My in-laws were in town recently and they (and my wife) love to go antique shopping. I have started to like it, but still not as much as them. I do like the unique things you can find, but unfortunately, you have to look through a lot of junk to find that “treasure.” My wife calls it the “hunt.”

One day when we were shopping, walking between antique stores along the street, someone asked us, “are you here for the Zombie Walk?” It caught me off-guard and I quickly said, “no.” We were in a small college town and apparently they were having a zombie walk that day to support breast cancer research. A zombie walk is an organized public gathering of people who dress up in zombie costumes. Participants usually meet in an urban center and make their way around the city streets and public spaces (or a series of taverns in the case of a zombie pub crawl) in an orderly fashion. Zombie walks can be organized simply for entertainment or with a purpose, such as setting a world record or promoting a charitable cause. During the walks, participants are encouraged to remain in character as zombies and to communicate only in a manner consistent with zombie behavior, which may include grunting, groaning or slurred, moaning calls for "brains".[1]

Acting or dressing like a zombie appears to have become a mainstream phenomenon. Not sure why, but it seems to pop up in places when you least expect it. Unfortunately, zombie-like behavior can sometimes exist in the state tax area on both sides – state governments and taxpayers.

Taxpayers get so overwhelmed with the complexity and minutia when trying to comply with multiple states whether it is income tax, sales tax, etc. that they default to following the methodology they used to file the prior return (“the same as last year” approach). This behavior can obviously lead to both issues and opportunities being overlooked creating tax exposure or excess tax being paid.

Another zombie-like behavior taxpayers may exhibit include the “wait and see game” approach. This approach is often used when a company grows beyond its borders and has nexus in multiple states from a technical perspective, but the activity in each state is relatively low (or de minimus) so the actual tax would be minuscule. Hence, the cost of compliance may outweigh the benefit of filing. This behavior can lead to large assessments of tax, interest and penalties because the statute of limitations never start.

The “wait and see game” approach may also be used by larger companies with an established presence in multiple states. These companies may be filing returns but have “grey” issues that could go either way if challenged. Obviously with the advent of FIN 48, companies are forced to assess the level of authority for each position and establish reserves if necessary. Companies are also required to obtain a certain level of authority or disclose their filing position in order to take a position on a return. Though these requirements make taking the “wait and see game” approach with a specific issue more difficult, it can be done if there is enough support to do so.

When a taxpayer is under audit, the taxpayer may blindly give the auditor more information than is requested or give the same information as provided in a prior audit without even looking at the information. Each audit period may contain unique transactions or facts that require additional explanation or should be presented in a certain way so the auditor gets the true picture. It is not only bad facts that cause problems within audits, but it is also the presentation. Just like when giving a speech or in personal communication, it isn't always the message; it is how the message is presented that makes all the difference.

These are just a few of the “zombie-like” behaviors taxpayers may exhibit in regards to state and local tax, can you think of others?

Are you here for the zombie walk?

[1] Wikipedia.

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Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States.  He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect."  For more info, visit his website:

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Because state and local taxes are deceptively simple and endlessly complicated.

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