These rankings reflect the breadth of our SALT platform — from high-stakes controversy and litigation to transactional tax planning and advisory work — and the strength of the team delivering results across both areas.

What The Legal 500 Says About Us

The Legal 500‘s editorial highlights the depth and range of the practice. As the guide notes, Pillsbury’s SALT team “is a premier US multistate tax practice, with bright minds and decades of experience representing companies on complex issues. Few practices combine that depth of expertise with such seamless collaboration.”

The guide further observes that “Pillsbury’s state and local tax team is one of the leading multistate tax groups in the US. It has the breadth and depth to handle virtually any state tax matter, from advisory to high-stakes controversy.”

What Our Clients Say

We are grateful for the feedback our clients shared with The Legal 500. Here is a selection:

• “The team is comprised of true all-stars, with a strong mix of seasoned leaders and dynamic younger partners. Team members stand out as exceptional lawyers who combine technical strength with approachability.”

• “Team members include some of the top indirect and state income tax attorneys in the country, trusted by some of the largest companies in the world, and among the strongest property tax lawyers in the US, delivering significant results on high-profile matters.”

Congratulations to the entire SALT team on this well-deserved recognition. These results underscore the talent, dedication, and collaborative spirit that define our practice.

For more information on Pillsbury’s SALT capabilities, visit our practice page or view our full Legal 500 profiles for US Taxes: Contentious and US Taxes: Non-Contentious.

The post Pillsbury’s SALT Practice Recognized in The Legal 500 United States 2026 appeared first on SeeSALT Blog.

Practice Rankings at a Glance

• California — Tax: State & Local — Band 1 (maintained)

• New York — Tax: State & Local — Band 2 (new ranking)

In addition to the practice-level honors, seven individual attorneys were recognized, including three who are ranked for the first time.

What’s New in 2026

This year’s results mark a significant milestone for the practice. The New York team’s debut in the Chambers rankings reflects the strength of our bi-coastal platform and our growing footprint in multistate tax controversy and litigation. Three New York-based attorneys received individual rankings for the first time:

• Evan Hamme — Band 2 (New York Tax: State & Local)

• Zachary Atkins — Band 2 (New York Tax: State & Local)

• Aruna Chittiappa — Up & Coming (New York Tax: State & Local)

Meanwhile, our California team continued its longstanding tradition of excellence, with Carley Roberts and Jeffrey Vesely maintaining their Band 1 positions and Jeffrey Phang continuing as an Associate to Watch.

What Chambers Says About Us

California (Band 1): Chambers describes Pillsbury as having “unrivaled strength in handling SALT matters in California and nationally,” noting the team’s depth in income, franchise, sales and use tax issues, as well as transactional tax planning.

New York (Band 2): The editorial highlights Pillsbury’s “robust litigation practice” and work across industries including healthcare, energy, and technology, with the team “regularly involved in matters across New York and other state tax courts.”

What Our Clients Say

We are grateful for the trust our clients place in us. Here is a selection of the feedback Chambers received:

On the California Practice:

• “Pillsbury is vigilant on issues that impact the company. It understands not only the current environment, but emerging trends in competition.”

• “Pillsbury demonstrated excellent technical skills, business acumen and provided practical advice.”

On the New York Practice:

• “Their lawyers demonstrate both technical precision and broad commercial understanding, enabling them to advise on complex, multi-state regulatory frameworks without losing sight of practical implementation and commercial issues.”

• “The Pillsbury SALT group is one of the top multistate tax practices in the country.”

• “Pillsbury’s ability to understand complex and unique business issues and how it relates to a patchwork of every changing state and local laws is amazing.”

Congratulations to the Entire Team

These results are a testament to the dedication, skill, and client-first approach that defines Pillsbury’s SALT group. We congratulate all of our ranked attorneys and thank our clients for their continued confidence in our team.

For more information on Pillsbury’s SALT capabilities, visit our practice page or view our full Chambers USA profiles on our California and New York teams.

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Under current law, taxpayers engaged in a unitary business may elect water’s-edge reporting, which generally limits the combined group to U.S. entities and certain affiliated foreign entities. Insurers, however, are typically excluded from combined reports because they are not subject to the corporate franchise tax and are instead taxed under a separate constitutional regime. AB 1790 would alter this structure by requiring captive insurers to be included in combined reports, but that raises significant questions about whether that treatment is consistent with California’s constitutional limits on the taxation of insurers.

California’s Constitutional Insurance Tax Regime
Under the California Constitution, insurers are subject to a tax system that differs from the corporate franchise tax applied to most businesses. Article XIII, section 28 imposes a gross premiums tax—currently 2.35% on premiums from business conducted in the state—that applies “in lieu of” most other state taxes, including the corporate franchise tax.[i] As a result, insurers are generally exempt from the corporate franchise tax and, under longstanding California Franchise Tax Board (FTB) guidance, excluded from combined reports regardless of whether they are doing business in the state.[ii]

The constitutional regime also includes a retaliatory component. If another state imposes higher taxes or regulatory burdens on California insurers, California may impose a comparable burden on insurers from that state. This system is not designed to maximize revenue, but to promote reciprocal treatment among states.[iii]

Consistent with this framework, FTB guidance applies a regulatory-based understanding of what constitutes an “insurer,” focusing on whether an entity is licensed as an insurance company and regularly conducts an insurance business. Nothing in this framework categorically precludes captive insurers from meeting this definition.

AB 1790 and the Inclusion of Captive Insurers
AB 1790 would depart from this longstanding framework by requiring captive insurers that are part of a unitary business to be included in a combined report. The bill defines a captive insurer as an insurance company “owned or controlled by a member or members of the unitary group” and used to insure the risks of the parent organization and its affiliates.

California insurance law generally recognizes insurance arrangements between related parties, including captive insurance arrangements, suggesting that captive insurers fall within the state’s definition of “insurer.” Accordingly, they may fall under the California Constitution’s protections for insurers.

Is the Proposal Constitutional?
The core issue is how “insurers” are defined—and how California’s constitutional framework interacts with federal income tax principles. Nothing in California insurance law excludes insurance arrangements between related parties, and administrative guidance suggests captive insurers may be treated as insurers.[iv]

Federal income tax law is arguably more restrictive. Courts require risk shifting and risk distribution and apply technical rules designed to prevent taxpayers from accelerating deductions. Although the definition is narrower, captive insurance companies can and have satisfied the federal definition of insurance.[v]

The interaction between these two regimes is not clearly defined. Neither the California Constitution nor AB 1790 addresses how differences between state regulatory definitions and federal tax standards should be reconciled. Existing administrative guidance suggests captive insurers may be treated as “insurers,” but does not address whether they may be excluded from that classification for California income and franchise tax purposes.

This gap is significant. Under California’s constitutional regime, entities that qualify as insurers are subject to the gross premiums tax and exempt from the corporate franchise tax. If captive insurers fall within that definition—as California’s regulatory approach suggests—then requiring their inclusion in combined reporting may conflict with the California Constitution. Captive insurers that satisfy the federal income tax definition of insurance present a clearer case for treatment as insurers under any applicable standard.

Practical Implications
Taxpayers may argue that AB 1790 effectively subjects insurers to direct or indirect taxation through the combined reporting system, contrary to the “in lieu of” limitation in Article XIII, section 28.

The bill attempts to mitigate this issue by providing a credit for members of a unitary group subject to a net income tax (or a tax measured by net income) under other California law. However, the credit may not fully offset the gross premiums tax or cure the underlying issue, which is whether insurers may be subjected to the corporate franchise tax at all.

The bill also introduces uncertainty for taxpayers that have historically relied on the exclusion of insurers from combined reporting. It does not clearly address how existing captive structures will be treated or how conflicts between the constitutional insurance tax regime and the corporate franchise tax will be resolved. This uncertainty is heightened by the lack of clarity around which definition of “insurance” governs, but the inclusion requirement could reach at least some captive insurers under any standard.

Although much of the attention has focused on the bill’s water’s-edge provisions, this less-discussed aspect of AB 1790 could become an even greater focal point if enacted.

Because AB 1790 would result in a tax increase, it requires approval by a two-thirds vote of each house of the Legislature. Any modification to the constitutional framework governing insurer taxation would require voter approval.

[i] Cal. Const. art. XIII, § 28(f).

[ii] Cal. Franchise Tax Bd., Legal Ruling 385 (Mar. 28, 1975).

[iii] W. & S. Life Ins. Co. v. State Bd. of Equalization of California, 451 U.S. 648, 669-70 (1981); First Am. Title Ins. & Trust Co. v. Franchise Tax Bd., 15 Cal.App.3d 343, 348 (1971).

[iv] Cal. Dep’t of Tax and Fee Admin., Annotation M99-1, Am. 2003-3 (Feb. 5, 1998), https://cdtfa.ca.gov/lawguides
/annotations/Captive-Insurer.pdf.

[v] See AMERCO, Inc. v. Comm’r, 979 F.2d 162 (9th Cir. 1992); Rent-A-Ctr., Inc. v. Comm’r, 142 T.C. 1 (2014); Securitas Holdings, Inc. v. Comm’r, 108 T.C.M. (CCH) 490, *10 (T.C. 2014).

The post Beyond Water’s-Edge: California’s Proposal to Include Captive Insurers Raises Overlooked Constitutional Issues appeared first on SeeSALT Blog.

First, the Court held that the FTB erred in concluding that the taxpayer did not qualify as an agricultural business under California Revenue and Taxation Code section 25128.  As a result of this finding, the taxpayer was entitled to apply the three-factor apportionment formula, which considers property, payroll, and sales, rather than being limited to the single-sales factor method.

Second, the Court held that the taxpayer successfully demonstrated that the application of the single-sales factor apportionment formula did not fairly represent the extent of its business activities in California.  Therefore, the taxpayer was permitted to use the three-factor apportionment formula for this reason as well.

Section 25128 requires businesses that derive more than 50 percent of their gross receipts from “agricultural business activity” to use a three‑factor formula consisting of property, payroll, and sales, rather than a formula based entirely on sales.

Smithfield argued that more than 50 percent of its gross receipts were derived from agricultural business activity because its core business involves raising and harvesting hogs.  It contended that Section 25128 focuses on business activities, e.g., the raising and harvesting of hogs, not on the character of the final product sold, e.g., bacon.  Downstream processing, the taxpayer argued, does not change the agricultural nature of the underlying activity generating the receipts.  In the alternative, even if it did not qualify as an agricultural business, Smithfield argued that the single-sales factor materially overstated its California business activity and alternative apportionment, in the form of a three-factor formula, was warranted to cure distortion.

The FTB defended its assessment by recasting Section 25128 as a product-based test and insisting that the taxpayer’s receipts were predominantly from sales of processed foods such as bacon, sausage, and other products, rather than “agricultural business activity.”  Relying on California Code of Regulations (“Regulation”) 25128-2, the FTB argued that once an agricultural product has been “processed,” the resulting receipts from that product are categorically treated as non-agricultural, even if the taxpayer raised and harvested the animals itself.

The Court rejected the FTB’s substantive arguments.  The Court held the statute governing agricultural businesses focuses on what the taxpayer does, not on whether the final product is processed.  Based on expert evidence presented at trial, the Court held that more than 50 percent of the taxpayer’s gross receipts were derived from agricultural business activity and therefore it was required to use the three-factor formula based on property, payroll, and sales.  In doing so, the Court held Regulation 25128-2 was invalid because it narrowed the scope of the statute by focusing on the taxpayer’s products, whereas the statute looked to the taxpayer’s activities.

The Court further held that even if the taxpayer did not qualify as an agricultural business, the standard single-sales factor formula did not fairly represent the taxpayer’s California business activity.  Only 1.02 percent of the taxpayer’s income-generating activities occurred in California, yet the sales factor produced an apportionment percentage of over 6.6 percent (a disparity of more than 600 percent).  The Court held this mismatch justified using the three-factor formula, which better reflected where Smithfield’s business operations actually took place.

The Court also rejected the FTB’s procedural defenses, which argued the taxpayer failed to exhaust administrative remedies, failed to raise certain arguments during the administrative process, and should be limited to the evidentiary record developed at audit.  The Court held that California tax refund suits are tried de novo, meaning a court is not limited to the audit record.  A taxpayer need only state the statutory grounds for refund in its administrative refund claim and is not required to present all evidence or fully develop legal theories during audit.  The Court declined to fix the evidentiary record at the audit level, noting that such a rule would effectively convert audits into full trials.

Following the Court’s Proposed Statement of Decision, the FTB raised multiple objections regarding the Court’s use of an activity-based approach, its interpretation of Regulation 25128-2, its method for calculating the agricultural sales threshold and corresponding refund, as well as its treatment of procedural defenses related to the matter.  In response, the taxpayer characterized the FTB’s objections as improperly rearguing the merits of the case but expressed willingness to address any or all of the FTB’s objections.  On April 28, 2026, the Court overruled the FTB’s objections, agreeing with the taxpayer and concluding that the FTB’s arguments were “largely … improper attempts to reargue the matter and/or … an effort to force the Court to explain the reasons for its findings in a more granular way than is required.”

The Court then issued a clarified and refined Statement of Decision, dated April 28, 2026.  This decision added language making it clear that the FTB’s interpretation and application of Section 25128 “ignores the plain language of the statute” and that the evidence presented at trial proved that the FTB “was not open to an evaluation of the distortion issue to the extent it varied from the single sales factor analysis.”  The Court added that it had reviewed all FTB testimony, which confirmed the FTB understood the taxpayer’s arguments.  The Court also emphasized its decision was based not on a lack of evidence by the FTB, but on the taxpayer’s evidence being more persuasive.  Finally, the Court dismissed any assertion of unfair surprise, stating that any issues arising at trial that were new to the FTB resulted from its own failure to pursue available information in a timely manner, rather than from improper litigation tactics by the taxpayer.

Although it is not certain whether the FTB will choose to appeal, this case stands out as an uncommon instance in which a taxpayer demonstrated that the standard single-sales factor apportionment formula was distortive and that the three-factor formula offered a reasonable alternative.  In addition, the case illustrates a successful challenge to the validity of an FTB regulation on the grounds that it conflicted with the scope of the underlying statute.

The post California Trial Court Finalizes Ruling for Taxpayer in Smithfield Apportionment Dispute appeared first on SeeSALT Blog.

On May 6, Breann will present “Intangibles Update: Post-Olympic and Georgia Partners Decision” during the 2026 Spring Webinar.

Participants will enjoy an insightful discussion and earn up to seven hours of education credits for attending this virtual event.

For more information and to register, please visit the event page.

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Zack will be presenting on a State & Local Taxation panel covering sales tax, income tax, and legislative developments.

Registration for the Wall Street Tax Association, in co-sponsorship with the Wall Street Tax Educational Corporation, is now open. The conference will be held in person on Wednesday, May 13, 2026, at the Marquis Marriott hotel, 1535 Broadway, New York.

For more information or to register, please visit the event page.

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Evan Hamme – The Evolving Landscape of SALT Litigation and Legislation – Key Issues and Insights
Tuesday, April 21
This opening session will provide a discussion of the significant issues and trends that are emerging from current SALT litigation and legislative matters. This session will cover all SALT tax types and will cue everyone in on the trends in this field.

Aruna Chittiappa – When One Size Doesn’t Fit All: The Limitations of the Single Sales Factor
Tuesday, April 21
The single sales factor apportionment method has become the rule not the exception. This method raises significant questions about fairness, distortion and unconstitutional consequences. The challenges increase when combined with the complexities of taxing foreign source income. This session will discuss how to address the limitations of the single sales factor method.

This Conference will feature presentations on the most recent income and sales tax developments, initiatives and case law updates, and include breakout sessions that will provide in-depth discussions of specific topics for maximum coverage of the hottest income and sales tax issues.

For more information and to register, please visit the event page.

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The proposed constitutional amendment is intended to curtail local taxes by:

• Reinstating a two-thirds voter approval requirement for all local special taxes, including those placed on the ballot through the citizen initiative process. This is in response to court rulings that allowed citizen-initiated special taxes to pass with a simple majority following California Cannabis Coalition v. City of Upland.
• Restoring the traditional statewide cap on local real estate transfer taxes at $1.10 per $1,000 of property value and repealing local transfer taxes that exceed the cap within two years, including measures like Los Angeles’s Measure ULA.  If passed as written, the amendment would also prohibit charter cities from adopting transfer taxes above that cap.

Supporters argue the measure would restore taxpayer safeguards and voter control over local taxation, while opponents contend it would constrain local government revenues and significantly reduce local tax receipts annually.

The post California Groups File Signatures for Initiative to Curtail Local Taxes appeared first on SeeSALT Blog.

Jack and his fellow panelists will be speaking on the topic “The Invisible Customer: Navigating State Look-Through Sourcing.” TEI’s Midyear Conference, running from March 15-18, 2026, is the premier event for in-house tax professionals to stay ahead by addressing the policy, technology, and practical challenges shaping today’s corporate tax function.

For more information or to register, please visit the event page.

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