The Kilpatrick Townsend Advantage: Tax Litigation Experience

As recent history confirms, a taxpayer cannot afford to take a “let’s see how it goes” approach to any Internal Revenue Service (IRS) inquiry. Too much is at stake. And for taxpayers with complex business affairs, there is no such thing as a “routine audit.” Any IRS inquiry can evolve into a major problem. Taxpayers need experienced and effective representation from the examination through litigation. And more now than ever, states are instituting their own audits in an effort to seek revenue. Thus, the discussion below focuses on the IRS but can apply for any tax controversy – whether by the IRS, a state, or a foreign country. And Kilpatrick Townsend can handle any tax controversy, regardless of the taxing authority involved.

The Kilpatrick Townsend Tax Controversy & Litigation team has few competitors. Why? Most tax advisors avoid litigation (or the threat of litigation) because they lack experience. Every tax controversy advisor has a strategy for resolving a tax dispute. But when that strategy is presented, ask your current tax advisor to lay out all possible options to resolve your tax dispute. Next, ask if challenging the IRS in court is an option and if so, ask how many times that advisor has challenged the IRS in court. All taxing authorities need to know you can and will pursue litigation if necessary to obtain the right result. The Kilpatrick Townsend Tax Controversy & Litigation Team does not claim litigation is the only option. But litigation, or threat of litigation, must be an option as your best opportunity to settle a case may be to remove the IRS’ home field advantage by taking the matter out of their office.

Some of the largest firms have no tax litigators. Instead, the firms either ignore the court alternative or turn the case over to a commercial litigator with no tax experience. In comparison, inside the IRS is one of the largest tax litigation firms in the world. IRS examiners are advised by those experienced IRS tax litigators daily who maintain an eye on potential future disputes. Taxpayers should also engage their own tax litigator to protect their interests during all phases of a tax dispute, which hopefully may ultimately help to avoid litigation. The best way to avoid litigation, yet achieve a favorable result, is to anticipate litigation and plan for litigation from the first IRS inquiry; or even better during the planning stages of the transactions. All business transactions include a tax component – but few transactions are planned with an eye towards future IRS scrutiny. Any tax planning or response to an IRS request should be analyzed from the IRS’ viewpoint.

The Kilpatrick Townsend Strategy: Our “Established Process” Works

Taxpayers must match the IRS strategy with their own strategy, carefully considering each issue that arises during any tax dispute with an end-game that focuses on the ultimate favorable resolution of the matter.

Kilpatrick Townsend has an established process for handling IRS tax controversy matters from the day you receive your first IRS notice. Decisions made during an examination can significantly impact the remainder of the case as well as the chances of success at the Appeals level or future litigation. There are a number of important rules to consider when dealing with the IRS or a department of revenue as outlined in our 15 Tips to Help Deal with (or Avoid) The IRS in 2015.

For example, a number of avenues exist to take your case to the IRS Office of Appeals after a taxpayer and the IRS Examination Division close the exam unagreed. How you choose to get to the IRS Appeals phase can impact the resolution of your case. Just preparing a Protest in every case may not be the best approach. Kilpatrick Townsend’s established process outlines two ways to get to Appeals [See discussion regarding Appeals consideration in 15 Tips.]. And now, the IRS permits many alternative dispute resolution techniques, including mediation, which should also be explored. Kilpatrick Townsend has experience in every alternative dispute resolution offered by the IRS.

Our established process is a roadmap charted with years of tax controversy/litigation experience that leads you in the right direction from day one. For a more extensive discussion of our established process, please refer to the 15 Tips. Regardless of the size and complexity of the case, we employ the same strategy because our established process works.

The Kilpatrick Townsend Edge: Technical Expertise

Kilpatrick Townsend represents clients in all industries and handles all stages of a tax controversy, including administrative and judicial levels, from examination though court proceedings. Our Tax Controversy & Litigation Team is regionally and nationally renowned. Therefore, we can represent any size taxpayer and any size matter. And based on our multi-disciplinary practice, especially in the intellectual property arena, we have the resources to deal procedurally and substantively on any domestic or international transaction the IRS questions. Currently, the IRS focuses a great deal of its enforcement resources on international tax issues. And the revenue departments of other countries are following suit. Kilpatrick Townsend has the experience to advise taxpayers subject to examination by the IRS, a state, or a foreign country. To learn where taxpayers can expect increased scrutiny in 2014, read our 15 Tips.

The Importance of Advocacy: An Outside Perspective

Why do you need external expertise to assist your in-house staff when dealing with the IRS in audits and other administrative matters? The decision to seek outside counsel when dealing with the IRS or State Departments of Revenue is not a question of competence. Instead, outside counsel may be needed as a company’s in-house staff cannot serve the role of an advocate because they are the taxpayer. On the other hand, we did not structure the transaction and did not prepare the tax return. As your representative, we can go into an IRS meeting as your cooperative advocate. As your outside counsel, our established process shields you and your in-house staff from a potential hostile examination that is best avoided.

When seeking outside counsel, you need a team that will serve as an advocate on your behalf. A trusted partner who understands your issues and position, with a view toward all possible options for a favorable resolution. Kilpatrick Townsend is the right firm to call when you need outside advocacy and can benefit from an outside perspective. We will work with your company’s in-house counsel, tax team, CPAs, and/or payroll department to assist them with a risk reduction plan.

Avoid Criminal Exposure: Who’s at Risk?

The IRS recently initiated almost 5,000 criminal investigations. Kilpatrick Townsend’s Tax and White Collar teams can handle any criminal tax investigation. Again, Kilpatrick Townsend has few competitors in the criminal tax area as few firms have both a white collar crime defense team and a tax controversy team. Scott L. Marrah, former Assistant United States Attorney in the Southern district of New York, leads the firm’s Special Investigations & White Collar Crime Team and has extensive experience in the areas of white collar criminal defense, internal, criminal, and SEC investigations, and complex commercial litigation.

When Should You Call Kilpatrick Townsend?

As soon as you receive an IRS notice. The first contact with the IRS in many instances can dictate the result or the extent of the IRS inquiry.

If you disagree with your IRS examiner and you want to take it to the Appeals level or discuss alternative dispute resolution options.

If you get an audit notice from the IRS requesting to talk to your people face-to-face. Employees tend to respond without thinking about why the IRS is asking a particular question without understanding the long-term ramifications.

A taxpayer is well-served to seek legal counsel if any IRS inquiry could result in a potential criminal investigation.

When the IRS comes knocking, call someone with an established process who can take you from examination to litigation – or at least can threaten litigation and back it up. At Kilpatrick Townsend, we can and do support the taxpayer from the first day to the final day.