Pat Derdenger is a partner in Steptoe & Johnson LLP’s Tax group. His practice emphasizes federal, state, and local taxation law. (Mr. Derdenger is certified as a tax law specialist by the Arizona State Bar.) Mr. Derdenger has been listed in The Best Lawyers in America since 1995 (published by Woodward/White, Aiken, SC) and has been listed in Southwest Super Lawyers for State, Local, and Federal Taxation since 2007.
Federal Tax Law
Mr. Derdenger provides advice and representation on income tax matters, employment tax matters, independent contractor/employee issues, responsible officer penalties, information return filing penalties, and excise taxes, including both federal and state fuel excise taxes (motor, aviation and diesel), the transportation excise tax and the communications excise tax. With respect to fuel excise taxes, Mr. Derdenger has represented both refiners and terminal operators in 637 registration matters and on compliance issues. Mr. Derdenger has extensive experience in advising clients on various employment tax and independent contractor issues, including the treatment of “leased employees” for employment tax purposes. He also represents business clients in tax controversy matters, income, employment and excise taxes with the Internal Revenue Service at the audit, appeals, and court levels, including the US Tax Court.
State and Local Tax Law
In Mr. Derdenger’s extensive state and local tax practice, he advises and represents his business clients on corporate and individual income, sales, use, and property tax matters. He represents his clients in tax litigation as well as counsels them on the state and local tax implications of their business transactions. Such clients include high-technology businesses, electric utilities, telecommunications companies, mining and railroad companies, manufacturers, retailers, banks, printers, mail order businesses, tax-exempt organizations, resorts, as well as various sized Arizona businesses. His practice also covers the growing e-commerce industry, advising clients on their multi-state and international income tax responsibilities and their multi-state sales tax and use tax collection obligations.
Multi-State Tax Practice
Mr. Derdenger advises businesses on various multi-state sales and use tax issues including advising e-commerce businesses on their multi-state sales and use tax collection obligations and on streamlined sales tax project registration and amnesty issues. He also advises multi-state businesses, on state corporate income tax issues, such as the “unitary” combination issue, allocation and apportionment issues, business/non-business income questions, Public Law 86-272 nexus issues, “throw-back” rule issues, and Appeal of Joyce/Finnegan issues. Mr. Derdenger also counsels clients on the multi-state taxation of flow through entities such as partnerships, S-corporations, and limited liability companies.
Mr. Derdenger has considerable experience with federal commerce clause, due process clause and equal protection clause issues, as well as state specific constitutional provisions such as the uniformity clause, which deals with property taxes and requires that property taxes as imposed on a class of property be uniformly applied. Commerce clause issues handled include not only income, sales and use tax nexus issues but also issues dealing with discriminatory treatment of interstate commerce. Equal protection clause matters have included challenges to a state’s unequal treatment of a taxpayer vis-à-vis the more favorable treatment provided to competitors.
Construction and Homebuilding Tax Issues
Mr. Derdenger represents construction contractors, both general and subcontractors, and homebuilders on a wide array of federal, state and local tax issues, including construction manager tax issues, hospital construction projects and issues dealing with the installation of exempt machinery and equipment. He also advises and works with homebuilders on the marketing arm – contracting arm structure used in Arizona for state transaction privilege tax purposes, as well as assisting homebuilders and real estate developers deal with the municipal “speculative builder” tax. The speculative builder tax is unique to Arizona in that it imposes a municipal (not state) sales tax on the sale of “improved real property.” In addition to advising clients on this tax, he has represented numerous clients in successfully appealing their speculative builder tax assessments.
Telecommunication Industry Tax Law. Mr. Derdenger has considerable experience in dealing with federal and state and local telecommunications excise tax matters, including issues relating to the Mobile Telecommunications Sourcing Act (sources cell phone calls for purposes of local taxation). He has represented telecommunications clients on real and personal property tax matters, including valuation issues. Of note, Mr. Derdenger represented a start-up international telecommunications carrier in structuring their state and local telecommunications excise tax reporting requirements, including nexus issues. Our Telecommunications clients in the tax area have included local, long distance, cell phone and satellite carriers.
Telecommunication Industry Tax Law
Mr. Derdenger has considerable experience in dealing with federal and state and local telecommunications excise tax matters, including issues relating to the Mobile Telecommunications Sourcing Act (sources cell phone calls for purposes of local taxation). He has represented telecommunications clients on real and personal property tax matters, including valuation issues. Of note, Mr. Derdenger represented a start-up international telecommunications carrier in structuring their state and local telecommunications excise tax reporting requirements, including nexus issues. Our Telecommunications clients in the tax area have included local, long distance, cell phone and satellite carriers.
Mr. Derdenger’s practice includes the representation of electric utilities and pipelines in a wide range of state tax issues. He has represented electric utilities on property tax valuation matters, both generation and transmission and distribution facilities, including a nuclear generation station. [See ADOR v. SRP and APS, 212 Ariz. 35, 126 P.3d 1063 (App. 2006).] He has also advised electric utilities on corporate income tax issues, including the sourcing of sales of electricity when generated in one state and sold in another (particularly the costs of performance and market tests dealing with the sales factor), nexus and Public Law 86-272 questions, as well as research and development tax credit issues. He has also advised electric utilities on sales tax issues dealing with the construction of generation plants and the applicability of various sales tax exemptions to the construction of those facilities and operation of generation plants, including sales tax issues on the sale of the electricity both in-state and out-of state. In addition to electric utilities, Mr. Derdenger has represented natural gas pipelines on sales tax, income tax and property tax matters.
Property Tax Law. Mr. Derdenger handles property tax valuation appeals for various types of industrial and commercial properties such as electric utilities (including the valuation of a nuclear generating plant as well as transmission and distribution facilities), and long distance telecommunications companies and satellite communications networks. In addition, he has represented Arizona copper mines in property tax litigation over the value of the producing mine and the appropriate valuation approach to use in valuing a mine.