entity was unitary with the manufacturer, whether one of the related entities had nexus with Minnesota, unconstitutional distortion resulting from the state’s assessment and alternative apportionment.
- Represented a publicly-traded retailer in a corporate franchise tax appeal relating to Minnesota’s application of the federal section 382 net operating loss limitation.
- Represented a distributor of medical imaging equipment and x-ray consumables in a sales tax matter before the Minnesota Tax Court. Following trial, the court held that discounts/credits received by the distributor from manufacturers in exchange for honoring pricing agreements between the manufacturers and their customers are not part of the gross receipts from the retail sale and as such are not subject to sales tax.
- Represented 16 electrical cooperatives in Minnesota sales tax refund appeals before the Minnesota Tax Court and Minnesota Supreme Court relating to determining the correct sales price of electricity sold by the cooperatives and addressing whether the state’s assessments of refunds previously issued were barred by the erroneous refund statute of limitations.
- Represented an emerging retailer in multistate sales tax disputes regarding nexus and several qui tam actions.
- Represented a financial services company in a corporate franchise tax appeal relating to apportionment and sourcing of gains from the sale of intangible property.
- Represented a retailer in a sales tax matter relating to whether food sold by the retailer was taxable as prepared food.
- Represented multiple computer software companies before the Minnesota Department of Revenue in sales tax audits and appeals relating to taxation of computer software, software as a service and consulting services.
- Represented a pipeline in a series of personal property tax appeals before the Minnesota Tax Court.
- Represented taxpayers before the IRS in transfer pricing audits and appeals.
- Represented taxpayers before the IRS in audits and appeals relating to Foreign Bank Account Reporting (FBAR), foreign pension plans (including superannuation funds), foreign trusts, ownership of non-U.S. entities (including Passive Foreign Investment Companies—PFICs) and other unreported offshore assets and income.
- Assisted taxpayers in becoming compliant with their U.S. tax and reporting obligations through the IRS’s 2009, 2011, 2012 and 2014 Offshore Voluntary Disclosure Programs (OVDI and OVDP), Streamline Programs (SDOP and SFOP) and Delinquent Filing Procedures.
- Represented high net worth individuals in residency disputes before the Minnesota Department of Revenue, the Minnesota Tax Court and the Minnesota Supreme Court.
- Assisted individuals prepare and plan for residency changes.
- Represented taxpayers in a transferee liability matter before the U.S. Tax Court.
- Represented taxpayers in federal and state audits and appeals relating to section 469 active versus passive losses and section 183 hobby losses.
- Represented clients on issues relating to compliance with IRS summonses.
- Represented business owners in officer liability and personal liability appeals before the Minnesota Department of Revenue.
- Represented hospitals, churches, nursing homes and other non-profit and tax exempt entities in property tax exemption appeals.
- Drafted and issued tax opinions on federal and state tax consequences of complex transactions.
Articles & Presentations
June 3, 2021
Minnesotans are wondering: could or should they change their residency to achieve income tax savings?
November 17, 2020
The Minnesota Department of Revenue has updated its data center exemption guidance, taking a step in the right direction for purchases of distributed software and required documentation.
April 22, 2020
As social distancing methods and shelter-in-place orders during the COVID-19 pandemic have prompted many across the country to work from home, businesses have begun to wonder about the nexus ramifications of their newly-expanded telecommuting arrangements.
March 21, 2020
COVID-19 has had innumerable impacts on our daily lives. In response, the IRS and certain local states have provided guidance for taxpayers whose federal income tax returns are due on April 15.
September 10, 2018
Individuals or companies with undisclosed foreign financial assets or income have until September 28, 2018 to enter the IRS’s Offshore Voluntary Disclosure Program.
June 22, 2018
By Masha M. Yevzelman & Thomas R. Muck
A merchant of goods and services that makes sales in multiple states is no longer required to have physical presence in a state in order to be subject to sales and use tax in that state.
September 1, 2017
Effective for tax years beginning after December 31, 2016, a “financial institution” for Minnesota tax purposes includes both corporations and “other business entities,” such as limited liability companies, that perform financial institution activities.
June 1, 2017
Should keeping a bank account or financial adviser in Minnesota be considered when determining where a person is a resident?
Residency Legislative Alert: Location of Attorney, CPA, Financial Adviser or Bank Account May No Longer Be Considered in Domicile Determinations
May 31, 2017
By Masha M. Yevzelman & Thomas R. Muck
When evaluating whether an individual is a Minnesota resident, the Minnesota Department of Revenue has been considering, among many factors, the location of a person’s attorney, accountant, financial adviser and bank accounts.
December 1, 2016
Financial institutions have not been shy about challenging Minnesota Department of Revenue tax determinations in court. For example, in the 1980s and early 1990s, the banking industry prevailed against the state’s unconstitutional imposition of the bank excise tax. Then, in 1998, Firstar Corporation (headquartered in Wisconsin) convinced the Minnesota Supreme Court that, for purposes of the corporate franchise tax, the bank’s sale of an office building in Wisconsin was “nonbusiness income” taxable only in Wisconsin, rather than “business income” apportioned among several states, including Minnesota.
February 1, 2011
Since 1970, the Bank Secrecy Act has required U.S. persons who have in aggregate more than $10,000 in foreign financial accounts to report certain information about those accounts to the Department of the Treasury using Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).
PUBLICATIONS & PRESENTATIONS
- Co-presenter, “State Tax: Multistate Legislative Session Review,” Fredrikson & Byron and COST Webinar, June 10, 2021
- Co-presenter, “FBAR Controversies Continue: Foreign Account Reporting, Compliance Requirements, and Litigation Update,” Fredrikson & Byron Webinar, April 29, 2021
- Co-presenter, “Conservation Easement Donations: Great for the Environment, Thorny for Taxpayers,” Fredrikson & Byron Webinar, March 18, 2021
- “Minnesota Data Center Exemption: DOR’s Revised Guidance Shows Progress,” Tax Notes State, December 14, 2020
- Co-presenter, “Leaving Town? Top 10 Minnesota Residency Myths Debunked,” Fredrikson & Byron Webinar, November 12, 2020
- Co-presenter, “Looking to Sell? Pre-Sale Considerations and Strategies to Avoid State Tax Pitfalls,” Fredrikson & Byron Webinar, October 8, 2020
- Co-presenter, “How COVID-19 Is Forcing States and Taxpayers to Re-Sweep the Minefield,” Fredrikson & Byron Webinar, August 13, 2020
- Co-Presenter, “SALT Controversy Strategies from Audits through Litigation,” The State Tax Webinar Series, hosted by Fredrikson & Byron and Minnesota Society of CPAs, April 30, 2020
- “Top 10 State Transaction Tax Cases and Other Important Developments in 2016/2017,” COST 2017 Sales Tax Conference, February 27, 2017
- “Transfer Pricing Controversy in the Global Economy,” Fredrikson & Byron Tax Litigation Seminar, January 12, 2017
- “Applying Deference in Tax Cases,” American Bar Association Mid-Year Meeting, State and Local Tax Committee, January 2016
- “Minnesota Residency Law Update,” 75th Annual MSBA Tax Institute, November 2015
- “Understanding the Big Picture: Reconciling Sales Tax Revenue with Revenue Reported for Other Purposes,” Institute for Professionals in Taxation 2015 Sales Tax Symposium, September 2015
- Minnesota Chapter of American Bar Association’s Sales & Use Tax Deskbook, co-authored with Jeffrey J. McNaught, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015
- North Dakota Chapter of American Bar Association’s Sales & Use Tax Deskbook, co-authored with Gauri Samant, 2014-2015
- “Minnesota Residency: Navigating Current Issues, Planning Changes, and Surviving Audits,” 33rd Annual MNCPA Estate and Personal Financial Planning Conference, June 2015
- “International Tax Polar Plunge: Cold Reality of Inversions, FATCA, and Expatriations,” Minnesota State Bar Association Tax CLE, March 2015
- “Tough Compliance Issues Associated with Taxing Services,” ABA/IPT Advanced Sales and Use Tax Seminar, March 2015
- “Dealing with Residency: What Does It Really Take to Leave Minnesota?,” Minnesota CLE—Drafting & Planning, Minnesota Estate Tax 2014, October 2014
- “Officer Liability – How to Keep Your Boss Out of Trouble,” Institute for Professionals in Taxation 2014 Annual Conference, June 2014
- “Pre-Sale Tax Planning for Business Owners,” Business Law Institute, May 2014
- “Minnesota Sales and Use Tax Update,” Institute for Professionals in Taxation Twin Cities Fall Luncheon, October 27, 2011
- “U.S. Tax Obligations of U.S. Citizens and Residents Living in Canada,” Interview with Terry McLeod of CBC News Radio Winnipeg, August 26, 2011
- “Ascertaining The Scope of the Minneapolis Entertainment Tax,” Tax Section News, Vol. 10, No. 5, Minnesota State Bar Association Tax Section, Fall 2008
Honors & Education
- University of Minnesota, J.D., 2007, magna cum laude
- Macalester College, B.A., 2004, magna cum laude
- Minnesota, 2007
- Wisconsin, 2016
- U.S. District Court for the District of Minnesota, 2007
- U.S. Tax Court, 2012
- Russian (native speaker)
- Friend of the Profession Award, Minnesota Society of CPAs, 2021
- Jack Carlson Memorial Distinguished Service Award, Minnesota State Bar Association, 2020
- Minnesota Lawyer, “Attorney of the Year,” Individual Recognition, 2020
- Minnesota State Bar Association, North Star Lawyer, 2014
- Benchmark Litigation, Future Star, 2009
- Minnesota Law Review, Managing Editor, 2006-2007; staff member, 2005-2006
- Order of the Coif
- Minnesota State Bar Association, Tax Section Council Member (2012-present) and Tax Section Council Chair (2015-2016)
- Institute for Professionals in Taxation, Member of Income Tax Symposium Planning Committee
- American Bar Association, State and Local Tax Committee Member
- Hennepin County Bar Association
- Lakewinds Natural Foods Cooperative, Board Member and Board Secretary (2011-2013)