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April 7, 2014
State Tax Spotlight on Jordan M. Goodman
by Maria Koklanaris

Full Text Published by Tax Analysts®

by Maria Koklanaris -- maria_koklanaris@tax.org

Before Jordan M. Goodman had SALT, he had pizza.

In 1986 one year out of law school at the University of Illinois, Goodman was a tax consultant at Arthur Andersen LLP. "My dad always said, 'Go get training and figure out what you want to do.' After awhile, I would pick the training [at Arthur Andersen] based on the food," Goodman, now a partner and co-chair of the state and local tax group at Horwood Marcus & Berk in Chicago, said during a series of interviews with Tax Analysts. "They were forming the first SALT group. They were offering Lou Malnati's deep dish pizza, which I love. So I went."

And he stayed.

"They talked about how this was going to be a growth area. For lawyers in particular, there's constitutional law, there's a lot of administrative hearings, there's protests -- that really intrigued me," Goodman said. "My friends, though, you would have thought I had elected to assassinate somebody. In one corner are the attorneys; in a deeper corner are the tax attorneys. In the deepest, darkest corner are the SALT attorneys."

Twenty-eight years later, Goodman is out of the corner. First at McDermott Will & Emery, where he was an associate from 1988 to 1993, and then at Horwood Marcus, where he has been for the past 21 years, Goodman has worked on three U.S. Supreme Court cases. He travels often, giving between 50 and 60 speeches and presentations each year. At home in Chicago, he is sought out regularly to resolve state and local tax issues for both Fortune 1000 and smaller companies.

"Seeing Jordan in action was very enjoyable," John Amato, state tax counsel for General Electric Capital Corp., said about Goodman's recent success in a case he handled for GE. "He was articulate, passionate, fast on his feet with questions from the bench. His arguments were persuasive."


Shaped by Experiences With the Supreme Court

Goodman, 54, said he has had the opportunity to learn from the best. In 1999 and 2000, he assisted with research and strategy as Hunt-Wesson Inc. v. Franchise Tax Board of California, 528 U.S. 458 (2000), went before the U.S. Supreme Court. He watched Walter Hellerstein, coauthor of State Taxation, distinguished research professor at the University of Georgia School of Law, and chair of the State Tax Notes advisory board, successfully argue the case for the petitioner.

"My partner Fred Marcus, it was his client, but we had Wally Hellerstein argue it," Goodman recalled. "He was familiar not only with the court but all the [SALT] cases. He has the presence about him, he has the knowledge. Justice [William] Rehnquist said, 'It's good to see you again, Mr. Hellerstein.'"

Hunt-Wesson was Goodman's second experience with the U.S. Supreme Court. The first was Quill, as part of MWE's group researching due process rights and the commerce clause. He said he was intrigued by the way the case began to shift.

Goodman said Justice Sandra Day O'Connor steered the case down a different path with the commerce clause, with the focus being "Am I doing something like purposely availing myself of the marketplace?" Goodman said they thought that question was important and that ultimately it was. "It wasn't as important under the due process clause, but it certainly was important under the commerce clause," he said.

Most recently, Goodman was a strategist in Meadwestvaco Corp. v. Illinois Department of Revenue, 553 U.S. 16 (2008), in which the Illinois Supreme Court declined to hear the taxpayer's appeal but the U.S. Supreme Court granted the taxpayer's petition for certiorari.

Goodman said he thought the Court might have wanted to use the case to clarify that it had not established a new test for apportionable business income, as many practitioners and taxpayers thought it had in Allied Signal Inc. v. Director, Division of Taxation, 504 U.S. 768 (1992). "I was very surprised [the Court] took it," Goodman said, adding that he thought that might have been for two reasons. "One is they wanted to clarify Allied Signal, to say it really wasn't the development of a test. And two -- this is the pessimistic view -- I don't think they knew what they were getting into when they took it."

That pessimistic view may have some merit. The case was never tried. Once the Court clarified that it did not intend to set up a new test for apportionable business income, it remanded the case back to the Illinois courts.


Navigating the Illinois DOR

Goodman, a nearly lifelong resident of Chicago, has spent his entire professional career in Illinois. The Illinois Department of Revenue is his stock in trade, and anyone who deals with him in a professional capacity will say so.

"I was introduced to Jordan six or seven years ago," said James Peterson of Carlson Companies Inc. in Minnetonka, Minn. "Our reporting was under review by the state of Illinois, and at the end of the day we had a very favorable settlement." Goodman had a relationship with the people in Illinois, and Peterson said his company thought it best to hire attorneys who knew those people, because "they know what makes those individuals tick."

Jordan M. GoodmanBrian Fliflet, deputy general counsel for the Illinois Department of Revenue, said:


    There's really a handful of people we deal with on a consistent basis. They know how we approach a case. Our job is to defend the audit, or the claim denial. We have a job to do. And they are going to do their job -- they are going to do their best work to get the best result for their client. We often have a disagreement, but their mission is to defend their clients' interests. Then you have the kind of practitioner who's on a mission to bring down the department.

    I've been dealing with Jordan for a number of years. He's the first kind, not the second.


Joe Huddleston, executive director of the Multistate Tax Commission, called Goodman "a zealot" when representing his clients. Huddleston said he's known Goodman at least 20 years and has disagreed with him on many issues. "But he is also an extremely ethical person and that goes a long way with me," Huddleston added.

Goodman's clients don't hire him just to argue, they hire him to theorize -- and not necessarily in cases where the theory ever comes to any kind of legal fruition. For example, one client asked him to investigate an idea that doesn't have a name: Say a small bookseller in a remote state has a relationship with Amazon. The bookseller uses the Amazon marketplace because it allows him to sell many more books online than he ever could with just his own website.


Testing New Theories

Goodman came up with two possibilities: marketplace nexus and the transitive property of nexus. "Do you have nexus in New York because Amazon does?" Goodman asked. "It may be you have never even been to New York, but can that create nexus for you because you use Amazon as a conduit? That's the transitive property. You don't know for sure if Amazon has nexus in New York because that's created through another relationship. So this little business -- Amazon could have nexus in 28 places, and then they are liable for tax in 28 places? It's kind of the next generation of Amazon laws."

Goodman acknowledged that that theory is "pretty deep into the weeds," adding, "But that's what's so great about my clients and some of the things I work on. It's not the same every day. I mean, this is cutting-edge kind of fun stuff. I've got a client who is actually thinking about it and is willing to pay me to think about it."

Another client has asked Goodman to think about the concept of backhauling and how it relates to P.L. 86-272 and related MTC guidance. Delivering goods is a protected activity not subject to tax under the law, but backhauling is not.

"Let's say I have a warehouse here in Illinois," Goodman said. "I have a truck, I bring my goods over to Indiana, and I do that 49 times. I do not owe Indiana any tax, I am protected by 86-272. But the 50th time I go in, they say, 'I don't want those goods,' and I bring them back to my warehouse. Is that activity backhauling, as the MTC has defined it? Are all my activities in Indiana now subject to their income tax?"

"This is just the cool stuff that we do," Goodman said. "The digging in, the thinking about a concept that is just a little bit different."

Goodman counts two of his fellow partners as some of his greatest teachers and mentors. One is Marilyn Wethekam, a former chair of the Council On State Taxation. "Jordan is known for enthusiasm, coupled with the fact that he is really smart in the SALT area," Wethekam said. "When Jordan walks into a room, you know Jordan's in the room."

The other is Marcus. Asked to name a case he associated most with Goodman, Marcus chuckled, then said, "The Beam case."

In Jim Beam Brands Co. v. Franchise Tax Board, 34 Cal. Rptr. 3d 874 (Cal. Ct. App. 2005), which Horwood Marcus argued as co-counsel with Silverstein & Pomerantz LLP, the California State Board of Equalization ruled that the gain from Jim Beam's sale of the stock of a wholly owned subsidiary was business income apportionable to the state. The trial court agreed, and the court of appeals upheld.

"We lost," Marcus said. "But Jordan would tell you the courts got it wrong."



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