Representative Tax Transactions

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Tax Controversy Practice

The Tax Controversy Practice includes disputes with both the IRS and New York State Department of Taxation and Finance on behalf of individuals, estates, partnerships and corporations. This includes Examinations, Appeals, United States Tax Court litigation, Federal Court of Claims, New York State Conciliation Conferences and the New York State Division of Tax Appeals. We also represent clients before the IRS and New York State Collection Divisions in matters involving Levies, Liens, Warrants, Property Seizures, Penalty abatements, and Drivers License suspensions due to unpaid NYS tax liabilities. We handle Offers in Compromise, Installment Payment Agreements, Collection Due Process and Equivalency Appeals, innocent Spouse claims, Payroll Tax assessments, Responsible Person assessments, Sales and Use Tax Assessments, NYS and NYC Residency cases, Employee/Independent Contractor cases, Pension Plan Qualification and Prohibited Transaction issues, and non-filers. We also assist clients with International tax matters including offshore voluntary disclosure initiatives. Our Tax group assists tax exempt organizations, such as private foundations and public charities assisting with the creation of their organization and their exemption applications. We also assist qualified pension plans with issues involving prohibited transactions, minimum funding deficiencies and other matters related to their qualified status.

    Transactional Tax Practice

    The Transactional Tax practice advises businesses on a variety of tax matters, including tax considerations associated with a range of financial transactions including mergers and acquisitions, structuring business entities, choice of business entity, separation of ownership, and the acquisition, disposition and like-kind exchange of real estate and other assets. The Tax group works with all kinds of entities, including C corporations, S corporations, Partnerships, Limited Liability Companies and Partnerships, and Trusts. The Tax group assists the Corporate practice group representing established businesses as well as emerging early and growth stage companies, financial institutions of all types, and strategic and financial buyers and sellers in all aspects of structuring and negotiating business combinations including mergers and acquisitions, private equity transactions, joint ventures, strategic partnerships and corporate reorganizations. Businesses of all sizes and industries from publicly traded corporations to closely held companies rely on the ability of our tax and corporate attorneys to provide innovative approaches to structuring practical and effective solutions to the challenges facing business owners and entrepreneurs. Our attorneys are well versed in providing counsel in connection with matters such as forming and growing start-up/emerging companies, devising and executing on exit strategies, helping to ensure smooth control transitions through succession planning.

      Representative Tax Cases

      • Tax Court litigation involving over $50 million in foreign income at issue. Taxpayer has a number of businesses in various South American countries that operate active companies in the pharmaceutical and construction industries. A favorable resolution with Appeals and Counsel’s office was achieved that reduced a $50 million liability down to approximately $30,000. Decision Documents reflecting the resolution was recently entered by the US Tax Court.

      • Controversy involving well-known author involving Form 843 claim for abatement of interest on substantial tax liabilities involving complex issues of credits of overpayments and filings of amended returns.

      • Controversy involving millions in asserted tax liabilities related to Reasonable Compensation issue for corporate owners/officers and Research & Development Credits that is currently at Appeals and could become a Tax Court case.

      • Controversy involving $10 million in taxes due by taxpayer in the New York real estate industry. Resolutions with both New York State and the IRS.

      • Favorable resolution of renowned patent and inventor’s tax liabilities.

      • Favorable settlements involving Sales Tax Assessments of over $6,000,000 for a large corporation, saving over $4,000,000 for the client. New Jersey company owed New York State sales taxes; secured significant reduction in sales taxes owed.

      • Favorable resolution of $2 million of tax liabilities, abatement of penalties and releases of filed tax liens for nationally known supplier of building and architectural products.

      • Favorable resolution of business client’s passport revocation due to substantial liabilities due.

      • Favorable resolution of retailer’s Lottery suspension and continuation of business for purposes of sale.

      • Innocent spouse case involving millions of tax liabilities of well-known Manhattan couple by which husband, a well-connected attorney and professor, took substantial conservation easement deductions that were disallowed.

      • Complete abatement of Responsible Person Assessments in cases against officers in the offending corporations, in the amounts of $2,000,000 and $300,000 respectively.

      • Favorable settlement agreements for both corporation and individual officers against which sales taxes of over $1.5 million were asserted.

      • Favorable settlement agreements for both corporation and individual officers for withholding taxes where over $1.7 million and $2 million was owed, respectively.

      • Favorable settlements involving New York State residency issues resulting in “no change” residency audits, one involving the CEO of a Long Island corporation.

      • Abatements of penalties (late filing, late payment, negligence penalty due to reasonable cause) involving hundreds of thousands of dollars for a number of clients.

      • Favorable settlement with both the IRS and Department of Labor involving pension plan qualification and compliance issues including a challenge to a $1.3 million adjustment against a non-profit corporation.

      • Obtained under severe time constraints the releases of Levies and Liens to facilitate property sales for a number of clients.

      • Negotiated settlement agreement with the Pension Benefit Guarantee Commission in an effort to cure client’s pension plan deficits and obtain withdrawals of tax liens filed (due to client’s failure to make in excess of $1M in required contributions.) Successfully closed funding transaction with all liens being withdrawn and a PBGC approved escrow account being established to hold proceeds necessary to effectuate a standard termination of the plans.

      • Negotiated the cancellation of a personal liability assessment made against an alleged responsible officer of company with outstanding payroll tax obligations.

      • Obtained a $100K+ reduction in a bulk sales tax assessment made against the alleged purchaser or transferee of local auto body shop (based on fair market value of assets actually transferred).

      • Obtained retroactive reinstatement of charity’s 501(c)(3) status after it had its taxexempt status revoked due to three-years of non-filing due to accountant error.

      • Corrected clients’ foreign compliance issues (i.e., information return and income tax reporting failures) via the submission of an offshore voluntary disclosure and receipt of closing agreement. Higher penalties and criminal exposure were avoided.

      • Advised on tax implications on the division of $20M commercial real property among legatees and co-owners. Recent widow wanted to extricate herself from husband’s commercial real estate partnerships without having to sell properties. Assisted in structuring series of transactions to separate ownership in manner that minimized taxable gain to both parties.

      • Advised on tax implications of structure of a potential $9M settlement in an SEC action. NYC litigation boutique about to settle significant SEC action by which SEC proposed a civil money penalty and disgorgement. We advised that the civil penalty element would not be deductible for federal income tax purposes and that the IRS viewed disgorgements as not deductible unless primarily compensatory (as opposed to punitive). Suggested that settlement agreement expressly provide that the disgorgement be paid to a Fair Fund created pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended for the benefit of injured investors.

      • Advised on structuring of the sale of a $50M group of patents. Client inventor held patents related to manufacture of bubble wrap. Patents were licensed to bubble wrap manufacturer. Manufacturer sought to purchase patents and related rights outright. We suggested allocation of purchase price in order to cushion the tax consequences. We advised that gain attributable to the patents was likely to be capital gain (taxed at favorable rates to the seller/client and not deductible by the buyer); and any payment attributable to the other related rights would be ordinary income to the seller/client, but deductible to the buyer. A negotiation ensued and mutually acceptable language was found.

      • Structured equity compensation to be paid to entertainers in connection with endorsement contracts. Advised entertainers on income tax aspects of endorsement contracts which provided for cash incentive payments and the grant of equity. Receipt of equity in connection with the performance of services can give rise to phantom income (taxable income without the liquidity to pay the related tax), thus we negotiated structures that, in some cases deferred the taxable event through the use of profits interests coupled with a catch up allocation; and in other cases provided for liquidity.

      • Advised on structures to effect tax-favorable freeze out of minority owners in a public company. Client local bank was considering a transaction to freeze-out minority shareholders. Applicable state corporate law permits a merger transaction to be used for this purpose. We are providing tax structuring in order to avoid taxable gain to the remaining shareholders.

      • Restructure of closely held financial advisory firm. We advised client, the founder of a successful financial Services firm on tax-favorable structures for the transition of ownership over time to his daughter.

      • An IRC Section 409A success. Client was a key employee at a well-known Bostonbased tech company. Upon his separation of service, he negotiated a significant separation payment. The employer argued that the separation payment would be subject to a 20% Section 409A penalty, which it was required to withhold. We argued that the penalty was not applicable to the payment as structured. Nevertheless, the employer, which was concerned about being hit with its own penalties for failing to withhold the Section 409A penalty if withholding was in fact required, insisted upon withholding. We negotiated a settlement whereby employer would withhold the 20% penalty from the separation payment made to client, but would reimburse client for half of the penalty. We advised client to file a claim for refund for the entire penalty. Last week, the refund was allowed and the client received a check for $75,000.

      • Structuring for foreign investment in US Commercial real estate. Structured investment by Israeli Group in their first foray into New York commercial real estate. The structure, which involves the use of a foreign non-grantor trust and limited liability companies is intended to achieve certain business objectives while minimizing US tax on operations and US gift and estate tax on later transfers.

      • Management equity structure for foreign tech company. We structured a management equity program for the US subsidiary of an Israeli tech company. The US subsidiary had employees in Israel, the structure had to accommodate both US and Israeli tax impact. Local counsel advised on Israeli tax issues.