Tax Controversies and Litigation

Holland & Knight's Tax Group includes a team of lawyers with more than a half century of experience representing both business and private clients in tax disputes at the federal, state and local levels. As part of a global law firm, our Tax Controversies and Litigation Team has the capacity to serve clients around the clock in any jurisdiction in which we practice.

Client Service Is Our Top Priority

We recognize the difficulties our clients encounter in tax disputes and we partner with you throughout the entire process. We avoid surprises and continually strive to eliminate uncertainty in a field of law that is fraught with ambiguity. We listen to your needs and objectives and communicate with you to keep you fully aware of all the facts in your matter. In short, we are there for you every step of the way.

Representation at All Levels

Members of our team have served in significant leadership and field-level positions in both government and private sector roles. Our representation is hands-on at all levels of a tax dispute, from initial civil examination and criminal investigation, to administrative appeals and trial. We provide representation in the U.S. Tax Court, the U.S. District Courts and the U.S. Court of Federal Claims, with designated trial attorneys in each tribunal.

Employing the Best Method for Resolution

Because litigation is uncertain, costly, sometimes sensational and often very public, we encourage our clients to resolve disputes outside of full-blown and protracted litigation. We will assist you in resolving issues at the audit level or at appeals through the use of persuasive written protests. When appropriate and in lieu of trial, we also provide alternative dispute resolution through mediation and arbitration, as well at all administrative levels of government.

If litigation cannot be avoided or is determined to be in your best interest, we are forceful advocates who will vigorously defend your interests in a manner that is consistent with your goals and budgetary considerations.

Fair Fees with No Surprises

Legal fees should not be as unpredictable or ambiguous as the Tax Code. That is why we structure our fees to ensure that you know in advance what to expect at every step of the process. We provide both hourly and fixed-fee arrangements, sharing in both success and failure whenever appropriate and allowed by law.

Broad Experience

Successful resolution of tax liability disputes requires mastery of the tax rules and procedures, knowledge of appropriate strategies, a thorough understanding of the type of tax involved, as well as a complete understanding of the client's business and individual circumstances. Our team includes attorney with the requisite skills and knowledge and we can help you with every aspect of a tax dispute, including:

• pre-controversy advice and counsel
• IRS examinations and appeals
• trial court litigation in the Tax Court, Court of Federal Claims and numerous district courts
• financial institutions and instruments controversy
• bankruptcy and restructuring controversy
• transfer pricing dispute resolution
• criminal tax investigation and defense
• appellate litigation
• state and local tax controversy and litigation
• voluntary disclosures arising out of undeclared offshore accounts
• executive compensation and employee benefits disputes
• real estate tax disputes
• estate, gift and fiduciary tax disputes

Criminal Investigations and Prosecutions

Our team regularly represents citizens of the United States, as well as resident and non-resident aliens, during all phases of criminal tax proceedings, including criminal administrative investigations, grand jury investigations, trials and appeals. Several of our tax litigation lawyers have spent considerable time prosecuting criminal tax cases while employed by the Tax Division of the United States Department of Justice or the offices of various United States Attorneys. This experience enables us to effectively counsel you during investigations by the Internal Revenue Service (IRS) and Department of Justice, as well as by state agencies.

Members of our Tax Controversies and Litigation Team can also assist in bringing you or your organization into the tax system by utilizing applicable programs when available, such as the Offshore Voluntary Compliance Initiative or Last Chance Compliance Initiative. When these initiatives are no longer available, we can help you to become accepted in, and navigate through, the Voluntary Disclosure program of the IRS. By taking advantage of such programs, you may be able to avoid criminal prosecution.

Offshore Accounts

While the IRS is cracking down on businesses and individuals who fail to report foreign investments, it has introduced programs designed to permit taxpayers to come into compliance while avoiding the full extent of the possible civil penalties and, generally, criminal penalties. We regularly counsel clients on offshore tax compliance issues and currently represent more than 200 taxpayers who have chosen to take advantage of these programs, or otherwise voluntarily disclose their previously undeclared foreign income and assets.

Estate, Gift and Fiduciary Tax Disputes

Our tax litigators have extensive experience litigating federal estate, gift and fiduciary income tax disputes in federal and state courts across the country. We assist numerous corporate and individual fiduciaries, as well as charitable and educational institutions, in negotiating and litigating tax issues against the IRS in the United States Tax Court and United States District Courts. Our team can assist you in audits by, and appeals against, the IRS on estate and gift tax returns, fiduciary income tax returns and other tax-related issues including domicile disputes.

State and Local Tax

Our team represents businesses and individuals before state and local taxing authorities across the country. We can assist you in responding to state and local tax audits, challenging assessments, litigating contested tax issues, seeking refund claims before administrative tribunals and state courts and advocating your position before state appellate courts. Our tax controversies and litigation lawyers can advise you on matters involving state and local income, excise, sales and use, franchise, telecommunications, hotel occupancy and fuels taxes. In the area of unclaimed property, we can provide you with counsel on multi-state escheat compliance issues, help you defend against state unclaimed property audits and litigate unclaimed property appeals. Many of our team members have acted as counsel for state taxing authorities, which provides us with a thorough understanding of the process.

Our strategy in handling state and local tax issues is to coordinate your audit and tax litigation needs from our national platform, while employing a close-knit team of individual tax professionals, each familiar with his or her tax jurisdiction, to represent you on a local basis.

Real Estate

Our team includes litigators who concentrate on real property tax assessment litigation to minimize the real property tax liability of property owners. We assist property owners, including institutional investors, not-for-profit organizations, REITS and privately held entities, in reviewing and appealing real estate tax assessments, from the initial administrative review through trial courts and courts of appeal in jurisdictions throughout the United States. Our lawyers have experience with all types of commercial property, including office buildings, hotels, apartment buildings, industrial, warehouse and mixed-use properties, with values that range up to $250 million. We are committed to helping you achieve your goals for substantial real estate tax savings and tax refunds.

Executive Compensation and Employee Benefits Disputes

We have significant experience negotiating employee benefit issues with the IRS and will represent your interests on matters such as plan audits, qualified plan determination letter applications, voluntary employee plan and fiduciary duty corrections and pension underfunding. In addition, our tax litigators are well-equipped to handle complex employee benefit disputes and can represent your interests in litigation of such issues in courts throughout the country.

Our Clients

Our team represents clients at every level and in every type of dispute with taxing authorities. We have represented a great majority of our clients for many years and in multiple engagements. In addition to assisting individual taxpayers, our tax controversy and litigation lawyers represent publicly traded and privately held corporations, trustees of defined contribution plans including leveraged and non-leveraged ESOPs and other ERISA plans, partnerships, limited liability companies, executors, trustees of testamentary trusts, S corporations, LLCs, tax-exempt entities and governmental entities (including Indian tribes).

Tax-Exempt and Government Entities: Our team has several tax controversy lawyers who focus primarily on the legal needs of tax-exempt organizations. We regularly represent private foundations, public charities, trade associations and all other types of tax-exempt organizations in audits and other inquiries by the IRS.

We advise private foundation clients regarding IRS claims of excessive compensation and other forms of self-dealing, failures to make the required qualifying distributions or to exercise expenditure responsibility and violations of the excess business holdings rules. We also counsel public charity clients with respect to IRS allegations of excess or private benefit (e.g., unreasonable compensation and non-fair market value transactions), prohibited political activity and excessive lobbying, as well as challenges to the basis on which the organization’s exemption was granted (e.g., the community benefit standard in the case of hospitals and the community access standard for other organizations). In addition, with respect to all types of tax-exempt organizations, we handle audit and compliance issues related to the unrelated business income tax (UBIT) rules and employment tax compliance issues. Working with the tax-exempt bond financing attorneys within the firm, our team regularly defends both issuers and borrowers in challenges to tax-exempt financings.

Indian Tribal Governments: Team members located in our Los Angeles, Washington, D.C. and select other offices focus exclusively on the legal and tax needs of Indian tribal governments and tribal organizations. Working in collaboration with our firm's tax, employee benefits and public finance lawyers, we routinely advise tribal governments on issues that are regularly examined and increasingly challenged by the IRS, including:

• compliance with information reporting and withholding rules when tribes make taxable payments of gaming revenues to their members (e.g., per capitas)
• employment tax compliance matters, which include classification of workers as employees or independent contractors, FICA, FUTA and wage withholding
• employee benefit plan compliance (both tax and ERISA matters)
• tribal general welfare plans that involve the provision of benefits to tribal members, such as education, housing, healthcare and recreation
• tax-exempt bond qualification matters, including those arising under section 7871 of the Internal Revenue Code (“essential governmental function” test applicable to tribes) and under other provisions, (e.g., private use and arbitrage)

In addition, we defend the tax-immune status of tribal business entities when such issues have been raised by the IRS on audit and regularly counsel tribes on how to structure their enterprises in a tax-efficient manner.

Representative Engagements

Following are select examples of recent matters handled by our team:

Federal Tax Proceedings

• secured a claim for refund of a wagering excise tax for a tribal casino without costly litigation by submitting a persuasive refund memorandum to the IRS
• represented a client to reduce an estate tax liability by more than $1.3 million relating to the valuation of shares of stock through the filing of an offer in compromise with the IRS
• defended a private foundation with approximately $400 million in assets from a possible challenge by the IRS with respect to the foundation’s structuring of its supplier arrangements
• represented a client in the United States Tax Court to achieve zero tax liability and abatement in full of original penalty assessment in excess of $100,000
• secured an abatement based on reasonable cause of substantially all IRS penalties throughout a six-year period for a private foundation
• represented a client in appellate litigation in the United States Court of Appeals for the 11th Circuit (which reversed the Tax Court decision) relating to whether life insurance proceeds to be used for a redemption of shares under a buy-sell agreement were includable in valuing the corporation’s shares for estate tax purposes
• represented a client in litigation pending in the United States Tax Court to obtain approximately 33 percent of the original assessment by the IRS
• negotiated with the IRS to refrain from a seizure of a client’s principal residence
• negotiated with the IRS to release a levy against an investment account of a non-resident alien client
• convinced the IRS to reverse its initial position to suspend a client from the IRS electronic filing system for an extended period of time
• represented a client in an IRS audit for multiple years relating to internal accounting irregularities and turned a potential deficiency into a refund
• represented a client to resolve an IRS dispute for $1.1 million (with exposure in excess of $6 million) involving income tax, gift tax and various penalty issues for failure to file Forms 3520 and 3520-A by using the Fast Track Settlement process with the IRS

State and Local Tax Proceedings

• negotiated certain sales and use tax exemptions for a major electrical utility corporation for purchases of generation and transmission equipment to achieve a $1.5 million reduction in a sales and use tax assessment
• rebutted a challenge by a state of a client’s methodology for calculating and paying fuels tax, pursuant to an agreement with a trucking company, and worked to resolve the matter prior to trial so client could receive a $3 million reduction in assessment
• settled a case prior to trial for a medical equipment manufacturer on the issue of deductibility of royalty expense and inter-company interest expense
• convinced a state to concede its case prior to trial in a client’s favor on the issue of sourcing of receipts from portfolio fund management for sales apportionment purposes
• proved at trial that a client’s appeal had been timely filed resulting in a refund of several hundred thousand dollars
• represented a Fortune 500 company regarding a complicated $7 million state income tax apportionment issue

Criminal Tax

• defended preparers of federal income tax returns in an inquiry by the United States Department of Justice
• represented a client in avoiding criminal sanctions by the IRS in a case involving a multi-year failure to file income tax returns
• represented a non-resident alien in a criminal investigation by the United States Department of Justice resulting in no criminal charges being filed against the client
• represented a client in avoiding criminal sanctions in an investigation by IRS special agents and lawyers from the United States Department of Justice