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- Tax Controversies
Covington’s tax group advises multinational clients on their most significant and challenging tax issues. Our members have extensive government experience, including senior positions at the U.S. Department of Treasury, International Revenue Service, and the U.S. Senate. Combined with our talents, focus and creativity, we provide bespoke solutions for sustained tax minimization in an increasingly regulated world. And, in disputes with the tax authorities, we secure favorable results by efficiently resolving matters as early in the administrative process as possible, and, where not possible, we litigate.
Covington’s tax controversy experience includes very large case audits; advance pricing agreements, private letter rulings, and competent authority proceedings; fast track settlements, administrative appeals, and post-IRS appeals mediation; Administrative Procedure Act challenges; and Tax Court and other litigation involving a broad spectrum of subject matter areas. We understand that efficient resolution of tax controversies requires creativity and a complete understanding of the impact of the controversy and potential resolutions on our clients and their operations.
Tax Court Victory Following Trial in Matter Involving over $350 million of Adjustments
Obtained a complete taxpayer victory following a trial in the Tax Court involving adjustments of over $350 million relating to homebuilder’s use of the completed contract method of accounting. The case represented, by dollar value, the largest taxpayer victory in the Tax Court in 2014. Currently represent taxpayer before the Ninth Circuit Court of Appeals in connection with the Government’s appeal of the case. Shea Homes v. Commissioner, 142 T.C. No. 3 (2014).
Transfer Pricing Resolution for More Than $3.3 Billion in Transactions
Served as lead U.S. counsel on negotiations for bilateral advance pricing agreement that proposed a transfer pricing methodology that was new to the industry and the two treaty countries; successfully assisted the two treaty countries in reaching agreement and voiding binding arbitration in dispute spanning 14 tax years and involving intercompany transactions of more than $3.3 billion.
Persuaded the IRS Examination Division to Close Out Transfer Pricing Audit With No Adjustment
Persuaded the IRS Examination Division to close out with no transfer pricing adjustment an audit involving a novel transfer pricing methodology and intercompany transactions in excess of $1.5 billion and to skip auditing the company for the next two years. The issues under audit were considered by a senior team of three government economists and nearly a dozen agents.
Persuaded IRS Appeals to Reverse Proposed Adjustments of More Than $250 million
On behalf of a national healthcare company, persuaded IRS Appeals Division to reverse, in their entirety, over $275 million of proposed adjustments related to the company’s income accruals. Following resolution, IRS Examination Division agreed to no longer raise the issue and to skip auditing the taxpayer for at least a year.
Tax Court Victory re: Expense Deduction Matter on Behalf of National Sports Team
Successfully litigated a matter before the Tax Court involving the taxable nature and deductibility of meal expenses on behalf of the Boston Bruins. The decision has implications for most national sports teams as well as other employers who provide meals to employees as a de minimis fringe benefit. Jacobs v. Commissioner, Tax Court Docket No. 019009-15.
Examination of Certain Transfer Pricing Payments
Persuaded IRS to drop examination of certain transfer pricing payments for use of intangibles involving hundreds of millions of dollars of payments.
Debt/Equity Classification for $2 Billion Instrument
Obtained an appeals reversal of a transfer pricing adjustment involving more than $400 million of proposed adjustments, reversals of $285 million of subpart F income, and reversal of proposed earnings and profits adjustment of almost $300 million in connection with the debt/equity classification of a $2 billion instrument.
Tax Court Litigation Resulting in Government Concession of over $250 million in Adjustments Plus an Additional Refund of $15 million
Prior to trial, obtained a concession from the Government with respect to adjustments of over $250 million relating to a worthless partnership interest deduction, and identified computational errors resulting in additional refunds of $15 million. JELD-WEN v. Commissioner, Tax Court Docket No. 003055-14.
Covington Nabs Tax Partner From PwC For NY Office
February 4, 2019, Law360
Law360 covered Kevin Otero’s move to the firm as a partner in our tax practice group. Mr. Otero will represent large corporations and individuals before the IRS. He also will advise and represent clients before the U.S. Tax Court, U.S. Court of Federal Claims, and federal district and appellate courts across the country. He says, “There’s been a lot of ...
Leading Tax Lawyer Joins Covington
February 1, 2019
NEW YORK—Kevin Otero has joined Covington's Tax Practice Group as a partner in New York. Mr. Otero advises clients on all aspects of tax controversy matters including audits, administrative appeals, transfer pricing controversies, and tax litigation. He also has extensive experience advising clients on technical tax risk management, strategic audit and ...
Emin Toro Named to the American College of Tax Counsel
October 5, 2017
WASHINGTON—Covington partner Emin Toro has been named a Fellow of the American College of Tax Counsel. Mr. Toro concentrates on the needs of multinational companies, including both tax controversies and counseling. His controversy experience includes audits, administrative appeals, litigation, as well as advance pricing agreement and competent authority ...
Covington Secures Tax Court Victory for Boston Bruins
July 5, 2017
WASHINGTON—The U.S. Tax Court ruled in favor of Covington’s client the Boston Bruins in a dispute with the IRS over away-game meal costs. The IRS had argued that the Bruins were entitled to deduct only 50 percent of the costs of meals that the club served to its players and other employees during road trips. The Tax Court declined to accept this view and ...
The IRS's intensifying fight over income taxes
November 1, 2015, Philadelphia Inquirer
Former Director of Transfer Pricing Operations in the Large Business & International Division of the IRS Samuel Maruca is quoted by the Philadelphia Inquirer in an article about taxes being paid by large companies, and the IRS’ attempt to settle “transfer-pricing” cases to ensure they are paying the correct amount. According to Maruca, "The IRS has become a lot ...
August 27, 2012
WASHINGTON, DC, August 27, 2012 — Covington & Burling LLP lawyers received 196 individual mentions in 57 areas of law in the 2013 edition of The Best Lawyers in America. This annual compilation of top U.S. lawyers is based on peer-review surveys and is used as a referral guide in the legal profession. The Covington lawyers recognized are as ...