Tax Research and How the Tax Representation Firm of Mike Habib, EA Can Assist

Tax research is the systematic process of identifying, analyzing, and applying tax laws, regulations, administrative guidance, and case law to the facts of a specific taxpayer’s situation. Proper tax research relies on primary authoritative sources such as the Internal Revenue Code (IRC), Treasury Regulations, IRS rulings and procedures, and reported court decisions. Equally important at the state level are state statutory codes, administrative regulations, departmental rulings, and state appellate decisions.

At both federal and state levels, tax research involves weighing authorities, reconciling differences among jurisdictions, and documenting the analysis so positions taken on returns or in disputes are defensible. A strong research process compares applicable federal guidance with state-level conformity and decoupling rules, notes timing differences, and highlights where state law diverges from federal treatment. Good research also takes into account agency audit practices and local enforcement trends to produce a practical, defensible outcome.

Tax research is essential for several reasons:

1. Compliance. Tax research helps taxpayers comply with federal, state, and local tax rules. Compliance reduces exposure to penalties, interest, and enforcement actions. Different jurisdictions have distinct filing requirements, thresholds for nexus, and reporting obligations. Thorough research ensures that taxpayers meet all obligations where they have exposure.
2. Tax Savings. Research identifies opportunities for legitimate tax savings at both federal and state levels. Many states offer credits, deductions, or incentive programs that do not exist on the federal level. Examples include state-level job creation credits, research and development incentives, historic preservation credits, and energy-efficiency incentives. Identifying these state programs can materially reduce a taxpayer’s combined tax burden.
3. Risk Mitigation. Differences between federal and state tax treatments can create risk if a taxpayer blindly applies federal positions at the state level. Research clarifies ambiguities and prevents errors that could trigger audits, assessments, or unexpected tax bills.
4. Strategic Planning. Tax research supports long-term decisions such as entity selection, multistate expansion, residency and domicile planning, and succession strategies. A well-executed research analysis quantifies the combined federal and state tax consequences of major transactions so clients make informed choices.
5. Audit Preparedness. Well-documented research and a written memorandum provide a defensible record of the rationale supporting a tax position. This documentation is invaluable if an auditor questions a position or requests substantiation.

Tax research typically follows these core steps:

1. Identifying the Issue. Clearly defining the tax question is essential. For state-level questions, this may involve identifying which states have jurisdiction, whether a taxpayer meets residency tests, or whether a business has sales or income tax nexus.
2. Gathering Authoritative Sources. Research draws on federal authorities—IRC, Treasury Regulations, IRS rulings and guidance—and state authorities such as state statutes, department publications, administrative decisions, and relevant court rulings. Local laws and ordinances are consulted when municipal taxes apply.
3. Analyzing the Facts. The law must be applied to the client’s specific circumstances. Subtle fact differences can change outcomes, so practitioners carefully map facts to statutory language and interpretive guidance.
4. Comparing Federal and State Treatment. States often adopt their own definitions, timing rules, and exceptions. Comparing federal positions with state treatments is critical to identify conformity issues, additions, substitutions, and decoupling choices.
5. Documenting Findings. Drafting a research memorandum that cites authorities and explains reasoning creates a record that supports positions during audits and provides clarity for clients and other advisors.

A wide range of taxpayers and advisors benefit from tax research, including:

• Individuals with complex circumstances such as multiple residences, rental property in several states, foreign income, significant investment activity, or equity compensation. Residency, sourcing, and state reporting rules often require customized analysis.
• Small and medium-sized businesses that operate across state lines, sell online, or engage contractors in multiple jurisdictions. Sales and use tax, income apportionment, payroll taxes, and nexus considerations frequently affect smaller enterprises.
• Corporations and pass-through entities facing multistate taxation, franchise taxes, or industry-specific state levies.
• Tax professionals—CPAs, enrolled agents, and tax attorneys—who rely on thorough research to advise clients and support positions in disputes.

Tax research can be difficult for several reasons:

1. Complexity and Volume. Both federal and state tax codes are extensive and technical. Each state may have unique rules that differ from federal law in material ways.
2. Frequent Changes. Federal legislation, IRS guidance, and court decisions can change the landscape. States often respond at different times or take different approaches, leading to inconsistent effective dates and transitional rules.
3. Nexus and Jurisdictional Questions. Determining where a business has tax obligations—sales tax nexus, income tax nexus, or payroll withholding—requires careful factual analysis, especially with evolving economic nexus standards.
4. Residency and Sourcing Rules. States vary widely in how they treat domicile, statutory residency, part-year residency, and sourcing of income. Conflicting state rules can create double taxation risks without proper planning.
5. Administrative Ambiguity. Some states publish clear guidance and rulings; others issue limited guidance, increasing uncertainty about enforcement and interpretation.
6. Multijurisdictional Complexity. Businesses operating in many states must reconcile multiple apportionment formulas, filing thresholds, and regulatory requirements, which complicates tax compliance and planning.

The best practices for addressing tax research challenges include:

• Engaging Experienced Professionals. Working with advisors familiar with both federal and state issues provides nuanced analysis and helps avoid common pitfalls.
• Using Specialized Research Tools. Professional databases and state-specific resources speed research and ensure access to current statutes and rulings.
• Maintaining Continuous Education. Tax professionals must monitor legislative changes, administrative updates, and court opinions across jurisdictions.
• Coordinated Multistate Actions. When an issue spans several states, a coordinated approach—such as multistate allocation studies, voluntary disclosures, or negotiated settlements—reduces exposure and often yields more favorable outcomes.
• Early Documentation and Recordkeeping. Maintaining complete records supports positions during audits and simplifies research.

The tax representation firm of Mike Habib, EA offers comprehensive research and representation services designed to address both federal and state tax concerns. Specific ways the firm assists include:

1. Full-Spectrum Research. The firm reviews relevant federal authorities (IRC, Treasury Regulations, IRS guidance) alongside state statutes, administrative rulings, and court decisions to provide a holistic analysis of tax obligations and opportunities.
2. State Conformity Analysis. Many research projects require determining whether a state conforms to recent federal tax changes, how and when that conformity takes effect, and whether a state has enacted modifications that create differences in tax calculation.
3. Nexus and Multistate Analysis. For businesses expanding geographically or selling online, the firm evaluates where tax registrations are required, whether economic or physical nexus thresholds have been met, and how income should be apportioned among jurisdictions.
4. Sales and Use Tax Guidance. States differ in taxable transactions, exemptions, filing thresholds, and marketplace facilitator rules. The firm assists clients in understanding collection responsibilities and documenting exemption claims.
5. Payroll and Withholding Research. The firm researches state payroll tax rules, unemployment insurance obligations, and local payroll levies to ensure correct withholding and reporting.
6. State Tax Incentives and Credits. The firm identifies state-level credits and incentive programs that may apply to clients’ operations, helping them secure available benefits while documenting eligibility.
7. Audit Representation and Negotiation. If a federal or state audit arises, the firm provides representation, presents well-documented research, and negotiates with taxing authorities on behalf of clients.
8. Collaboration With Other Professionals. When issues require legal input or specialized financial modeling, the firm coordinates with attorneys, CPAs, and industry advisors to produce a comprehensive solution.

Beyond research, the firm provides a full suite of services including:

• Tax Preparation and Review for accurate federal and state filings;

• Audit Representation before federal and state tax authorities;

• Tax Resolution services for addressing outstanding liabilities, negotiating payment plans, offers in compromise, or seeking penalty abatements;

• Bookkeeping and Payroll services to maintain reliable financial records; and
• Proactive Tax Planning that considers the combined federal and state tax impact of decisions.

Clients choose the firm for several reasons:

1. Authoritative and Practical Guidance. Research is grounded in primary authorities and presented in practical terms to guide decision-making.
2. Client-Focused Service. Each engagement is tailored to the client’s unique fact pattern and jurisdictional needs.
3. Collaborative Approach. The firm works effectively with other professionals to deliver well-rounded solutions.
4. Transparent Communication. Clients receive clear, documented explanations of research findings and recommended actions.

To begin, contact the firm for an intake consultation. The initial conversation will establish the facts, define the scope of research, and provide a proposed plan and fee estimate.

Phone: 877-788-2937

Online: https://www.myirstaxrelief.com/contact-us/

Thorough tax research that covers both IRS and state issues is vital for accurate compliance and effective tax planning. Whether you are an individual with multistate ties, a small business selling in multiple jurisdictions, or a larger entity with complex apportionment needs, the tax representation firm of Mike Habib, EA can provide the research, documentation, and representation you need to manage risk and realize available savings. Understanding how federal and state law interact allows advisors to design a research plan tailored to your facts and goals.

The firm’s approach blends authoritative legal research with practical implementation steps—documented memoranda, careful recordkeeping guidance, coordination with other advisors, and proactive filings when appropriate. If you face uncertainty over where taxes are owed, whether a credit applies in your state, or how to respond to a federal or state audit, a measured research plan provides clarity and a defensible path forward.

To get started, gather the pertinent records, make a list of the jurisdictions where you operate or earn income, and reach out to schedule an initial consultation. A focused intake lets the firm define the scope, outline the research steps, and provide an upfront estimate so you know what to expect.

Phone: 877-788-2937

Online: https://www.myirstaxrelief.com/contact-us/