International Tax Controversy and Transfer Pricing

Steptoe & Johnson LLP represents clients with respect to international tax controversy matters before the US Internal Revenue Service (IRS), the US Department of the Treasury, the US Congress, and foreign tax authorities.  Our lawyers resolve client problems with practical judgment, technical skill, and integrity.  

Transfer pricing matters are a significant part of Steptoe’s international tax controversy practice.  We combine the strategic and negotiation skills and litigation experience of our tax controversy group with the technical knowledge of our international tax group to resolve controversies favorably and efficiently.  Our tax controversy lawyers have proven experience at the IRS and in court across a broad range of subjects. Additionally, our lawyers are at the forefront of the issues facing our clients. Our efforts include:

• Advocating positions throughout the IRS administrative process and in the courts with experts on complex economic matters;
• Working  with experts to develop the facts and documentation necessary to prepare and defend transfer pricing positions; and
• Achieving success in demonstrating the infirmities in expert work performed for the government in tax controversies.

Some of our most notable successes have come in Competent Authority proceedings pursuant to bilateral income tax treaties.  Our lawyers are also frequently consulted on planning strategies, documentation, APAs, and other matters. 

Representative Matters

Transfer Pricing Matters

• Achieved 100 percent concession from the IRS on a significant cross-border royalty issue
• Assisted in developing a transfer pricing methodology for a global brokerage operation with emphasis on valuable trading strategies
• Assisted a major financial institution in resolving a difficult transfer pricing examination with the tax authorities of a major Asian country
• Assisted a major consumer products company with the resolution of large multi-country matter involving transfer pricing adjustments, as well as the impact of those adjustments on the foreign tax credit and controlled foreign corporation rules
• Advised a multi-billion dollar group, when it could no longer rely on documentation used by the group from which it was spun off, in a 21-country transfer pricing revision project
• Advised a large, non-US based financial institution on transfer pricing aspects of major cross-border restructuring
• Advised a large, publicly-traded financial institution with regard to global transfer pricing review and implementation of revised methodology
• Advised an international chemical and materials corporation in connection with international migration of intangibles
• Advised a large, publicly traded multinational in connection with transfer pricing strategy risks, opportunities, and implementation issues relating to a high-profit multi-billion dollar business segment
• Assisted a high-tech company with complex transfer pricing planning, ensuring financial audit readiness in going-public context 
• Advised a major telecommunications company in connection with proposed revisions to its cross-border royalty arrangements
• Advised a major financial institution on a complex US-UK-Japan transfer pricing matter involving global dealing, treatment of adjustments to hybrid entities, and other issues
• Headed teams preparing contemporaneous documentation under the transfer pricing rules
• Advised leading consumer products company on permanent establishment and transfer pricing aspects of supply chain restructuring

Audit Controversy Matters

• Represented a large financial institution in connection with a major controversy involving treaty limitation on benefits, contingent interest, active trade or business, and other issues
• Represented a hedge fund group in connection with multi-jurisdictional audit issues
• Represented a large multinational media company before IRS Appeals in connection with a major Foreign Sales Corporation  (FSC) controversy 
• Advised several clients in connection with IRS audits of stapled stock and other tax-sensitive cross-border structured transactions
• Represented a high-tech services company before the IRS in connection with a significant transfer pricing controversy
• Represented a multinational diversified manufacturer before the IRS Appeals in a matter relating to the capitalization of the cost of buying out Chinese minority partners
• Represented a foreign airline in connection with the application of US excise taxes

Competent Authority & Other Treaty Matters

• Represented a Middle Eastern investment company in groundbreaking Competent Authority resolution of high value and seemingly intractable dispute 
• Represented a major US multinational in obtaining extremely favorable resolution of US.-Asian withholding tax issue historically resolved in favor of the other country 
• Represented multinational before US Competent Authority regarding residency of a pass-through entity
• Represented high-net-worth individual in connection with US information exchange and treaty residence aspects of Japanese audit
• Represented the securities industry before the US Competent Authority to obtain an interpretive agreement under the US-Japan tax treaty
• Represented a multinational medical and scientific device company before the US Competent Authority to obtain a taxpayer-specific agreement under the US-French treaty regarding the potential double tax resulting from a French thin capitalization adjustment
• Represented trust fiduciaries and high-net-worth individuals in connection with competent authority and other aspects of the application of adverse foreign legislation
• Advised a foreign airline on the effects of international agreements
• In connection with a French tax controversy, advised a foreign professional services company on its treatment under the French-US tax treaty
• In connection with a Japanese tax controversy, advised a major US investment bank on the proper application of OECD principles embodied in the US-Japan tax treaty

Noteworthy

• Philip West served as the US Department of the Treasury’s Tax Counsel, the highest ranking international tax official in the US government
• Philip West ranked Band 1 for international tax by Chambers Global (2009-2011)
• Matt Lerner ranked for nationwide tax controversy in Chambers USA (2011)
• Walker Johnson ranked for nationwide tax controversy in Chambers USA (2011)
• Philip West and Matt Lerner listed in Best Lawyers in America for tax law (2011)
• Philip West recognized in Expert Guides: Guide to the World’s Leading Tax Advisers (2011)
• Steptoe and Johnson LLP ranked for international tax in Legal 500 (2011)
• Steptoe and Johnson LLP ranked for tax controversy in Legal 500 (2011)
• Philip West listed in The International Who's Who of Business Lawyers for corporate tax (2011)
• Steptoe and Johnson LLP recommended for international tax in International Tax Review's "World Tax 2009” (2009)

Publications

• The Korean Position on Royalty Sourcing
  April 23, 2012, Tax Notes