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A 360-Degree View: November and December 2017

by McDermott Will & Emery | Dec 6, 2017 | Uncategorized

Wrapping Up November – and Looking Forward to December

Please view all of the topics we discussed over the last month, and take a look at the upcoming tax controversy events where our lawyers will be speaking in December.

Upcoming Tax Controversy Activities in December:

December 14, 2017: Catherine Battin, Britt Haxton, Kristen Hazel, Mary Kay Martire, Jane May, Sandra McGill and Judith Wethall will be hosting the Tax in the City® – A Year in Review event, which will focus on the state and local impact, as well as the federal and international aspects of tax reform.

December 14, 2017: Thomas Jones will be presenting the webinar, “Understand how the new Tax Reform bill will affect the status of captive insurers and hear the latest 2017 tax developments” for the Vermont Captive Insurance Association.

Tax Court: Mailbox Rule Can Apply with Stamps.com Postage Label

by Jeffrey M. Glassman and McDermott Will & Emery | Dec 5, 2017 | Court Procedure Matters, IRS Guidance, Trial Courts, Uncategorized

Within the Internal Revenue Code (Code) is a rule commonly known as the “mailbox rule” or the “timely mailed, timely filed rule.” Under Code Section 7502(b), the date that an item—including a Tax Court petition—is postmarked and mailed can also be the date the item is considered filed. When an item is received after the filing deadline, the mailbox rule can make all the difference. There are, however, procedural requirements which must be satisfied. In Pearson v. Commissioner, the Tax Court, in a court-reviewed opinion, held that a Tax Court petition mailed with a Stamps.com postage label was timely filed under the mailbox rule.

Taxpayers generally have 90 days to file a petition with the Tax Court after receiving a notice of deficiency. In Pearson, the Tax Court received the taxpayers’ petition one week after the 90-day period expired, but the envelope in which the petition was mailed bore a Stamps.com postage label dated within the 90-day period. The administrative assistant who created the Stamps.com postage label supplied the court with a declaration under penalty of perjury stating that she went to a US Post Office the same day as the postage label date and mailed the petition. (more…)

McDermott Launches Tax Reform Resource Center

by McDermott Will & Emery | Dec 1, 2017 | Tax Reform, Uncategorized

As details of tax reform take shape, our team continues to evaluate proposed legislation and to provide critical, real-time guidance on the likely impacts to our clients.

McDermott has always partnered with our clients to design strategies that are both creative and sound—to effectively plan for long-term business success. Access our new Tax Reform Resource Center for strategies and tools that will continue to help you lead your organization through the opportunities and risks brought about by proposed tax reform. You can also subscribe to stay on top of McDermott’s latest take on tax.

Access the Tax Reform Resource Center.

Government Appeals Defeat in Anti-Inversion Regulation Case

by McDermott Will & Emery | Nov 29, 2017 | Appellate Courts, Court Procedure Matters, IRS Guidance, Uncategorized

We previously posted on the Order by the US District Court for the Western District of Texas in Chamber of Commerce of the United States of America, et al. v. Internal Revenue Service, Dkt. No. 1:16-CV-944-LY (W.D. Tex. Sept. 29, 2017). In that Order, the court held that Treas. Reg. § 1.7874-8T was unlawfully issued. See here for our prior post. As expected by many, the government on November 27, 2017, appealed the Order to the Court of Appeals for the Fifth Circuit. The next steps are for the Fifth Circuit to set a briefing schedule and a date for oral argument. We will continue to follow this case and provide updates.

The IRS Has Never Won a Subpart F Sales or Services Case

by Lowell D. Yoder | Nov 22, 2017 | Appellate Courts, IRS Appeals, Trial Courts, Uncategorized

The IRS has never won a single litigated case arguing for foreign base company sales income (and has never litigated a foreign base company services income case). Courts have consistently rejected the government’s arguments to expansively apply the definition of Subpart F sales income in order to carry out asserted congressional intent. While the courts have acknowledged that the policies informed the rules, they have not permitted the policies to eclipse the plain language of the code, even where the taxpayer engaged in tax planning that took advantage of the rules and arguably frustrated the policies underlying the rules.

Jury Acquits Swiss Banker Stefan Buck of Tax Evasion Conspiracy

by McDermott Will & Emery | Nov 21, 2017 | Court Procedure Matters, Trial Courts, Uncategorized

On Tuesday, November 21, a jury acquitted Bank Frey executive Stefan Buck of conspiracy to commit criminal tax evasion in the Southern District of New York. The case is captioned United States v. Edgar Paltzer and Stefan Buck, No 1:13-cr-00282-JSR (S.D.N.Y.).

In April 2013, an indictment was filed against Buck and a co-conspirator, Edgar Paltzer, alleging a criminal conspiracy whereby Buck, the head of private banking at Bank Frey, and Paltzer, a US citizen and lawyer, conspired with US taxpayers to move funds out of Swiss banks under investigation in the US, including Wegelin. The alleged criminal conduct included arranging for cash withdrawals and purchases of jewelry, opening new undeclared accounts, and filing false statements of beneficial ownership, among other actions.

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Natural Disasters and Tax Law

by Editorial Team | Nov 20, 2017 | Uncategorized

Following up on our pro bono post last week, we wanted to highlight a recent article in the ABA Tax Times regarding tax impacts of natural disasters. The article discusses resources available to taxpayers and volunteers dealing with the after-effects of a natural disaster and emphasizes the need for tax assistance long-after the natural disaster occurs. If you have a few moments and/or are interested in ways you might be able to help, please take a quick look.

ABA Section of Taxation Seeks Nominations for Annual Pro Bono Award

by Editorial Team | Nov 14, 2017 | Uncategorized

As we have written about before, there is a substantial need for pro bono assistance to low-income taxpayers throughout the country. A sample of some of the tremendous results obtained by pro bono volunteers can be found here. As strong proponents of pro bono, both in tax law and other areas of the law, we have seen firsthand the difference that a few hours of your time can make in the life of an individual that cannot otherwise afford to pay for legal representation.

The American Bar Association (ABA) Section of Taxation annually selects one individual or law firm as the recipient of the Janet Spragens Pro Bono Award. The award was established in 2012 to recognize outstanding and sustained achievements in pro bono activities in tax law. The ABA is seeking nominations for the 2018 recipient, which must be submitted by December 8, 2017. More information about the criteria for selection and a list of prior recipients can be found here. If you know of an individual or a law firm that would be a worthy nominee, please do not hesitate to submit your nomination to the ABA Section of Taxation. We note that all nominations are maintained in strict confidence by the Pro Bono Award Committee.

Facebook Goes to District Court to Enforce Access to IRS Appeals

by K. Christy Vouri-Misso and Robin L. Greenhouse | Nov 13, 2017 | Court Procedure Matters, IRS Guidance, Trial Courts, Uncategorized

On November 8, 2017, Facebook, Inc. and Subsidiaries (Facebook) filed a complaint in the District Court for the Northern District of California asserting that the Internal Revenue Service (IRS) had improperly denied Facebook access to Internal Revenue Service (IRS) Appeals. Facebook’s complaint seeks a declaratory judgment that the IRS unlawfully issued Revenue Procedure 2016-22, 2016-15 I.R.B. 1, and unlawfully denied Facebook its statutory right to access an independent administrative forum. Facebook also requests injunctive relief from the IRS’s unlawful position, or action in the nature of mandamus to compel the IRS to provide Facebook access to an independent administrative forum. (more…)

The Slow Death of the Section 385 Regulations

by McDermott Will & Emery and McDermott Will & Emery | Nov 9, 2017 | IRS Guidance, Uncategorized

Internal Revenue Code (Code) Section 385 provides that the US Department of the Treasury (Treasury) is authorized to issue regulations to determine whether an interest in a corporation is to be treated for purposes of the Code as stock or indebtedness. After decades of inaction, proposed regulations were issued on April 14, 2016. The proposed regulations were not well-received; the tax bar had serious and substantial comments to the proposed regulations. Among the most important critiques, there were criticisms for the potential overbreadth of the regulations’ application to foreign-to-foreign transactions, the lack of a de minimis exception for smaller companies and for the anticipated burden of the contemporaneous documentation requirements.

Treasury released final regulations under Code Section 385, which are effective as of October 21, 2016. Although the proposed regulations were changed in some respects, the final regulations retained strict documentation requirements.

In Executive Order 13789, the President called on Treasury to identify and reduce tax regulatory burdens that impose undue financial burdens on US taxpayers, or otherwise add undue complexity to federal tax law. In response, Treasury indicated on October 2, 2017, that it would potentially revoke the documentation requirements under the proposed regulations. (more…)

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