Risk Management
Our Tax Controversy Team believes that a key function of our job is to help clients avoid controversy through careful planning. We subscribe to the theory that “an ounce of prevention is worth a pound of cure.” That is why we bring a controversy perspective to the planning phase of transactions by:
- Counseling clients on risk assessment, which includes an analysis of business purpose, economic substance, privilege, reportable transactions, disclosure obligations, information returns and penalties
- Assisting clients with FIN 48 analysis
- Issuing comprehensive tax opinions
- Obtaining advance rulings from the IRS and other tax authorities
- Obtaining Pre-Filing Agreements from the IRS
- Assisting clients in impacting tax policy at both the federal and Ohio levels on both administrative and legislative issues
Advocacy
When controversies do arise, we are there to:
- Represent taxpayers before the IRS and other tax authorities in examinations, administrative appeals and criminal investigations
- Represent taxpayers in rulings obtained during the examination process, such as IRS Technical Advice Memoranda
- Assist taxpayers in responding to summonses for the production of documents
- Represent taxpayers in mediation/arbitration, including procedures such as the IRS’ Early Referral, Fast-Track Appeals and Appeals Mediation programs
- Obtain reasonable cause relief from the IRS and other tax authorities for late filings, missed elections and penalties
- Represent taxpayers in litigation in the U.S. Tax Court, U.S. Court of Federal Claims, U.S. district courts and Ohio courts
- Represent taxpayers in global settlement initiatives offered by the IRS and other tax authorities
Our experience encompasses litigating cases in various U.S. Circuit Courts of Appeal, various U.S. District Courts (including bankruptcy court), U.S. Court of Federal Claims, U.S. Tax Court, Ohio Supreme Court and various Ohio state courts, including the Ohio Board of Tax Appeals.
We have handled countless Ohio tax disputes concerning sales and use tax, commercial activity tax (CAT), franchise tax and tangible personal property tax (including public utility tax).
We have deep experience in all areas of federal income tax law, and have specific experience dealing with high-profile tax strategies challenged by the IRS, including:
- A SILO (listed transaction) cross-border leveraged leasing deal (litigation/global settlement)
- A “Times Mirror” tax-free reorganization (litigation/settlement)
- Several corporate-owned life insurance (COLI) (listed transactions) cases positioned for litigation (settled)
- Several bank-owned life insurance transactions (BOLI) (conceded by government)
- A Tier 1 research credit claim (pending)
- A Tier 1 specified liability loss claim (pending)
- A section 461(f) (listed transaction) accelerated deduction case (settled)
We have amassed an impressive record of achieving major concessions for our clients in large dollar cases before the IRS at all levels (National Office, Appeals Division and Examination).[1] Below is a sampling of some of our most significant successes:
|
Company |
Industry |
Type of Case |
Amount of Tax |
Status |
| Fortune 100 | Financial Services | Representation concerning investment in bank owned life insurance (BOLI). | $1.5B invested in tax advantaged product | Conceded by IRS in Exam |
| Fortune 350 | Financial Services | Cross-border leveraged leasing transactions. | Over $1B tax, penalties & interest | Settlement Concluded Pursuant to IRS Global Settlement Initiative |
| U.S. Subsidiary of Canadian Public Company | Manufacturing | Eliminated tax, penalty and interest with respect to proposed taxable liquidation of wholly-owned subsidiary valued in excess of $1 billion, elimination of U.S. withholding tax on distributions to foreign parent, determination of tax basis of subsidiary stock under consolidated return regulations, reduction of excess loss account income from termination of group, and elimination of proposed transfer pricing adjustments. | $400M tax, penalty & interest | Settled at IRS Appeals |
| Fortune 250 | Technologies Companies | Obtain favorable PLR on tax treatment of R&D expenses in spin-off transaction | $165M | Reversal of initial adverse IRS position – Created new favorable position now used in spin offs |
| Fortune 250 | Manufacturing | Successfully defend monetization of installment notes received in select subsidiary shares, where notes and borrowed amount have been extended | $100M tax | Settled Appeals – No change |
| Fortune 250 | Utility | Refund claim for deductions and credits with respect to research and development activities. | $90M tax | Refund Claim at IRS Exam |
| U.S. Subsidiary of Canadian Public Company | Manufacturing | Obtained favorable pre-filing agreement with respect to abandonment loss of mining property. | $90M tax | IRS Pre-Filing Agreement |
| Fortune 250 | Utility | Obtained a favorable technical advice memoranda – in which we convinced the IRS to change its long-standing position – with respect to a claim of right issue and ultimate utilization of large capital losses. | $72M tax | IRS Technical Advice Memorandum |
| U.S. Subsidiary of Canadian Public Company | Manufacturing | Allowance of $125 million bad debt deduction with respect to intercompany debt to wholly-owned subsidiary sold in section 338(h)(10) transaction. | $60M in tax & interest | Conceded in Full by IRS at Exam |
| Fortune 20 | Telecom | Claim for investment tax credits on capital improvements (1986 Tax Act transition rules). | $57M tax & interest | Settled at IRS Appeals |
| Fortune 350 | Manufacturing/ Retail |
Investment in corporate owned life insurance (COLI). | $49M tax & interest | Settled at IRS Appeals |
| Fortune 250 | Manufacturing | Investment in corporate owned life insurance (COLI). | $45M tax & interest | Settled at IRS Appeals |
| Fortune 500 | Conglomerate | Corporate transaction (contingent liabilities in asset acquisition). | $40M tax & interest | Settled at IRS Appeals |
| Multi-national Health Care Manufacturer | Health Care Manufacturer | Eliminated tax, penalty and interest with respect to a variety of domestic and foreign issues, including bad debt deductions, worthless stock loss, and deduction of fees paid to investment bankers related to acquisition. | $35M tax, penalty & interest | Settled at IRS Appeals |
| Fortune 1000 | Manufacturing/ Retail |
Obtained favorable technical advice memorandum from IRS National Office concerning large loss on the factoring of accounts receivable. | $25M tax | Technical Advice Memorandum; Valuation Issue Settled at IRS Appeals |
| Fortune 250 | Manufacturing | Tax-free reorganization/IBNR Medical. | $12M tax & interest | Settled at IRS Appeals |
| Fortune 1000 | Retail | Refund with respect to deduction for specified liability loss. | $11M tax & interest | Settled at IRS Appeals; Refund Approved by Joint Committee |
| Fortune 150 | Manufacturing | Filed appeals protest defending carryback of specified liability loss. | Over $9M tax & interest | Tier 1 Issue; Favorable GLAM Issued; Complete Recovery for Taxpayer |
| Fortune 250 | Manufacturing | FSC/ETI refund claims. | $8M tax & interest | Settled at IRS Appeals |
| Fortune 250 | Manufacturing | Interest netting. | $5M | Litigated in Court of Federal Claims |
| Subsidiary of Fortune 1000 | Retail | Loss on sale of subsidiary (open/closed transaction). | $4M tax & interest | Litigated in Tax Court |
| Fortune 250 | Manufacturing | Creditable Brazilian taxes and dividends received deduction. | $4M tax & interest | Litigated in Court of Federal Claims |
| Electric Utility | Utility | Obtained full concession with respect to a claim of right issue concerning income from government grant program. | $4M tax & interest | Settled at IRS Appeals |
| Fortune 250 | Manufacturing | Refund attributable to excessive payments of deficiency interest. | $3M | Refund; Closing Agreement |
Our Tax Controversy Team has served a wide variety of sophisticated public and private clients, including a distinguished list of some of the country’s largest public companies. We have substantial Fortune 500 representation in the manufacturing, retail and financial services sectors. Additionally, we have represented some of the nation’s largest real estate developers, a major airline, large multinational corporations, a wide variety of closely held businesses, a rock star, and individual investors and entrepreneurs.
We are proud of our accomplishments as counselors and advocates for our clients. Large companies like Eaton, Key, Parker Hannifin, STERIS, Verizon Wireless and others among the Fortune 500 have turned to us to represent them in complicated federal and state tax controversies.
Our philosophy is to present our client’s case to a tax authority or court using simple direct themes carefully supported by the most compelling facts. We view our role as providing the decision makers (revenue agents, appeals officers, judges or juries) with the tools they need to understand the issues upon which a complex tax controversy turns. In approaching each case, we know that the degree of success is dictated by more than just aggressive advocacy. It involves understanding client-specific protocols, expectations and objectives for resolution of the tax controversy. We will address these issues at the outset in an effort to enhance our effectiveness and increase our chances for success.