Arthur L. Bailey

Partner

1330 Connecticut Avenue, NW
Washington DC 20036
TEL: 202.429.6409
FAX: 202.429.3902

Art Bailey is a tax partner in the Washington office of Steptoe & Johnson LLP, where he is a member of the Tax group. He is an authority in tax controversy and tax litigation.

Prior to joining the firm, Mr. Bailey worked in the Office of Chief Counsel at the Internal Revenue Service and at the Tax Division of the Department of Justice, where he was a trial attorney. He was also vice president and tax counsel for a major life insurance company.

Tax Controversy and Tax Litigation
For the past 10 years, Mr. Bailey has represented large, publicly owned corporations in tax disputes where the government relies on the “economic substance” doctrine and related theories to disallow losses and other tax attributes. Mr. Bailey’s cases frequently involve highly technical issues where the outcome turns on the interpretation of a complex statute and, in some cases, on obscure procedural points.

Mr. Bailey’s practice includes cases with issues relating to privilege, work product, tax accrual workpapers, third-party summons, and other issues that require the attention of counsel during the IRS’ examination of a significant tax matter. His recent cases have included disputes utilizing the IRS’ new controversy resolution procedures such as fast track, early referral, and mediation, as well as the traditional IRS Appeals process. He represents taxpayers at Appeals Offices across the country. In several recent cases, Mr. Bailey successfully involved LMSB executives who were able to correct the course an issue was taking.

In today’s high-profile tax controversy environment, taxpayers with significant tax disputes look for counsel with both substantive knowledge of the tax laws and solid tax litigation experience, including familiarity with the appellate courts. In a career spanning three decades, Mr. Bailey has handled tax cases in the three major Federal trial court forums (US Tax Court, US Court of Federal Claims, US District Court) as well as all but one of the 13 Federal courts of appeal.

Mr. Bailey is a frequent speaker at various bar association and bar-affiliated seminars. He recently published several articles explaining the workings of the new Circular 230 regulations that impose broad new practice requirements on written tax advice provided by tax practitioners and in-house tax advisors.

Noteworthy

Listed in Best Lawyers of America 2008 for Tax Law

Representative Matters

Cases at Steptoe & Johnson LLP:

United States v. Textron—Taxpayer prevails in quashing an administrative summons seeking disclosure of tax accrual workpapers. (District Court)
Fleet Bank v. Commissioner—Government concedes. $300 million loss allowed on sale of mortgage pools with mortgage servicing rights retained. Basis allocation issue. (Tax Court)
Phoenix Mutual v. Commissioner—Taxpayer prevails on five issues despite adverse authority in other courts. Government does not appeal. (Tax Court)
Phoenix Mutual v. United States—Same issues as above. Government agrees that it is collaterally estopped to oppose refund. $50 million refund. (District Court)
National Life v. Commissioner—Taxpayer denied double deduction (fresh start) due to unique facts. (CA 2)
New York Life v. United States—Taxpayer wins $34 million judgment in a “payment or deposit” case. Tucker Act jurisdiction. (Fed. Cir.) Government’s cert. pet. denied.
State Mutual et al v. United States—District Court decision in favor of government reversed by DC Circuit. Procedural issues. (Rule 27 petition)
American Electric Power v. United States—Court of Appeals follows decisions of CA 3 and CA 5 in similar COLI cases and upholds District Court decision in government’s favor. Six-week trial; electronic courtroom. (CA 6)
Hughes Properties v. United States—Amicus brief filed in Supreme Court supporting taxpayer’s accrual position with respect to “progressive jackpots.”

Government Appeals at the US Department of Justice:

Engineering Sales v. United States—District Court reversed in Section 482 allocation case. Upholds constructive dividend. (CA 5)
Wendell Olk v. United States—District Court decision in taxpayer’s favor reversed; “tokens” paid to casino dealers by gamblers are taxable income, not gifts. (CA 9)
Lee v. United States—District Court affirmed in flower bond case. (CA 9)
Hicks Nurseries v. Commissioner—Tax Court decision in favor of taxpayer reversed. Sub S qualification. (CA 2)
Monfort of Colorado, Inc. v. United States—District Court decision in favor of taxpayer upheld; hedging used to adjust closing inventory cost. (CA 10)
Singleton v. Commissioner—District Court decision in taxpayer’s favor reversed. Court of Appeals holds that payment (per tax sharing agreement) from sub to parent was in substance a dividend, not tax payment. (CA 5)
First National Bank of South Carolina v. United States—District Court affirmed; bank’s payment of Visa membership fee was deductible. Precedent in other circuits followed. (CA 4)
North America Life and Casualty v. Commissioner—Life insurance tax accounting; precedent favoring the taxpayer in other circuits followed. (CA 8)
Corex Corp. v. United States—Excise tax; District Court decision in taxpayer’s favor reversed. In substance, Cortex was the real importer. (CA 9)

Taxpayer Appeals at the US Department of Justice:

Northwestern National Bank of Minneapolis v. United States—Section 482 case; Section 482 “trumps” Section 351 in transaction between related parties. (CA 8)
Ertegun v. Commissioner—Tax Court upheld in change in accounting method case. Record company wanted to accelerate credit for returned records. (CA 2)
Klein v. Commissioner—Tax Court upheld in case involving sale of patent rights and the “all substantial rights” test. (CA 7)
Pleasanton Gravel Co. v. Commissioner—Tax Court upheld in sale vs. lease issue. (CA 9)
Youngblood v. Commissioner—Tax Court upheld in amended return/change in accounting method case. (CA 8)

Areas of Practice

Education

Bar & Court Admissions

Arthur L. Bailey

Partner

Noteworthy

Representative Matters

News

Speaking Engagements

Publications