Jim Fuller, Adam Halpern
Under the Trump administration, the Treasury Department has undertaken a review of all tax regulations issued since January 1 2016. Two of the Obama administration regulations have since been delayed in their implementation, as further described below. More significant changes likely will be forthcoming, including, possibly, outright withdrawal of some of these rules.
This has given rise to a period of some uncertainty. These regulations contain important, and highly controversial, new rules.
Treasury and the IRS finalised, without any substantive changes, the § 367(a) and (d) regulations proposed in September 2015. The final regulations eliminate the favourable treatment for foreign goodwill and going concern value that had been in effect under the prior regulations for over 30 years. Intangible property, including foreign goodwill and going concern value, no longer qualifies for the active trade or business exception to § 367(a). The specific § 367(d) exception for foreign goodwill and going concern value has been eliminated. The final regulations apply retroactively to outbound transfers occurring on or after September 14 2015, the date the proposed rules were issued.
In adopting these new rules, Treasury and the IRS ignored the very clear legislative history, the relevant statutory language, numerous written comments, and testimony at the hearings. In the preamble to the final regulations, Treasury and the IRS discussed and rejected virtually every taxpayer comment or suggestion regarding the proposed regulations.
Temporary regulations issued under § 721(c) address certain outbound transfers to partnerships. The regulations implement the rules announced in Notice 2015-54, with certain changes. They are intended to ensure that, when a US person contributes certain property to a partnership with related foreign partners, the income or gain attributable to the appreciation in the property at the time of the contribution will be taken into account by the US transferor, either immediately or over time.
Treasury and the IRS also finalised the § 385 regulations and included certain of the § 385 rules in temporary regulations. The final regulations "reserve" on their application to foreign debt issuers (i.e., their application to outbound taxpayers). Thus, they do not apply when a US parent company makes a loan to its foreign subsidiary (controlled foreign company; CFC), or when one CFC makes a loan to another CFC. It was this area of the proposed rules that caused the most problems from an international tax perspective. We (Adam) testified on this very point at the IRS hearings. Foreign tax credits could have been lost and other serious collateral damage would have resulted.
The rules thus apply primarily to US subsidiaries in foreign-parented multinational groups (i.e. inbound taxpayers). Under the final regulations, the documentation requirements of Treas. Reg. § 1.385-2 were slated to have a delayed effective date, applying to debt instruments issued (or treated as issued) on or after Januaruy 1 2018. Recently issued Notice 2017-36 further delayed the effective date to January 1 2019.
The final regulations largely retain the so-called 'blacklisted transactions' rules of Treas. Reg. § 1.385-3, including the per se funding rule causing a debt issued within 3 years of a distribution, stock acquisition, or certain reorganisations to be treated automatically as equity. The retroactive effective date of April 5 2016 is also retained. A number of changes were made to the blacklist rules in response to comments. These changes offer some relief but also add substantial complexity to the rules.
Treasury and the IRS finalised the § 956 regulations relating to partnerships, Treas. Reg. § 1.956-4. Under one rule, a CFC partner is treated for § 956 purposes as holding its attributable share of partnership property, determined in accordance with the partner's liquidation-value percentage with respect to the partnership. Thus, for example, if the partnership makes a loan to a related US person, a CFC partner is treated as holding a percentage of the loan, resulting in a § 956 investment.
Another rule generally treats an obligation of a foreign partnership as an obligation of its partners for the purposes of § 956. This is perhaps the most important part of the new § 956 partnership regulations. If a CFC lends to a foreign partnership in which the CFC's US parent company is a partner, the CFC will be treated as holding an obligation of a US person, again resulting in a § 956 investment. If the partnership distributes the borrowed funds to the US parent company, the amount of the § 956 investment can be increased.
Treasury and the IRS finalised the 2006 proposed § 987 regulations, generally adopting the proposed regulations' substantive approach, with changes at the margins. The final rules are exceedingly complex and are likely to be challenged as they clearly contradict the statutory mandate in certain respects.
Treas. Reg. § 1.987-3 generally requires a branch to compute its taxable income by translating each item of income, gain, loss, and deduction from its currency to the owner's currency. Certain items are translated at current exchange rates, others at historic rates. This scheme runs directly counter to the statute, which provides for calculation of branch income in the branch's currency, and a simple translation into the owner's currency at a single rate.
Treas. Reg. §§ 1.987-4 and 1.987-5 apply when a branch makes a remittance back to the home office. These regulations apply the foreign exchange exposure pool (FEEP method) to determine § 987 gain or loss in such a case, taking into account currency fluctuations in financial assets (but not hard assets or stock in subsidiaries) since income was earned by, or assets were contributed to, the branch. When a branch experiences a "termination," it is deemed to have made a remittance of all of its assets and liabilities to the home office, resulting in full recognition of the currency gain or loss inherent in the FEEP.
The final regulations become effective in 2018. There are important transition rules for companies that need to switch to the final rules from their current method of applying § 987.
Treasury and the IRS finalised the 2015 temporary and proposed § 871(m) regulations addressing certain dividend equivalent transactions, for example, a notional principal contract linked to dividends and share price of a particular US corporate stock. Consistent with Notice 2016-76, the final regulations were to apply to contracts with a delta of one (i.e., 100% of the contract value is determined by reference to the underlying securities) beginning in 2017 and to other applicable contracts beginning in 2018.
In Notice 2017-42, Treasury and the IRS delayed the implementation date for non-delta-one contracts to January 1 2019. The lenient enforcement standards of Notice 2016-76 for taxpayers making a good faith effort to comply were also extended. They will apply in 2017 and 2018 for delta-one contracts, and in 2019 for non-delta-one contracts.
Expectations for fundamental US tax reform were high after the 2016 presidential election. It was anticipated that a Republican president and a Republican-controlled Congress could work together to enact meaningful reforms to the outdated US international tax system.
As of early September 2017, prospects for fundamental reform have dwindled. House Republican leaders spent the first half of the year promoting their "Blueprint" which included a border adjustability tax (BAT) – similar to a VAT on imported goods, services and intangibles. Importers organised strong opposition to the BAT, and House leaders finally relented, but only after substantial time was lost.
Recent tax proposals from the Trump Administration and congressional leaders seem to be focused on a temporary reduction in corporate and individual rates. An optional repatriation holiday has also been mentioned, along the lines of § 965 from the 2004 Tax Act.
In a development that surprised most taxpayers and tax advisers, the IRS appealed the Tax Court's decision in Medtronic v. Commissioner, T.C. Memo No. 2016-112 (2016), a major transfer pricing case in which Medtronic won a resounding victory.
The IRS contends that the Tax Court erred as a matter of law in adopting Medtronic's transfer pricing method. The Service also contends that the case should be remanded so that certain adjustments may be made to the transfer price adopted by the Tax Court.
The Service asserts that the Tax Court's transfer pricing analysis was wrong as a matter of law because it used a royalty rate as a comparable price for Medtronic's inter-company licenses without first applying the requirements for evaluating whether the relevant agreement qualified as a comparable uncontrolled transaction (CUT).
The government seems to have an uphill battle in pursuing this appeal. It likely will have to establish that the Tax Court made a "clear error" regarding its findings of fact despite its "errors of law" assertions. This is a hard standard to satisfy. The IRS brief articulates the IRS's disagreement with the Tax Court's opinion, but it doesn't seem to establish clear error.
The IRS keeps fighting in the courts regarding transfer pricing issues, but doesn't seem to listen to the pretty clear opinions of these courts.
The Tax Court ruled in favour of Eaton Corp., agreeing with the company that the IRS abused its discretion by cancelling two advance pricing agreements that Eaton and the IRS had entered into to establish a transfer pricing method for covered transactions between Eaton and its subsidiaries. Eaton Corp. v. Commissioner, T.C. Memo. 2017-147. Eaton appears to be the only taxpayer whose advance pricing agreements (APAs) were cancelled retroactively. The IRS then issued a deficiency notice to Eaton based on an alternative transfer pricing methodology.
The IRS argued that it cancelled the APAs for two reasons: (1) misrepresentations, mistakes as to a material fact, and failures to state a material fact during the APA negotiations; and (2) implementation and compliance. The Tax Court disagreed with this IRS argument, and held that only a mistake as to a material fact or a failure to state a material fact is a ground for cancellation, based on Rev. Proc. 96-53, § 11.06(1), and Rev. Proc. 2004- 40, § 10.06(1). Under Rev. Proc. 96-53, 1996-2 C.B. 375, in order to cancel an APA, the material fact must be one that, if known to the IRS, could reasonably result in a significantly different APA (or no APA at all).
The Tax Court held that the cancellation of an APA is a rare occurrence and should be done only when there are valid reasons that are consistent with the revenue procedures. A misrepresentation has to be false or misleading, usually with the intent to deceive, and must relate to the terms of the APA. The Tax Court stated that a different viewpoint is not the same as a misrepresentation and is not grounds for terminating an APA. The Court said an APA is a binding agreement and should only be cancelled according to the terms of the revenue procedures and should not be cancelled because of a desire to change the underlying methodology of a transfer pricing method.
The Tax Court held that based on all the evidence presented, no additional material facts, mistakes of material facts, or misrepresentations existed that would have resulted in a significantly different APA or no APA at all. The IRS had enough material to decide not to agree to the APAs or to reject Eaton's proposed transfer pricing method and suggest another APA at the time the APAs were negotiated.
While the issue was framed differently, the Eaton case bears conceptual similarities to Medtronic (above) and Eli Lilly v. Commissioner, 856 F.3rd 855 (7th Cir. 1988), in that each of these three cases involved § 482, a prior transfer pricing agreement between the taxpayer and the IRS, and the IRS's subsequent decision not to follow the agreement and to assert large tax deficiencies. All three cases were lost by the IRS. In all three, the courts' transfer pricing results were effectively those to which the IRS and the taxpayer had previously agreed, with some minor changes.
The Tax Court decision in Amazon.com Inc. v. Commissioner, 148 T.C. No. 8 (2017), was yet another transfer pricing taxpayer victory. The court rejected the IRS's attempt to relitigate the same cost-sharing transfer pricing issues the IRS lost on in Veritas Software Corp. v. Commissioner, 133 T.C. 297 (2009).
The Tax Court stated that one does not need a Ph.D. in economics to appreciate the essential similarity between the discounted cash flow (DCF) methodology used by the IRS's expert in Veritas, and the DCF methodology used by the IRS's expert in Amazon. Both assumed that the pre-existing intangibles transferred had a perpetual useful life; both determined the buy-in payment by valuing into perpetuity the cash flows supposedly attributable to these pre-existing intangibles; and both in effect treated the transfer of pre-existing intangibles as economically equivalent to the sale of an entire business.
The Tax Court rejected the Service's aggregation argument in Veritas and it rejected it in Amazon as well. The Tax Court stated the type of aggregation proposed does not yield a reasonable means, much less the most reliable means, of determining an arm's-length buy-in payment for at least two reasons. It improperly aggregates pre-existing intangibles (which are subject to the buy-in payment) and subsequently developed intangibles (which are not). It improperly aggregates compensable intangibles (such as software programs and trademarks) and residual business assets (such as workforce in place and growth options) that do not constitute pre-existing intangible property under the cost sharing regulations in effect during 2005-2006.
The Service urged the Tax Court to overrule Veritas if it could not be distinguished on the facts. The Tax Court stated: "We decline his invitation to overrule that Opinion".
Analog Devices won an important § 482 transfer pricing case involving Rev. Proc. 99-32, 1999-2 C.B. 296, which authorises procedures to repatriate cash following, and equal to the amount of, a transfer pricing adjustment. The IRS argued unsuccessfully that the deemed accounts receivable under the revenue procedure constituted real and retroactive accounts receivable and payable that could create serious negative tax consequences under other tax provisions, § 965 in the case of Analog Devices.
A previous case, BMC Software v. Commissioner, 141 T.C. 224 (2013) (BMC), was decided against the taxpayer on this issue, but reversed on appeal by the Fifth Circuit, 780 F.3d 669 (2015). An appeal in Analog Devices would lie to the First Circuit, so BMC's appellate victory was not controlling.
In a 'reviewed by the Court' decision in Analog Devices, the Tax Court agreed to follow the Fifth Circuit, thus overruling its BMC decision. Accordingly, the Rev. Proc. 99-32 deemed accounts receivable is just that, artificial and only a procedural mechanism to repatriate the relevant cash.
Grecian Magnesite Mining v. Commissioner, 149 T.C. No. 3 (2017), addressed Grecian Magnesite Mining (GMM), a Greek corporation that had an interest in Premier Chemicals (Partnership), a US limited liability company treated as a partnership for tax purposes. GMM's partnership interest was later redeemed. Part of the gain was subject to tax under FIRPTA (real estate gain) rules, and taxed accordingly. The issue was how the rest of the gain from the redemption of GMM's partnership interest should be taxed.
Under Rev. Rul. 91-32 the gain recognised by GMM would be treated as effectively connected with a US trade or business to the extent the partnership was so engaged. The Tax Court rejected the revenue ruling as not a proper interpretation of the IRS's own regulations, and stated that it lacked the power to persuade the Court. Further, the Court stated that the revenue ruling's treatment of the relevant partnership statutory provisions was cursory in the extreme, and did not even cite § 731, the tax code rule governing "gain or loss from the sale or exchange of a partnership interest".
This holding was not unexpected. Many practitioners had long viewed the revenue ruling as suspect and of questionable validity. It simply ignored the Code's statutory language.
The Court found that the balance of the gain was treated as gain from the sale or exchange of a capital asset based on the plain language of the statute. The Court stated that Congress intended § 741, if applicable, to provide capital gain or loss treatment on the sale or exchange of a partnership interest by a partner. Indeed, stated the Court, congressional use of the phrase "shall be considered as" in § 741 is unambiguous and mandatory on its face.
The IRS argued that the redemption should be subject to US tax anyway. The disputed gain was foreign source income. The Service argued that the gain was taxable under § 865(e)(2)(A) which provides that: "If a nonresident maintains an office or other fixed place of business in the United States, income from any sale of personal property (including inventory property) attributable to such office or fixed place of business shall be sourced in the United States".
The Service argued that the disputed gain was taxable under this exception if the gain was attributed to the Partnership's US office.
The Service's argument had two strands: first, that the Partnership's office was material to the deemed sale of GMM's portion of the Partnership assets; and second, that the Partnership's office was material to the increased value of that interest that GMM realised in the redemption. The Court stated that the material factor test was not satisfied because the Partnership's actions to increase its overall value were not "an essential economic element in the realisation of the income". Increasing the value of the Partnership's business as a going concern, without a subsequent sale, would not have resulted in the realisation of gain by GMM.
Even if the Court were to decide that the Partnership's office was a material factor in the production of the disputed gain (which it did not), the Court stated that it would also need to find that the disputed gain was realised in the ordinary course of the Partnership's business conducted through its office in order for the gain to be attributable to that office, and thereby to be US source income.
The redemption of GMM's interest in the Partnership was a one-time, extraordinary event and therefore was not undertaken in the ordinary course of the Partnership's business. The Court stated that the IRS conflates the ongoing income-producing activities of the Partnership (magnesite production and sale), which certainly occurred in the ordinary course, and the redemption of GMM's partnership interest, which was an extraordinary event. The Court stated that the Service would effectively eliminate the "ordinary course" test and would allow the "material factor" test to stand for both tests.
Much anticipation surrounds the Trump administration's promise to push through tax reforms. Throughout the presidential campaign, Donald Trump pledged to slash corporate income rate, repatriate foreign earnings and increase the standards of deductions. The Republican Party is well-positioned in the grand scheme of legislative change with a majority in both House and Senate.
Douglas Stransky, head of tax at Sullivan & Worcester, said that passing through comprehensive tax reform will likely prove challenging. "If we do not see a bill in the next few weeks, it is very unlikely that we would see tax reform legislation this year because of political pressure and an unforgiving legislative timetable," said Stransky.
Despite the uncertainty that surrounds reform, some practitioners have affirmed that the US tax system will likely be transposed to a territorial tax regime. "Such a system would put the US on parity with most of the rest of the world with regard to how profits earned overseas are taxed," said Stransky.
However, Rocco Femia, tax member at Miller & Chevalier Chartered, stated: "A territorial system could exacerbate the pressure on US transfer pricing rules, as profits shifted outside of the US would escape US tax. This effect could be mitigated by anti-base erosion rules, although the design of such rules should preserve the competitive benefits of territoriality."
While talk of tax reform on a grand scale have dominated the headlines, tax inversion-curbing legislation introduced by the previous administration is also at risk of being reversed.
On July 28 2017, the IRS issued Notice 2017-38, which placed earnings stripping regulation under renewed review and delayed it from coming into effect by 12 months, until January 2019.
The initial rules, legislated by former president Barack Obama, reclassified certain loans as equity under Section 385 of the US tax code and aimed at closing international tax loopholes by asking companies to submit information on related party debt to the tax authority.
Stransky argued that the regulations in this area are complex and impose significant documentation and analysis requirements on US corporations for ordinary inter-company transactions.
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Fenwick & West
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Fenwick & West LLP has represented over 100 of the Fortune 500 largest corporations in tax planning, transfer pricing, acquisitions, joint ventures and tax dispute resolution, including litigation. Well over 50 are Fortune 100 companies.
Our primary focus is in the international tax area. International Tax Review named us in 2017 as having one of the world's leading tax planning and tax transactional practices.
Dispute resolution also is an important part of our tax practice. We have favorably resolved disputes in over 150 IRS appeals proceedings. We also have been counsel to corporate taxpayers in over 70 federal tax court cases. Many of these cases and appeals proceedings involve or have involved transfer pricing.
Eight Fenwick tax partners appear in International Tax Review's Tax Controversy Leaders (2017), and five have appeared in Euromoney's World's Leading Transfer Pricing Advisors.
Euromoney Legal Media Group named Jim Fuller, one of our tax partners, as one of the top 25 tax lawyers in the world. Ten Fenwick partners, including our tax practice group leader, Adam Halpern, have appeared in Euromoney's World's Leading Tax Advisors. Three appear in Euromoney's Top 30 US Tax Advisors (2017).
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|Federal corporate income tax rate||35%|
|Royalties from, for example, patents, know-how||30%|
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Alston & Bird is led by Henry Birnkrant. The firm's tax professionals are experts on matters involving acquisitions and dispositions of businesses and businesses assets, partnerships, state and local taxation, unclaimed property, REITs, transfer pricing and cross-border taxation.
Birnkrant assists multinationals with transfer pricing matters and structuring of cross-border business transactions. He has also been consulted by the IRS and OECD with regards to TP compliance.
Alvarez & Marsal, Taxand USA offers services in federal, state and local tax, international tax, transfer pricing, controversy, and restructuring. Thomas Aiello is managing director of the firm's tax practice.
Baker McKenzie is a full service firm that comprises 38 professionals, including Richard Slowinski who chairs the firm's Washington tax group. Slowinski assists US and foreign companies with corporate taxation, cross-border tax controversy and planning, TP planning issues with regards to tangible products, intellectual property, global restructurings, tax treaties and regulatory lobbying.
The firm offers services in international tax controversy, transfer pricing, international tax planning and cross-border transactions. It has also represented and defended clients in all stages of tax disputes. Due to its success rate, the firm is a trusted tax counsel to multinational operating in the US and aboard
Key members of the team include counsel Kathleen Agbayani, and partner Mary Bennett.
Caplin & Drysdale has extensive experience in tax law, tax procedure and tax cases. The firm works with US and foreign based companies, organisations and individuals, on the full range of tax, controversy and related legal matters. Its tax professionals also assist clients with IRS audits, litigation and negotiating closing agreements. Scott Michel is a partner in the firm's Washington D.C. office where he assists individual and corporate clients in complex multi-jurisdictional voluntary disclosure disputes, tax fraud investigations and corporate internal investigations of tax and financial related matters. Mortimer Caplin is the firm's founding member, he also sits in Caplin & Drysdale's Washington D.C. office.
Covington & Burling is a well-respected firm that offers its tax expertise to multinational enterprises, financial institutions, sovereign wealth funds and governments.
Daniel Luchsinger and Reeves Westbrook are co-chairs of the practice. Luchsinger assists clients with federal income tax issues, including the structuring of partnerships and joint ventures, domestic and cross-border acquisitions and dispositions, including both inbound and outbound property and stock transfers and cross-border corporate restructurings involving partnership issues. Westbrook counsels on international asset transfers and tax optimal corporate structures, acquisitions and dispositions, cross-border transfer pricing, cross-border financings, tax credit planning as well as foreign and domestic joint ventures.
Deloitte is one of the largest tax firms in the country with more than 11,000 professionals. The firm provides a broad range of fully integrated tax services that deliver insight, innovation, and deep business and sector experience to companies facing the challenges of adapting to worldwide trends in taxation. Services include business tax, international tax, transfer pricing, indirect tax, multistate tax, tax management consulting, global employer services and M&A.
The firm's Washington tax group works with clients to analyse complicated tax issues and tax risks that could harm their operations. Over the past year, the firm has helped clients with documentation in accordance with new tax regulations.
Steve Kimble is the chairman and the chief executive officer of the firm's tax group. Tim Tuerff is the managing partner for the Washington national tax office. His practice specialises in international tax issues and serves US-based multinational corporate clients engaged in cross-border transactions.
EY provides a full range of tax services, including tax planning, international and corporate tax, state and local tax, cross-border tax advisory and M&A.
The firm's client list includes multinational companies from a variety of sectors.
Freshfields Bruckhaus Deringer provides expert advice on inbound M&A including listed and private companies and de-mergers, joint ventures and partnerships, flotations and privatisations, reorganisations and private equity.
This year the firm advised Henderson Group on its $6 billion all stock merger of equals with Janus Capital to form Janus Henderson Global Investors, a leading global active asset manager with AUM of more than $320 billion. It has also advised on US tax aspects for Formula One Group and its shareholders, including CVC Capital Partners, on selling its 38.8% stake in Formula One to Liberty Media. Another key member of the firm is senior associate Dennis Caracristi.
Ivins, Phillips & Barker offers services in federal tax and employee benefits. Eric Fox is the managing partner at the firm. Fox's practice centres on international and corporate taxation, including controversy and estate planning.
The firm has assisted US and foreign Fortune 500 companies with their tax matters.
Jones Day offers services in bankruptcy tax, international tax, M&A, private equity and real estate, state and local tax, structured finance, tax audits, controversies and tax-credit transactions.
Joseph Pari is the national principal in charge for KPMG's tax practice. Pari's practice centres on US federal income tax issues related to domestic and cross-border M&A, spin-offs and other divestitures, internal restructurings, post-acquisition integration, workouts and consolidated return matters.
KPMG's tax team consists of around 180 professionals, many of whom have worked for the IRS, the US treasury department, Congress and the US Tax Court. The firm assists clients in analysing complex tax issues. The firm has a range of specialty groups which include accounting for income taxes, M&A, economic and valuation services, federal legislative and regulatory service, international tax, global mobility, state and local tax as well as compensation and benefits.
The professionals at Latham & Watkins advise small and medium-sized enterprises and multinational corporations across several sectors. The firm offers services in transactional and international tax, tax controversy, tax-exempt organisations, and benefits, compensation and employment.
Its team is highly experienced in dealing with the US tax authorities. Members of the firm have also previously served in the IRS, the US Department of Justice and the Department of Treasury.
Nicholas DeNovio is the global chair of Latham & Watkins's international tax practice. He has advised large US and foreign multinational corporations on complex cross-border transactions. Miriam Fisher is the global chair of the tax controversy practice. Her practice concentrates on federal tax controversy and litigation. Cheryl Coe is the local chair of the firm's D.C. tax department, her expertise includes corporate and partnership taxation.
Mayer Brown's tax practice covers every aspect of corporate, partnership and individual taxation in the US and in Europe, including taxation of cross-border transactions and state and local issues. The firm's sub-practices include transactions, consulting and planning, audits, administrative appeals and litigation, transfer pricing and government relations.
In the transactional area, the firm's practitioners work in all areas of inbound and outbound planning, M&A, divestitures, leveraged and structured financings, financial products and derivatives, renewable energy transactions, transfer pricing compliance and other tax advisory work. On the tax controversy side, Mayer Brown assists clients with trial and appellate tax litigation, federal audits, administrative appeals, MAPs, APAs and other administrative matters.
Clients of the firm come from the financial services, transport, energy and utilities and computers, software, online and digital sectors.
A key member at the firm is partner Kenneth Klein who is a former IRS associate chief counsel that specialises in structuring and restructuring operations of US and foreign multinational companies in numerous industries.
McDermott Will & Emery assists Fortune 500 companies on the tax aspects of M&A deals and corporate restructurings. It also handles tax controversy, administrative appeals and tax litigation.
The firm has an interdisciplinary team which comprises lawyers, economists and accountants highly experienced in transfer pricing planning, documentation and controversy matters. It also regularly resolves tax controversies for clients operating in a number of industries.
David Noren assists multinationals with international tax planning and advises on outbound and inbound issues including, the subpart F anti-deferral rules, application of bilateral income tax treaties and the treatment of cross-border flows of services.
George Hani oversees the tax practice at Miller & Chevalier Chartered. The firm consists of 19 partners and 13 other tax professionals, including Katherine Zhang and Colin Handzo who joined the firm in 2017.
This year, the firm has provided tax advice to British American Tobacco in connection with the $49 billion acquisition by its US subsidiary BATUS Holdings. As a result of the size and strategic importance of the transaction this will create the world's largest listed tobacco company. It also advised a Fortune 100 natural resources company on a claim for relief from double taxation under a US income tax treaty. This involved a potential adjustment imposed by a European jurisdiction.
One client said: "We have for many years engaged with Miller & Chevalier, primarily to represent us in tax appeals procedures involving the IRS. Miller & Chevalier has consistently obtained excellent results for us. We have been very happy with their work for us and I would recommend them."
Morgan, Lewis & Bockius's tax practice comprises 93 professionals. The firm provides clients with a broad range of tax services. Its tax group focuses on four main disciplines: advising on transactions, providing day-to-day counselling on substantive and tax planning and compliance issues, resolving disputes with tax authorities and in court and helping clients obtain private or public guidance from the IRS and the US Treasury. Practitioners at the firm previously held senior roles in the US Treasury, IRS and the US Department of Justice.
Sheila Armstrong represents a range of clients in all aspects of government contracting, including contract negotiation, and litigation matters. Elizabeth Baird practice centres on securities enforcement defences, internal investigations and regulatory counselling.
PwC offers services in indirect taxes, tax accounting, international tax, state and local tax, M&A, tax reporting and strategy, tax controversy and dispute resolution, among other areas of expertise.
The tax professionals at Shearman & Sterling advise clients on matters relating to the US government and its regulatory and administrative bodies. The firm's Washington D.C. office practices in the areas of tax law, capital markets, and international trade and government relations. The tax group also advises multinational companies in cross-border M&A, tax-efficient investment and operating structures, tax-sensitive management/employee compensation packages and expatriate taxation.
The team has a wealth of experience from previously held positions in government agencies, including the Department of Justice, the Securities and Exchange Commission, the Internal Revenue Service and the Department of Commerce.
Clients of the firm are active in the banking and finance, insurance, technology, real estate and hospitality sectors.
Michael Shulman is a co-head of the tax group. His areas of specialism includes corporate acquisitions, dispositions, restructurings and spin-offs. He also represents regulated investment companies and onshore and offshore investment funds.
The tax practice at Skadden, Arps, Slate, Meagher & Flom comprises 37 lawyers, 13 of which are partners. The firm counsels on every aspect of domestic and international tax law, including complex corporate tax transactions, restructurings, tax controversy and litigation. Its professionals have been involved in some of the firm's most significant transactions representing many of the world's largest companies across all industries. In the past year, the firm has led the charge on major M&A, spin-offs, partnerships and joint ventures, and energy project finance transactions. It has also maintained its leading role in assisting clients in resolving large, complex and global tax controversies.
The firm's Washington tax practice is led by Jessica Hough. Hough represents clients in a wide range of areas, including M&A and divestiture transactions.
In March 2017, Skadden, Arps, Slate, Meagher & Flom successfully represented Amazon in one of the largest TP cases in decades, and the first involving e-commerce.
Robert Rizzi and Lisa Zarlenga lead Steptoe & Johnson's tax practice. The firm offer services in consultancy, transactional tax and advocacy in federal and state taxation. Its team has also represented clients before the IRS, the US Treasury Department, in Congress and before foreign tax authorities through competent authority proceedings.
Steptoe & Johnson works with some of the world's largest corporations and tax-exempt organisations on M&A, joint ventures, financings and investment arrangements and international tax.
Rizzi's area of expertise includes the federal and state income tax aspects of corporate and partnership business transactions and tax planning for transactions in the financial services, telecommunications, technology and hospitality sectors.
Zarlenga focuses on federal income taxation, structuring tax-free and taxable acquisitions and dispositions for both public and private companies.
Sullivan & Cromwell has a respected tax practice known for its expertise in tax controversies. Its tax group has assisted clients at audit level, administrative level and during litigation. Korb has been with the firm since 2009 and has more than 42 years of industry experience.
Sullivan & Worcester is highly regarded for its expertise in international taxation. The firm advises US clients on foreign investments and counsels foreign investors in the tax implications of their investments in the US. Its tax team comprises 19 partners and 15 other fee earners, including Max Levine who joined the firm in May 2016. The practice is led by Doug Stransky, who one client described as "fantastic".
Sullivan & Worcester has one of the largest international tax practices in the northeast. Its tax specialists have extensive experience in strategic tax planning and implementation for a wide range of international business activities and taxes, including structuring tax-efficient international M&A, dispositions and reorganisations. The firm also assists clients in designing cross-border financing strategies, capital structures, repatriation strategies and planning for foreign among other things.
This year, the firm provided legal and international tax advice to Broadstone Group on the running of the inaugural European Games, held in Baku 2015.
One client said of the firm that the "service is excellent".
Sutherland Asbill & Brennan advises Fortune 500 companies in the areas of federal, international, state and local tax law. The firm has more than 100 tax practitioners who specialise in tax controversy and litigation, audits and disputes, inbound and outbound tax planning, transfer pricing and tax accounting.
Vinson & Elkins's tax, executive compensation and benefits department is led by George Gerachis. The team consists of 24 partners and 35 other tax professionals that provide comprehensive tax advice in a broad range of industries.
Skilled in analysing tax controversies, controversy planning and tax consequences associated with business transactions, the team provides strategic counselling to resolve a range of tax issues. In November 2016, Vinson & Elkins advised Sunoco Logistics Partners in a corporate tax case concerning its merger agreement with Energy Transfer Partners.
Vinson & Elkins advised Energy Transfer in a tax dispute worth $33 billion. In this case, Energy Transfer terminated its merger agreement with the Williams Companies after a tax opinion could not be produced at the closing of the merger. Gerachis and David Cole contributed immensely to the trial. In March 2017, the Delaware Supreme Court ruled in their favour, holding that Energy Transfer was within its rights to terminate the merger.
The professionals at Weil, Gotshal & Manges are highly experienced in complex M&A, private equity and private-funds matters, restructurings and recapitalisations, securitisation and financing matters. David Bower is a partner at the firm. He specialises in international taxation, joint ventures and private equity funds.
Kim Boylan heads the tax controversy practice in White & Case's DC office and is also the global head of the firm's tax practice. Brian Gleicher heads the transfer pricing practice in D.C. Its tax team comprises two partners and four other professionals.
The firm offers services in tax disputes, including domestic and international tax disputes involving the competent authority process. This year, White & Case represented a client in an IRS appeal and in a later audit cycle with the IRS examination team.
|Tier 1 - US: Washington D.C.|
|Skadden, Arps, Slate, Meagher & Flom|
|Tier 2 - US: Washington D.C.|
|Caplin & Drysdale|
|Covington & Burling|
|McDermott Will & Emery|
|Miller & Chevalier Chartered|
|Morgan, Lewis & Bockius|
|Shearman & Sterling|
|Steptoe & Johnson|
|Sullivan & Worcester|
|Tier 3 - US: Washington D.C.|
|Freshfields Bruckhaus Deringer|
|Latham & Watkins|
|Sullivan & Cromwell|
|Sutherland Asbill & Brennan|
|Vinson & Elkins|
|Weil, Gotshal & Manges|
|White & Case|
|Tier 4 - US: Washington D.C.|
|Alston & Bird|
|Alvarez & Marsal, Taxand USA|
|Ivins, Phillips & Barker|