Tax Controversies

Overview

As tax laws evolve and the focus on enforcement increases, so do the risks and challenges you face. To strategize and stay ahead of potential tax controversies, you need forward-thinking legal counsel.

With one of the largest tax practices in the US, along with first-rate tax practitioners in our offices around the globe, we can provide you with the nuanced resources and experience you need to handle any tax controversy, at any stage, with any type of taxing authority—in or out of the courtroom.

Results

Secured a complete victory on all issues in a major US Tax Court case, Illinois Tool Works Inc. v. Commissioner of Internal Revenue Service. The high-profile case, in which the IRS challenged the repatriation strategy and determined that Illinois Tool Works was liable for more than $84 million in income tax deficiency and penalties, was presented before the United States Tax Court and the court resolved all issues in Illinois Tool Works’ favor. The decision, which had been highly anticipated and garnered extensive press coverage in the tax community, came after an eight-day trial in July 2016 and multiple briefings.
Served as lead tax litigation counsel for a $3 billion estate with respect to an alleged $150 million estate and gift tax deficiency involving transfer of interests in a professional sports team, building consensus among tax litigation counsel employed by three sets of beneficiaries adverse to each other in pending probate litigation and advising the court-appointed personal representative regarding his fiduciary duties.
Won U.S. Supreme Court case on statute of limitations issue with aggregate tax at issue of more than $1 billion; Home Concrete & Supply.
Achieved Fast Track Settlement that resolved multi-billion dollar proposed adjustments for several years under Subpart F and complete abatement of 20% accuracy-related penalty in excess of $1 billion.
Obtained 95% IRS concession on Code section 162(f) issue related to claimed deductions of several hundred million dollars.

Won New York State Supreme Court False Claims Act case alleging a major food retail chain failed to collect tens of millions in sales tax over a decade. The team effectively established that the company properly handled its tax obligation, and had consistently worked with auditors from the New York State Department of Taxation and Finance. They argued that the plaintiffs’ “survey” of purchases at the company’s locations and anecdotal conversations with company employees failed to properly allege that the company violated the tax law or engaged in fraud and that the survey itself was not scientifically performed or supported. The Court agreed with the arguments and dismissed the case.
Won a $5 million income tax refund by proving at trial that the taxpayer materially participated in a business that suffered losses.
Defended a $900 million estate in an estate and gift tax audit involving transfers of family limited partnership interests, over $10 million of art, and complex intra-family transactions.
Won Tax Court case respecting a Code section 338(h)(10) election, resulting in basis step-up and allowance of several hundred million dollars of deductions; Ralphs Grocery Co.
Obtained “no-change” letter after extensive audit regarding inversion, spin-off, and decontrol issues.
Won Tax Court case, making new law on whether credit card interchange income earned by taxpayer was OID; IRS subsequently issued guidance agreeing to drop the issue for the entire industry; Capital One Financial Corp.
Obtained “no-change” letter on Code section 199 issue involving IRS “campaign” issue on qualified films involving multichannel video programming distributors and television broadcasters.
Convinced Court of Appeals to reverse district court’s order denying motion for return of $12 million seized by IRS in criminal tax investigation.
Defended employees of international bank in connection with a Department of Justice money laundering and tax evasion investigation.

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Tax Controversies

Overview

IRS success: Franchisee recoups $3 million with 100% tax penalty abatement

Tax Controversy 360

"They are able to think through complex questions and provide technical advice in such a way that we understand their advice and guidance, and do all of this under pressure in a short period of time."

RANKED IN TIER 1 FOR US TAXES: CONTENTIOUS

"McDermott has an excellent understanding of tax law and application to the situations we encounter. They can make complex legal issues understandable and help come to a workable resolution. We rely on the advice we receive extensively."

Results