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Tax professional Saba Shatara has shared her thoughts on the practice of taxation in 2026. According to Shatara, the biggest challenge facing tax practitioners is the misconception that artificial intelligence (AI) can replace expert judgement in tax controversy work. She also mentioned that the tax case ‘Wynnefield Brothers International LLC v. Franchise Tax Board’ is not getting the attention it deserves and state conformity is a persistent source of complexity.
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Saba Shatara from Reed Smith Speaks on Tax Practice and AI
In a recent interview with Bloomberg Tax Insights & Commentary, Saba Shatara, a Reed Smith partner specializing in state tax, discussed the current challenges, important cases, and issues surrounding tax practice.
The Impact of AI on Tax Practice
When asked about the most significant issue tax practitioners face in 2026, Shatara highlighted the belief that artificial intelligence (AI) can supplant human expertise in tax controversies. Although AI is a potent tool, Shatara insists it cannot replace the experience and knowledge that tax practitioners bring to the table. AI lacks context, often relies on outdated or inaccurate information, and fails to critically consider downstream implications of state-level decisions.
Shatara underscored that effective tax controversy management requires a comprehensive understanding of the agency, personnel, procedural dynamics, and institutional tendencies. She also pointed out the importance of having experienced practitioners who can anticipate the indirect effects of decisions across jurisdictions. Given the rapidly evolving regulatory and legislative landscape in California, she believes that AI can support rather than replace the need for creative and contextual human thinking.
The Under-the-Radar Tax Case
A case that deserves more attention, according to Shatara, is Wynnefield Brothers International LLC v. Franchise Tax Board. This case challenges the validity of California’s “substantial and occasional sale” rule while an FTB audit was ongoing and before the final tax payment. The trial court ruled that the taxpayer’s claim was barred by the “Pay First, Litigate Later” rule and the exhaustion doctrine of the California Constitution. The taxpayer is currently appealing this decision.
Shatara believes that this case could impact the broader landscape around declaratory relief in California and how taxpayers can seek judicial clarity on statutory conflicts. She urges practitioners to keep an eye on this case, especially in pre-transaction contexts where paying the tax first and litigating later isn’t feasible.
Concerns Over State Conformity
Shatara’s main concern is the widening gap between federal and California tax law. She points out that the selective date conformity method adopted by California doesn’t automatically incorporate changes to the federal tax code, leading to complexities and uncertainties. For example, California doesn’t completely conform to the treatment of global intangible low-taxed income (now referred to as net controlled foreign corporation tested income) under Internal Revenue Code Section 951A, creating uncertainty for multinational taxpayers with California filing obligations.
Valuable Lessons and Beliefs
Shatara has learned that understanding the law is not enough. Advocacy requires a comprehensive understanding of the client’s business, industry, and decision-making processes. She also expresses her firm belief that investing in good people always pays off, noting that her best investments were not in technology, marketing, or business development, but in the people she works with and the broader state tax community she’s part of.
Opinions expressed in this article do not necessarily represent the views of Bloomberg Industry Group Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.
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