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Covington is well known for its patent litigation and FDA regulatory practices, which have gained the firm eminence in Life Sciences and other IP-based industries. Not surprisingly, many IP-based companies turn to our tax partners for advice on IP tax planning and resolving IP tax controversies. The firm has practiced tax law since opening its doors in 1919, and our second-to-none tax expertise is bolstered by the firm’s in-depth knowledge of IP-based businesses.
The firm’s IP Tax Services Group is led by three Washington-based tax partners, two of whom have been recognized by Chambers USA as a “Leading American Tax Lawyer.” The IP Tax Services Group specializes in (1) advising clients on tax-efficient management of IP (including through offshore holding companies) and (2) resolving IP-related tax controversies, especially those involving cross-border transfer pricing and cost-sharing arrangements. Members of the Group literally “wrote the book” on the US transfer pricing rules and on handling IRS transfer pricing audits. They have chaired transfer pricing committees of the American and International Bar Associations and of the US Council for International Business. One of them holds an advanced degree in economics and was for a time Technical Director of a Big Four firm’s global transfer pricing practice.
The IP Tax Services Group has hands-on experience planning and defending IP arrangements in a variety of industries, including the biopharmaceutical, computer, and telecom industries, as well as various industrial and retail businesses for which IP is a critical asset. They have helped these companies challenge IP-related transfer pricing adjustments ranging from $90m to $20b, including complex adjustments relating to cost-sharing buy-in payments.
A tax controversy starts with an IRS examination, which may then lead to an administrative Appeal, resort to Competent Authority proceedings, or closure through an Advance Pricing Agreement (APA). Our IP Tax Services Group has achieved success for clients at every level of controversy resolution. Although the Group has a perfect record of reaching favorable settlements that avoided the need to go to court, it is also ready to pursue tax litigation if circumstances warrant. (The firm was recently a finalist for American Lawyer “Litigation Department of the Year").
Based on years of experience defending against IP-related transfer pricing adjustments, the IP Tax Services Group has developed an inventory of effective defense positions that may be deployed at the examination or appeals level. These positions draw support from leading academics, economists, and industry experts, many of whom have been interviewed by the Group as potential witnesses. If you have any questions, feel free to contact any member of the IP Tax Services Group.
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