Taxpayers Ramp Up Use of Skip-the-Line Path in State Disputes

A state tax case can take years to wind its way through the administrative process, which can be especially frustrating when taxpayers aren’t even sure if a levy applies to them.

But increasingly taxpayers are going straight to court through declaratory judgment actions in hopes of getting an answer on whether a tax is constitutional or applicable before they spend time and money—theirs and the state’s—exhausting administrative remedies.

The rise of declaratory judgment actions is a reaction to the emerging trend of revenue departments putting forth novel interpretations of tax statutes, applying them to digital transactions and other situations they ...