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Tax in the City® Seattle Proves to be the Largest Turnout to Date

by McDermott Will & Emery | May 31, 2018 | Tax Reform, Trial Courts, Uncategorized

The second meeting of McDermott’s Tax in the City® initiative in Seattle was held on May 22, 2018 at the Amazon headquarters. McDermott established Tax in the City® in 2014 as a discussion and networking group for women in tax aimed to foster collaboration and mentorship, and to facilitate in-person connections and roundtable events around the country. With the highest attendance rate of any Tax in the City® event to date, the May meeting featured a CLE/CPE presentation about Ethical Considerations around Tax Reform by Elizabeth Chao, Kirsten Hazel, Jane May and Erin Turley, followed by a roundtable discussion about recent tax reform insights led by Britt Haxton, Sandra McGill and Diann Smith.

Here’s what we covered at last week’s Tax in the City® Seattle:

Tax Reform: Ethical Considerations – Because of tax reform, taxpayers face increased uncertainty and will likely face increased IRS/state scrutiny for their 2017 & 2018 returns. Therefore, it’s crucial for taxpayers to be intentional about post-reform planning and compliance, including by coordinating among various departments (federal tax, state and local tax, employee benefits, treasury, operations, etc.). Taxpayers should understand the weight of various IRS/state revenue authority guidance, the IRS’s authority to issue retroactive regulations within 18 months of passing legislation, and how to take reasonable positions in the absence of guidance. They should also understand when the IRS has longer than three years to assess tax, including when there is an omission of global intangible low taxed income (GILTI) or when the tax relates to the section 965 transition tax.
Tax Reform Changes to Employee Compensation and Benefit Deductions – Post-tax reform, all employees of US public companies, private companies with US publicly traded debt, and foreign issuers with ADRs traded on the US market are covered employees subject to the $1 million limit for deductible compensation. Though a grandfather rule applies if existing contracts are not materially modified, key questions about how to apply this rule remain. Tax reform eliminated the employer deduction for transportation subsidies (other than bicycle subsidies). It also reduced employers’ ability to deduct meal and entertainment expenses, and removed employers’ and employees’ ability to deduct moving expenses.
Supreme Court Update: Wayfair – Jurisdiction to Tax – Following the Wayfair oral arguments, it is difficult to predict whether the Supreme Court will uphold as constitutional South Dakota’s tax on online retailers. Wayfair raises the fundamental question of when the courts should settle tax issues, and when they should wait for Congress to act.
Interaction of Cross-Border Tax Reform Provisions – Income of a US multinational is subject to varying rates of US tax depending on where it is earned. The US parent’s income from selling to US customers will be subject to the full rate of 21 percent and its income from selling to foreign customers will generally be subject to the foreign derived intangible income (FDII) rate of 13.125 percent. If the income is earned by a [...]

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Tax Court Judge Holmes Reappointed

by Kevin Spencer and McDermott Will & Emery | Apr 25, 2018 | Court Procedure Matters, Trial Courts, Uncategorized

In a press release on April 24, 2018, the White House stated that President Trump has reappointed Tax Court Judge Mark Holmes for a second 15-year term. Judge Holmes was originally appointed by President George W. Bush on June 30, 2003, for a term ending June 29, 2018. Instead of seeking “senior status” on the Tax Court, Judge Holmes sought to be reappointed for a second term.

Corporate Tax Newsletter: Are Changes Looming Over Tax Court’s Procedure Rules?

by Kevin Spencer and McDermott Will & Emery | Apr 16, 2018 | Court Procedure Matters, Trial Courts, Uncategorized

Our recent post on potential changes to the Tax Court’s procedure rules has been republished in the Corporate Tax Newsletter – USA by The International Law Office. See here for the article.

President Trump Announces Intent to Nominate Emin Toro to Tax Court

by McDermott Will & Emery | Apr 10, 2018 | Trial Courts, Uncategorized

In a press release this morning, President Trump announced his intent to nominate Emin Toro to serve as a judge on the United States Tax Court (Tax Court). This is the latest in a wave of nominations to high-level tax positions within the government, as we have previously covered here and here.

Mr. Toro is currently a partner in the Washington, DC, office of Covington & Burling LLP. His practice focuses on the needs of multinational companies, including both tax controversies and counseling. Mr. Toro’s experience includes audits, administrative appeals, litigation and transfer pricing matters. He received his JD from the University of North Carolina School of Law in 2000 and clerked for the Honorable Karen LeCraft Henderson, US Court of Appeals for the District of Columbia (2000–2001) and the Honorable Clarence Thomas, US Supreme Court (2002–2003).

Are Changes Looming over the Tax Court’s Procedure Rules?

by Kevin Spencer and McDermott Will & Emery | Apr 3, 2018 | Court Procedure Matters, Trial Courts, Uncategorized

Tax controversy practitioners are undoubtedly aware of the gradual movement over the years to conform certain Tax Court procedure rules (Tax Court Rules) to those of the Federal Rules of Civil Procedure. In many ways, this makes sense to ensure uniformity of tax cases regardless of whether a taxpayer litigates his tax dispute in a refund forum in the US District Court or the US Court of Federal Claims, or prior to payment of tax in the Tax Court. Below we note a few important areas of divergence between the different rules, and point out situations where the Tax Court Rules do not address a particular matter. These matters were discussed at the recent Tax Court Judicial Conference held in Chicago last week.

Amicus Briefs

As we have discussed before, amicus briefs are not uncommon in other courts. However, the Tax Court does not have specific rules on the topic and, instead, permits each judge to decide a case-by-case basis whether to permit the filing of an amicus brief. Although the Tax Court has discussed standards for filing amicus briefs in unpublished orders, given the nationwide importance of many issues that arise in Tax Court litigation, it may be time for the court to issue specific rules addressing the issue. (more…)

The Fifth Circuit Puts an End to the Madness with its March Opinion

by McDermott Will & Emery and McDermott Will & Emery | Mar 21, 2018 | Appellate Courts, Court Procedure Matters, Trial Courts, Uncategorized

We have all heard the famous quote about doing the same thing over and over again and expecting different results. The Court of Appeals for the Fifth Circuit applied this concept in its March 8 opinion in Annamalai v. Comm’r, No. 17-60255. There, the issue was whether the taxpayers could extend into perpetuity the 90-day deadline to file an appeal by filing successive motions to vacate a Tax Court decision. Under the facts presented, the answer was no.

Taxpayers have 90 days after a decision of the Tax Court to file an appeal. If a party makes a timely motion to vacate or revise the Tax Court’s decision, the 90 days runs from the later of either entry of the order disposing the motion or entry of a new decision.

In Annamalai, the taxpayers filed successive motions to vacate a Tax Court decision. After the Tax Court entered a final decision in favor of the government, the taxpayers unsuccessfully moved to vacate the decision. Rather than filing a notice of appeal within 90 days after the denial, the taxpayers filed another motion to vacate that did not raise any substantially new grounds or arguments. After the Tax Court denied the second motion, the taxpayers filed the notice of appeal. The notice of appeal was filed 117 days after the ruling on the first motion and 83 days after the ruling on the second motion.

The Fifth Circuit dismissed the taxpayers’ appeal, which it noted involved a jurisdictional issue of first impression. The court agreed with the general principle that tolling motions may not be tacked together to perpetuate the prescribed time for appeal. As such, the 90-day period ran from the ruling on the first motion, and the appeal was thereby untimely and dismissed.

The Fifth Circuit declined to address the issue of whether a second motion to vacate on substantially different grounds and new arguments would be acceptable. The court noted that it is acceptable in the civil context, suggesting it may be permitted.

Practice Point: Absent intervening events such as new case law directly on point, motions to vacate or reconsider are rarely granted in tax cases. Indeed, filing a motion to vacate or reconsider may provide an opportunity for the court to bolster its prior opinion and lessen the chances of success on appeal. In a situation where a motion to vacate or reconsider is pursued, taxpayers should take care to ensure that all arguments supporting such a motion are properly placed before the court and that an appeal is filed within the statutory-prescribed period if the motion is denied.

Law360: US District Court To French Tax Authorities: Pas De Probleme

by Kevin Spencer and Robin L. Greenhouse | Mar 15, 2018 | Court Procedure Matters, IRS Guidance, Trial Courts, Uncategorized

Robin Greenhouse and Kevin Spencer recently authored, “US District Court To French Tax Authorities: Pas De Probleme” for Law360. The article discusses a case involving IRS summons and taxpayers’ rights in context of the US-France Treaty.

Read the full coverage on Law360.

Statutes of Limitation and International Taxes

by Elizabeth Chao and McDermott Will & Emery | Mar 8, 2018 | IRS Audits, IRS Guidance, Tax Reform, Trial Courts, Uncategorized

In late 2017, we provided a brief overview of statutes of limitation in the international tax context. At that time, we noted a forthcoming article on the subject. We are pleased to report that our expanded article on the subject has been published in the January-February 2018 edition of the International Tax Journal. The full article can be viewed here.

A 360-Degree View: February and March 2018

by McDermott Will & Emery | Mar 6, 2018 | IRS Guidance, Trial Courts, Uncategorized

Wrapping Up February – and Looking Forward to March

Top February Tax Controversy 360 Blog Posts

Types of Tax Court Opinions and Their Precedential Effect

The Slow Death of the Section 385 Regulations

Court Rules That a Family Office Is a Business!

Upcoming Tax Controversy Activities in March

Our lawyers appear are making the following Tax Controversy speeches in March:

March 7, 2018: Andrew Roberson will be presenting “Nuts & Bolts Collections Workshop: A Guide to Assisting Pro Bono Clients with Collection Matters” at the ABA Section of Taxation Webinar.

March 9, 2018: Jay Singer will be presenting “Section 355 Developments” at the at the Federal Bar Association’s 2018 Tax Law Conference in Washington DC.

March 15, 2018: Mary Kay Martire will be speaking at Tax in the City® in McDermott’s Chicago office about the upcoming oral argument before the US Supreme Court in the case challenging the Quill physical presence requirement for sales tax nexus.

March 27, 2018: Andrew Roberson will be presenting “Discovery & Stipulations Process” at the US Tax Court Judicial Conference at the Northwestern University Pritzker School of Law in Chicago, IL.

White House Intends to Nominate Michael J. Desmond to High-Level Roles in the IRS and the Department of Treasury

by Kevin Spencer, Macdonald Norman and McDermott Will & Emery | Mar 5, 2018 | Court Procedure Matters, IRS Guidance, Trial Courts, Uncategorized

The White House announced on March 2 that the president intends to nominate Michael J. Desmond, a prominent tax lawyer, to be the Chief Counsel for the Internal Revenue Service (IRS) and Assistant General Counsel in the Department of Treasury. Subject to approval by the Senate, Mr. Desmond’s new roles will entail providing legal guidance and interpretive advice to taxpayers, the IRS, and the Department of Treasury.

Mr. Desmond clerked for Judge Ronald S.W. Lew of the United States District Court from 1994 until 1995. Mr. Desmond went on to serve as a trial attorney for the Department of Justice Tax Division and as tax legislative counsel for the Department of Treasury’s Office of Tax Policy. After leaving the public sector, Mr. Desmond became a partner with Bingham McCutchen LLP in the Washington, DC office until he opened the Law Offices of Michael J. Desmond in 2012. While operating his own practice, Mr. Desmond has represented clients at every stage of the tax controversy process. He has been a frequent author and speaker on tax topics. More information about Mr. Desmond can be found at his firm’s website.

Mr. Desmond is a very well-known and respected tax practitioner. He is a fixture in the tax community. We congratulate him on his nomination.