In 2022, Mayer Brown's Tax Controversy & Litigation practice was recognized by Chambers USA in its highest ranking for the 17th consecutive year and by Legal 500 US for the 15th consecutive year. Mayer Brown's Tax Controversy & Litigation practice includes approximately 40 lawyers and is one of the most active in the country. Mayer Brown was also named 2019 Tax Group of the Year by Law360.
The depth of our capabilities allows us to represent clients in a variety of situations, whether counseling corporations during tax audits, pursuing administrative appeals of audit results, or litigating tax matters at the trial court or appellate court level. Clients hire us because of our extensive experience in all areas and especially because of our litigation experience we know when to go to court, and we know how to litigate. Mayer Brown's Tax Controversy & Litigation lawyers have experience litigating major tax cases in US federal courts: collectively we have litigated more than 100 US tax cases. We have extensive worldwide experience in areas including audits, administrative appeals, litigation and appellate.
Our Tax Controversy & Litigation lawyers understand that an efficient and successful resolution to tax controversies often begins with skillful representation before court involvement. We assist clients with large case audits, in answering IDRs, in dealing with IRS agents and in formulating overall audit strategies. Our role in the audit depends on the needs of each individual client and the circumstances of each case, including the intensity of IRS counsel's activity in the audit. In some audits, we have played a lead role at the request of the taxpayer, in effect managing the entire audit; in others, we have served a purely advisory role, staying in the background with no direct contact with the IRS.
In the United States, we have conducted audits related to cross-border transfer pricing for goods, services and intangibles; economic substance issues pertaining to leasing and financial products; debt versus equity characterization; corporate acquisitions and divestitures, including the tax treatment of tangible and intangible assets in acquisitions; tax accounting issues; conversion of possessions corporation to controlled foreign corporation status; offshore insurance operations; issues concerning whether a taxpayer is engaged in a US trade or business or has effectively connected US source income; sourcing of export sales income; manufacturing characterization for Subpart F purposes; creditability of foreign taxes and the US implications of foreign country taxation; and transactions that result in utilization of foreign tax credits. Skillful representation during audits is especially important to resolve transfer pricing controversies quickly and efficiently, particularly in today's environment of increased scrutiny on related-party transactions. In the United Kingdom, we have extensive experience acting for corporate taxpayers on a wide range of tax disputes, including negotiating settlements with the UK tax authority and experience at every level of the UK tax appeals system. In addition, our Paris tax group has assisted with tax audits and litigation relating to a wide range of issues.
Successful representation in large corporate audits involves not only substantive tax understanding, but also mastery of unique and sometimes arcane procedural rules.
Our US lawyers have handled many cases in the IRS Appeals Office and have substantial experience negotiating with IRS Appeals officers and representing taxpayers before Appeals. We have also participated in the Fast Track mediation process with IRS Exam, which involves using IRS Appeals personnel as mediators. We have also been involved in negotiating with the IRS to establish arbitration and mediation procedures used as an alternative to trial for resolving cases.
Among other issues handled in Appeals, we have handled several large cases involving transfer pricing issues, customer-based intangibles, employee benefits and executive compensation issues, debt-equity characterization, leasing, involuntary conversion, subpart F issues, FSC and ETI issues, and such corporate issues as like-kind exchanges, leveraged buy-outs, and the deductibility of interest on debt incurred to redeem stock. We have handled Appeals cases for clients from a wide array of industries, including many of the world's largest pharmaceutical and technology companies.
For most taxpayers, litigation is an option of last resort. Indeed, the vast majority of controversy matters are settled before litigation becomes necessary. Nevertheless, it is our philosophy that advantageous settlements are most often achieved when the IRS believes that the taxpayer's counsel is willing and able to litigate if the need arises. We have found that tax litigation is conducted most effectively by lawyers who have a solid background in tax and who are also trained in the unique skills of litigation. For this reason, the lawyers in our tax controversy group spend virtually all of their time on tax controversy matters. This focus ensures that skillful representation in the courtroom is combined with sophisticated tax advice.
Collectively, we have litigated more than 100 US tax cases. Particular areas of focus within our group include cross-border transfer pricing for goods, services and intangibles; economic substance issues; corporate reorganizations; leasing and financial products issues, including LILOs; tax-advantaged transactions; tax treatment of tangible and intangible assets in acquisitions; tax accounting issues; offshore insurance operations; issues concerning whether a taxpayer is engaged in a US trade or business or has effectively connected US source income; sourcing of export sales income; manufacturing characterization for subpart F purposes; entitlement to, and computation of, FSC and ETI benefits; and bank taxation, particularly with regard to creditability of foreign taxes and the US implications of foreign-country taxation.
Drawing on the resources of the firm's renowned Supreme Court and Appellate practice, our tax appellate lawyers offer a valuable combination of technical tax knowledge, broad experience in pursuing appeals and practical experience in trying tax cases in the courts of first instance.
We have successfully represented taxpayers on appeal from lower court decisions in major tax cases and have participated directly in the briefing and argument of cases of major importance to the development of tax law.
- Westreco. In the Westreco case, we were successful in establishing crucial procedural safeguards against abusive audits.
- Confidential Clients. We have represented several clients in successfully defending against IRS summons enforcement cases in federal district court.
- Confidential Clients. We are experienced with the I.R.C. § 6038A information reporting regulations for foreign-owned corporations and the I.R.C. § 6662 transfer pricing penalty regulations. We successfully defended one taxpayer against an attempt by the IRS to use I.R.C. § 6038A to force the company to translate thousands of pages of documents from Japanese into English.
- Confidential Clients. We represented taxpayers in precedent-setting actions by the IRS to obtain tax return preparation software source code.
- Confidential Client. We assisted a major corporation in obtaining a refund of tax paid after an accounting restatement reduced its reported income.
- Altria Group Inc. We represented Altria Group Inc. in a case involving an appeal from a jury verdict and subsequent decision in Altria Group, Inc. v. United States, No. 06-cv-9430, 2009 WL 874207 (S.D.N.Y. 2009), which denied federal income tax deductions claimed by Altria related to four leveraged lease transactions entered into by a wholly owned leasing subsidiary of Altria.
- Boston Scientific Corporation. We represented Boston Scientific and its subsidiaries in related actions recently filed in the United States Tax Court.
- Consolidated Edison. We successfully represented Consolidated Edison in a case before the US Court of Federal Claims involving the income tax treatment of a lease-in-lease-out (LILO) transaction. The US government challenged Consolidated Edison's tax treatment of the leveraged lease of a foreign power plant in the Netherlands on economic substance and substance over form grounds. In October 2009, the United States Court of Federal Claims upheld the tax deductions claimed by Consolidated Edison.
- Eaton Corporation. We are representing Eaton in connections with transfer pricing matters involved litigation of its 2005 and 2006 tax years and a complex Subpart F income issue. In another matter, we challenged the IRS’s cancellation of two Advance Pricing Agreements and the IRS’s adjustments under section 482.
- Exelon Corporation. We are representing Exelon Corporation in a case involving a deferred like-kind exchange of power generation facilities.
- Flextronics. We represented Flextronics in litigation concerning an acquisition of a North Carolina manufacturing facility completed by a subsidiary, C-MAC Holdings, prior to the time it was acquired by Flextronics. At issue was whether the assets acquired by CMAC received a step-up in basis under Sections 357(c) and 362.
- National Semiconductor and Seagate Technology. We represented National Semiconductor and Seagate Technology in major transfer pricing cases involving their offshore manufacturing operations.
- Nestlé Holdings, Inc. We litigated several issues for this client, including valuation and amortization of intangibles and debt-equity characterization, which arose from Nestlé's $3.2 billion acquisition of the Carnation Company.
- Saba Partnership. We represented Saba Partnership in a challenge to investment partnerships as devoid of economic substance.
- Tribune Company. We represented the Tribune Company in a case presenting the question of whether substance-over-form theories permit recharacterization of a transaction that was structured to comply with the requirements of the Code and Regulations for nontaxable reorganizations.
- Union Bank of California. We are representing Union Bank of California in a case involving leveraged leases of hydroelectric power facilities and sports entertainment complex.
- Wells Fargo Bank. We represented Wells Fargo Bank in a case concerning the tax treatment of leveraged leases of transit equipment and technical equipment, a matter worth approximately $1 billion to the company. (Chambers actual listing on site)
- UK Matters. UK practitioners have acted in a number of landmark cases, including Customs & Excise Commissioners v. Thorn Materials Supply Limited, concerning the effectiveness of value added tax prepayments; EMI Group Electronics Limited v. Coldicott (HM Inspector of Taxes), concerning the income tax treatment of contractual payments in lieu of notice to employees; and M&G Securities Ltd. v. Inland Revenue Commissioners, concerning the stamp duty treatment of the in specie redemption of unit trusts.
- DC Circuit. Riggs (holding that official tax receipts of Brazilian government were entitled to evidentiary presumption)
- Federal Circuit. Bankers Trust (reversing Court of Federal Claims on Brazilian "pecuniary benefit" foreign tax credit issue)
- Second Circuit. Nestlé Holdings, Inc. (I.R.C. § 482 reallocations, Carnation acquisition)
- Fourth Circuit. Volvo Group North America, Inc. (vacating district court decision on application of I.R.C. § 471 to inventory transfers)
- Sixth Circuit. The Limited (reversing the Tax Court's holding that CFC's purchase of CDs from affiliated credit card bank failed to qualify as § 956(b)(2)(A) "deposits with [a] person carrying on banking business")
- Seventh Circuit. Continental Illinois Corporation (Brazilian foreign tax credits, foreign tax credits relating to net quoted loans, and recognition of income on CAP loans)
- Eighth Circuit. Norwest (Brazilian foreign tax credits)
- Ninth Circuit. Intel Corporation (allocation of income partly from sources within a foreign country under Treas. Reg. § 1.863-3(b)(2))
- Tenth Circuit. Tele-Communications, Inc. (application of I.R.C. § 1253 to cable television franchises)
- Eleventh Circuit. United Parcel Service (vacating Tax Court's finding on sham, assignment of income and penalties)
- US Supreme Court. Boeing (allocation of R&D costs in determination of sales income under DISC and FSC rules)