Thomas D. Sykes is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm's Chicago office. He focuses his practice on tax compliance and controversies, including tax litigation in all forums. He has a coast-to-coast federal tax practice in which he advises or represents some of the nation’s most successful and well-known individuals, for-profit corporations and tax-exempt organizations.
In recent years, Tom has been at the forefront of the rapidly evolving litigation over FICA tax paid on stipends paid to medical residents. He was lead counsel in game-changing victories for taxpayers in both the federal district court (2006) and the U.S. Court of Appeals (2008) in Chicago, and helped formulate the presentation of the arguments in the key taxpayer victory obtained in the U.S. Court of Appeals (2007) in Atlanta. His representation of teaching hospitals against the U.S. Department of Justice (which handles all of these court cases for the IRS) is informed not only by this issue-specific experience, but also by his 14-year tenure at the U.S. Department of Justice’s Tax Division – a tenure that provided Tom with day-to-day exposure to the litigation and tax-refund-case settlement processes that prevail inside the U.S. Department of Justice and the IRS.
Broadly speaking, and as set out more specifically below, Tom brings to his tax practice several key elements:
- technical tax experience, gained over the last 25 years;
- almost 14 years of federal government service in Washington, D.C., where he represented the IRS in tax disputes across the nation; and
- extraordinary first-chair, in-court, trial and appellate experience.
Tom also brings to his tax practice, which is primarily civil, a stint as a federal prosecutor. This highly uncommon combination of elements inform Tom’s ability to realistically assess the legal hazards faced by a taxpayer involved in a tax dispute; to plot, pursue, and implement a strategy for settlement that comprehends the inner workings of both the IRS and the Department of Justice; and to resolve efficiently administrative proceedings and any subsequent litigation that becomes necessary.
Sophisticated taxpayers who must go to court for a resolution increasingly are advised to do so by way of a tax-refund suit (as opposed to a suit in Tax Court); and most penalty and employment-tax disputes may be taken to court only by way of a refund suit. With his extensive experience at the Department of Justice in Washington and as a partner in private law practice, Tom has probably handled a greater number of tax-refund suits in the federal trial courts than any attorney now active in private practice in the United States. This extraordinary background informs, among other things, Tom’s advice as to litigation hazards and the numerous special prerequisites, not applicable to suits in Tax Court, that must be met before a tax-refund suit can be commenced and maintained.
In recent years, Tom’s most notable in-court representations include:
- First-chair representation of The University of Chicago Medical Center in a multi-million dollar refund suit in its victory in the U.S. Court of Appeals for the Seventh Circuit with respect to FICA tax on stipends paid to medical residents, after having successfully represented it in the U.S. district court below (2004 to present);
- First-chair representation of Partners Healthcare System in a suit in Boston addressing whether $23 million in FICA tax must be repaid to the IRS in connection with stipends paid to medical residents (2008);
- Primary responsibility for handling a Tax Court case in which the IRS agreed to reduce tax and penalty deficiencies to less than $6,000 from $839,000 (2006);
- First-chair representation of The University of Chicago in a multi-million dollar FICA tax refund suit in U.S. district court in Chicago (2005 to 2007);
- First-chair representation of a partner in U.S. district court and in the U.S. Court of Appeals for the Seventh Circuit in a case of first impression under the unified partnership audit and litigation procedures of the Internal Revenue Code (2004 to 2008);
- Primary responsibility for obtaining a full and unqualified concession from the IRS in a Tax Court case of an issue worth $75 to $100 million to the taxpayer, a large insurance company (2001);
- First-chair representation in U.S. district court in Nashville (2003-2005) in which the IRS and the Department of Justice completely conceded $15 million of excise tax and penalties in connection with a purported prohibited transaction. Still attracting attention, the case was described in The Legal 500’s law-firm survey for 2008 as reflecting a taxpayer-favorable result that was “most unusual[].”; and
- First-chair representation in an estate tax case involving an IRS challenge to a family limited partnership (FLP) (2008 to present).
In addition to his in-court practice, Tom represents taxpayers before the IRS’s Examination, Collection, and Appeals Divisions, and before the IRS National Office. He is often brought in to prepare protests against adjustments proposed by the IRS, especially when the IRS has been or is expected to be difficult. He has extensive experience with IRS summonses – on both sides. In 2007 and 2008 he successfully represented 14 mutual funds seeking letter rulings from the IRS National Office respecting belated elections. He had a leading-edge and highly visible role in bringing about the IRS’s unprecedented nationwide concession, in May 2006, that $13 billion in tax refunds were due to 150 million taxpayers who had overpaid excise tax on long-distance and cellular phone service. Over the past six years, Tom has counseled dozens of companies and individuals with respect to the filing and back-filing of Forms TD F 90-22.1 (“FBARs”) respecting foreign financial accounts – and has published and spoken frequently in this by-now highly active field, drawing upon his experience as a former federal prosecutor and U.S. Department of Justice tax attorney.
Tom’s propensity for being involved with notable tax issues du jour is indicated by his having been quoted or mentioned by name in The New York Times, The Baltimore Sun, Tax Notes, Tax Notes Today, the Daily Tax Report, the International Herald Tribune, The Kansas City Star, Financial Advisor Magazine, TheLedger.com, The Trusted Professional, the Chicago Lawyer, Bloomberg.com, Accountingweb.com., CNNMoney.com and Crain’s Health Pulse.
Before returning to the Midwest to join the Firm as a partner in 2002, Tom practiced tax law in Washington, D.C., for almost 18 years. In 1998 he had left the U.S. Department of Justice’s Tax Division, after almost 14 years there, to join a Washington, D.C., tax boutique as a partner.
While with the U.S. Justice Department’s Tax Division from 1984 through 1998, Tom litigated, or directly supervised the litigation of, approximately 175 tax cases in the Court of Federal Claims and in U.S. district courts. His personal case load at times directly controlled almost $1 billion in tax and interest, and included disputes over valuations of real estate, closely-held stock, and intangible assets. Tom negotiated or supervised the settlement of roughly 125 or 150 tax cases. He is a four-time recipient of Outstanding Attorney awards from the Tax Division (1986, 1988, 1991, and 1997). When he left the Tax Division for private practice in 1998, he was an Assistant Chief in its Court of Federal Claims Section.
Tom gained in-court experience at an early stage in his career. Before joining the Tax Division in 1984, he was an Assistant U.S. Attorney in Madison, Wisconsin, where he handled dozens of federal criminal prosecutions. Before becoming a federal prosecutor in 1982, Tom was, in 1980 at the age of 25, the youngest District Attorney in the State of Wisconsin. Over the course of his 30-year legal career, Tom’s litigation experience has included:
- Trying, as lead counsel, over twenty cases to a jury and many scores of cases to a court;
- First-chairing 10 cases in U.S. courts of appeals;
- Litigating in 27 jurisdictions, almost always as lead counsel;
- Teaching trial advocacy to U.S. Department of Justice lawyers at the Attorney General’s Advocacy Institute, in Washington, D.C.; and
- Identification as counsel in over 50 reported federal court opinions.
Tom is a frequent author, contributing articles to the Journal of Taxation of Global Transactions, the Legal Times, Tax Notes, The Insurance Tax Review, International Tax Notes, The Tax Executive, and the Ohio State Law Journal (student contribution). Working under commission from the Bureau of National Affairs (BNA), Tom revised Tax Management Portfolio No. 524, Deductibility of Illegal Payments, Fines, and Penalties. In 2005, at BNA’s request, he revised the chapter of BNA’s Tax Practice Series that addresses IRS audits, assessments, and appeals.
Tom is active in pro bono matters. He is appointed by a federal district judge to act as lead counsel in federal court in an employment-discrimination case, and he is also lead counsel in state court in a case involving a contractual dispute.
Tom is a member of the bars of Illinois, Wisconsin, and the District of Columbia, and of the U.S. Supreme Court, the Tax Court, the Court of Federal Claims, and the Courts of Appeals for the Seventh and Eleventh Circuits, as well as the bars of various federal district courts. He served on the Board of Governors of the Court of Federal Claims Bar Association from 2001 through 2003, and is a member of the Tax Advisory Board for the graduate degree programs in tax law at the John Marshall Law School. He has been listed in Who’s Who in American Law, has been repeatedly designated by his peers as an Illinois Super Lawyer in Tax, and was identified as one of the leading lawyers in the United States in the tax controversy field by The Legal 500.
Education
- Ohio State University College of Law, J.D., 1979
- University of Wisconsin at Eau Claire, B.A. (magna cum laude), 1976
