Caplin & Drysdale has broad experience advising business entities and their principals in tax planning with respect to both their operations and their transactions. Clients include domestic and foreign manufacturing and service companies, fund managers, financial institutions and insurance companies. The firm regularly advises with respect to corporate tax, partnership tax, subchapter S, the taxation of executive compensation, the taxation of financial products, the taxation of regulated investment companies and real estate investment trusts, the taxation of insurance companies and products, the taxation of royalty streams, tax accounting and payroll and other withholding taxes.
Tax Administrative Process
Caplin & Drysdale provides clients with a full range of assistance in dealing with examinations and allied administrative proceedings with both the IRS and state tax agencies. Apart from direct representation before tax agencies, we often provide behind the scenes advice to assist in negotiating, preparing administrative protests of proposed deficiencies (and proposed disallowances of refund claims), requesting technical advice, and invoking the increasing array of alternative processes for resolving issues administratively.
Tax controversies often present taxpayers with a constant flow of tactical decisions such as how to settle a tax case while preserving existing refund claims or the right to file others in the future, how to avoid being rushed into filing suit before all issues are ready, how to deal with overlapping statutes of limitations and how to raise computational and/or interest claims after the main case is concluded Caplin & Drysdale lawyers are continually providing advice on these kinds of nuts and bolts tactical issues and drafting and negotiating the related documents.
There are also many different ruling processes in the IRS, including private letter rulings on contemplated transactions, technical advice on issues that arise during audit and requests to allow correction of various kinds of footfaults. These matters can often be high stakes, and it is equally important to craft a convincing written product and to anticipate how tax authorities will view the filing. Caplin & Drysdale has extensive experience with private letter rulings requests for changes in accounting method and requests for reasonable cause relief.
Representative Engagements
- The New York State Department of Finance asserted that a large investment fund was a mere "investor" rather than engaged in business as a trader, which would have had the effect of the partners losing hundreds of millions of dollars of investment expenses as deductions for New York State income tax purposes. Caplin & Drysdale attorneys painstakingly reviewed years of trading records and marshaled these facts along with case law to convince New York authorities that the fund was indeed a trader.
- A foreign taxpayer acquired a U.S. consolidated group that had used loss carryforwards to offset taxes on its profitable sales of unwanted assets before the transaction. On audit, an IRS proposed to disallow the losses on multiple grounds, asserting large current tax deficiencies. The situation was further complicated by state allocation and apportionment disputes involving current and past members of the group. Caplin & Drysdale oversaw the reconstruction of twenty years of federal and state tax returns and identified grounds for claiming additional losses. Ultimately, a favorable resolution is reached with both the state auditors and federal appeals.
- Months after signing a multiple-year IRS Appeals settlement, a corporate taxpayer was surprised by IRS-calculated interest assessments that exceeded projected liabilities by over $100 million. Caplin & Drysdale coordinated filing three sets of refund claims raising over twenty computational issues, worked with the IRS Appeals computations specialists to revise the interim tax calculations on which the restricted interest calculation was based and then assisted the taxpayer in prevailing on virtually all of its interest claims, in the process achieving favorable resolutions of disputes about the scope of earlier settlements and the statute of limitations.
