Robert M. La Follette School of Public Affairs
Friday, October 10, 2014

Skavlem helps firms understand myriad state and local tax systems in U.S.

Jon Skavlem Jon Skavlem

1977 alum Jon Skavlem's diligence ensures businesses know they are paying their fair share of taxes.

"We assist our clients as they manage and plan for their taxes and related issues at the state and local level," says Skavlem, who is director of local and state taxes for Baker Tilly Virchow Krause LLP, the 12th largest public accounting firm in the United States. "As more companies project themselves across multiple states, their taxes, especially their business income taxes, become more complex."

With this increasing complexity, many businesses do not have a good handle on how to manage their taxes or comply with the filing requirements. "Our role is to help them resolve tax issues," Skavlem says. "We are here to help them find out the right tax. When we represent a client, we work with the tax agency to work out what is fair and apply the tax law in the right way. If the client made a mistake, we are willing to concede the client should pay the tax. On the other hand, the client should not be penalized by complex laws or a rule or regulation that should not have been interpreted a certain way."

With the internet, a little retailer can become a nationwide seller, Skavlem notes. Each company encounters different rules in different jurisdictions about taxes to file. For example, the United States is home to 7,500 jurisdictions that impose sales taxes. Filing a tax return in one state might cost the client $1,000 in administrative expense and professional fees, even though the sale was only for $50, Skavlem says.

As a broker between a client and a tax authority, Skavlem draws on his master's degree in public administration and the eight years he spent after graduation as an economist with the Wisconsin Department of Revenue. "That experience and my knowledge of public policy and how legislative intent works helps me represent my client without sacrificing fairness," Skavlem says.

The critical thinking and communication skills Skavlem learned at the Center for the Study of Public Policy and Administration have also stood him in good stead. "I started developing an interest in economics during my undergraduate studies in political science and philosophy at the University of Wisconsin–Madison," Skavlem says. "That critical thinking, that sifting through concepts and information and synthesizing, meant I graduated with good reading and research skills applicable to the tax consulting area. Writing an opinion letter, communicating to auditors, clients or others, or synthesizing financial data and presenting it — my ability to use a blended liberal arts and public policy writing style and way of thinking, a lot of that came out of my early graduate days with the public policy center."

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Because of those skills he gained and because he received a fellowship that covered many of his graduate school expenses, Skavlem contributes financially to the La Follette School via the University of Wisconsin Foundation. "I received a fellowship when I was at a crossroads in my undergraduate career," Skavlem says. "I was thinking about law school, so I sought out a professor for advice, and he directed me to the Center for the Study of Public Policy and Administration, which I found intriguing, partly because my parents had worked in the public sector."

Skavlem also gives to the school because he believes skilled people need to work in the public sector. "I feel that if they could, everyone should have some exposure to the public sector to understand how it works," he says. "If my contributions help keep the public affairs program going and support good bright people as they move into government jobs, we need that. There are enough people going into accounting, financial services and marketing, but we need smart, motivated people to go into the public sector."

"I was grateful for the fellowship money I received," Skavlem adds. "The center steered me into an internship with the DOR, which sharpened my interest in tax policy, which got me to where I am now. I also interned with the Wisconsin Department of Administration. I loved the people I worked with and met. It's been a great career path, and the center and the fellowship started it."

For DOR, Skavlem partly did comparative tax work, analyzing Wisconsin tax policies and tax impacts relative to those in other states to better understand whether people and firms would leave Wisconsin for tax reasons. "I consulted with public economic development agencies to help them understand the different incentives that might drive businesses to locate somewhere," Skavlem says.

When Skavlem left the DOR in 1986 to join the Arthur Andersen accounting firm, he was pleased to find he could continue to use his public policy interest and experience. "For example, Arthur Andersen had a nice connection with Wisconsin utilities," Skavlem says, "and the firm contributed staff to provide tax information to a partnership between Forward Wisconsin and what is now We Energies to meet with businesses that were thinking about moving to Wisconsin."

Skavlem joined Price Waterhouse in 1995 when the firm asked if he would be interested in opening up a Milwaukee-based state and local consulting practice. Six and a half years later, he joined Virchow Krause, a regional accounting firm based in Madison. As the firm grew, it later added the Baker Tilly International brand name to extend the regional firm's national and international reach. Baker Tilly International is the world's eighth largest network of accounting firms, with 125 member firms that operate in 110 countries.

At Baker Tilly Virchow Krause LLP, Skavlem managed as many as 150 state tax returns that were due September 15. "I looked at specific issues in those returns," he says. "Are they correct? Is the methodology for assigning income to each jurisdiction proper?"

Skavlem serves on the board of the Wisconsin State & Local Tax Club, the Wisconsin Manufacturers & Commerce's tax committee and on the Wisconsin Institute of Certified Public Accountants Wisconsin Taxation Committee. Working with these organizations has let him maintain his relationships at the WDOR. "That committee (WICPA Wisconsin Taxation Committee) has worked hand in glove with DOR on tax policy changes, giving advice about forms and how to change them for the better," Skavlem says. "Some of the DOR leadership are people who were there when I was, so we can speak honestly and I can speak as a practitioner. We have a great deal of respect for each other. I am glad that they think I will give them a relatively unbiased opinion."

Skavlem also shares his expertise through presentations on state and local tax topics. He has spoken to the State Bar of Wisconsin, Chicago Bar, Financial Executives Institute, the Wisconsin Auto and Truck Dealer Association, the Association of General Contractors of Wisconsin, the Deloitte Multistate Tax Institute, and the Construction Financial Managers Association. The topics he covers include state and local tax issues affecting cloud computing, credits and incentives, sales and use tax audit management, and Canadian – U.S. cross border tax issues. Skavlem also leads Baker Tilly Virchow Krause LLP's public webinars on state and local tax topics such as controlling state and local tax risk and state nexus rules.

In October, Skavlem will attend an international conference and serve on a panel about the state and local tax regime in the United States. "People in Europe and Asia are baffled by our local taxes," Skavlem says, noting that many countries just have national taxes. "Our powerful state tax agencies might or might not follow U.S. tax treaties. Some of our biggest consulting jobs are with subsidiaries of international companies who must determine their tax obligations in many U.S. jurisdictions."

In all these interactions, Skavlem says, he applies his public policy training to be a voice of clarity in the complex tax world. "In the day-to-day world with hard and fast tax issues, I have not forgotten what I learned about tax policy analysis and what makes good policy," Skavlem says. "Taxes are more than numbers stuck in a form."