1. Current Issues and Opportunities in State Tax Controversy Chicago Tax Club – October 27, 2010 George Barry, Director, Deloitte Tax LLP Jon Cesaretti, Director, WTAS LLC - Moderator Dave Kupiec, Partner, Kupiec & Martin Mike Wynne, Partner, Reed Smith LLP

2. Outline The Beginning The Decision Makers for the State Endgame The Courts Legislation Revenue Department Advance Resolution Overpayments / Refunds Where is this going? Questions Disclaimers 2

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4. The Beginning What are we seeing? – Today – Future 4

5. 5 The Beginning (Cont.) Responding to (or Initiating a) Controversy Different environment? Individuals involved (Taxpayer, State,…) New approach?

6. 6 The Decision Makers for the State Audit / Admin. Procedure / Judicial Process – What are we seeing today? – Basis for Decisions – Future

7. 7 Endgame Time has passed Resources Cost/Benefit – What has changed in this determination? Settlement environment – Now – Future Litigation considerations – Subject matter – Financial statement impact – Legal basis – Pending litigation – State fiscal position – Politics – Other

8. 8 The Courts Administrative tribunals (For example, IL ALJ) Circuit Courts Courts of Appeal State Supreme Courts The U.S. Supreme Court

9. 9 Legislation Does it work…? How and when does it work… Current dynamics

10. Overpayments/Refunds Timing Alternatives: – Offsets – Legislation – Other possibilities 10

11. Revenue Departments / Advance Resolution of Issues Does it work? Current dynamics 11

12. Illinois Amnesty (10/1/2010 to 11/8/2010) 12 This amnesty in perspective Outline – The Stick(s) – The Carrot What does the bottom line appear to be (currently)? Use Tax Amnesty 2011?

13. Prospective/Retroactive 13 Prospective – What are your facts Retroactive – Federal law – State Law

14. Where is this going? 14 – Current – Near Future Effect on taxpayers

15. Questions? George BarryJon Cesaretti Deloitte Tax LLPWTAS LLC (312) 357-3937 gebarry@deloitte.comjonathan.m.cesaretti@wtas.com Dave KupiecMike Wynne Kupiec & Martin, LLC Reed Smith LLP (312) 632-1022 (312) 207-3894 dkupiec@kupiecandmartin.comdkupiec@kupiecandmartin.com mwynne@reedsmith.commwynne@reedsmith.com 15

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