AUDITS & APPEALS
Colvin + Hallett has handled thousands of audits and appeals for clients throughout the country involving a limitless range of tax issues and potential tax liabilities from the thousands to multi-millions. Our goal is to obtain a favorable resolution for our clients as early as possible to eliminate the need for further time and expense. However, if an acceptable resolution cannot or has not been reached in the audit process, our attorneys also represent clients at the next phase in the process, the agency appeal.
Represented an executive in a gift tax audit relating to participation in an alleged tax shelter using grantor retained annuity trusts to gift over $40 million to his children and successfully defended the IRS’s challenge to the validity of the GRATs.
Represented a large vessel/yacht manufacturer in an audit involving a challenge to its inventory accounting, including a $2 million write down of scrapped and obsolete items and a $6 million deduction related to a cancelled contract. The audit resulted in no change; the IRS accepted the tax returns as filed.
Successfully secured the withdrawal of IRS summonses issued in response to a Russian Tax Treaty request for information from Russian expatriate.
Obtained a favorable resolution involving the IRS’s challenge that $6 million of a larger asset sale was a three party § 1031 exchange qualifying for deferral of gain.
Represented client in an IRS challenge to validity of client’s deduction for substantial deposit into capital construction fund; IRS conceded the issue on audit.
Assisted two taxpayers in claiming over $1.6 million in theft losses from fraudulent investment schemes and successfully defended the losses in an IRS audit, resulting in refunds of over $250,000 for the clients.
Represented a bankruptcy trustee in an audit of bankruptcy estate/taxpayers’ $2 million net operating loss deduction on real estate transactions; the IRS accepted the loss in its entirety.
Represented a large partnership of technology companies in a case involving the IRS’s proposed $250 million adjustment relating to the amortization of patents; the IRS conceded entirely at Appeals.
Secured a full concession at Appeals for the owner of a sports team where the IRS had asserted that $100 million is losses should be disallowed because the team was a hobby and not a business.
Represented an investor who participated in multiple variable prepaid forward contracts involving over $120 million that the IRS challenged on the grounds that the sale occurred at the time the contract was executed rather than at the contract’s end. Successfully persuaded Appeals to depart from its prior settlement posture of 80% concession by taxpayer and instead obtained an 80% IRS concession.
Obtained a $7 million refund for a homebuilder with operations in multiple states in an appeal of an IRS determination that financing arrangements were a circular flow of money and should not be respected, successfully defending client’s plan to shift basis to alternate entity.
Secured full concession at IRS Appeals that homebuilder’s land-holding entities were entitled to capital gain treatment on the sale of land to the homebuilder’s development entity.
Secured full concession by IRS that bonus payments made by corporation were deductible compensation, not non-deductible dividends even though they were made, in part, in proportion to stock ownership.
Successfully argued that the $2 million of gains from client’s commodities broker-dealer who created sham transactions to generate losses for other clients, assigning the gain to our client, were shams and not taxable, plus later obtained theft loss deduction for client.
Obtained favorable settlements at Appeals for clients around the U.S. where the IRS sought to include in the clients’ income the cash value of life insurance policies purchased by their employers.
In estate tax case involving value of stock of publicly traded closely held business, favorably resolved valuation dispute resulting in a savings of more than $8 million from the IRS’s asserted position.
Successfully defended at Appeals an IRS challenge to a $1.7 million theft loss deduction for money lost to a Nigerian internet scheme.
Represented tribal tobacco stores where the IRS challenged a deduction for over $1.5 million in cash and goods seized in a raid by the federal government. Obtained a favorable result at Appeals—the liability was less than 2% of the amount proposed by the IRS.
Obtained an $800,000 casualty loss for a client whose pool and property was damaged as a result of a sinkhole; IRS argued it did not qualify for casualty loss treatment and challenged the amount of the loss.
In audit of tax return preparer, persuaded the IRS that proposed audit of 30 clients under a preparer penalty project was unjustified and should not be pursued after conducting an audit of just three clients.
Convinced the IRS that preparer’s treatment of complex transaction was proper and not subject to penalty, saving a potential audit of a thousand or more clients.
Defended tax return preparer in connection with IRS preparer penalty assertion; Appeals conceded the penalty.
Determination No. 14-0157. Successfully argued that out-of-state manufacturer of beverage additive was not subject to B&O tax because the goods were delivered and received outside of Washington.
Determination No. 12-0111. Prevailed entirely before the ALJ in case involving sales tax liability for a popular bar and restaurant.
Determination No. 12-300. Successfully challenged the Department of Revenue’s attempt to pierce the corporate veil and collect use tax on a $5 million yacht from the LLC’s member.
Determination No. 15-0031. Represented an out-of-state manufacturer against the Department of Revenue’s assertion that its sales to Washington retailers were not associated with any Washington activities and were therefore exempt from B&O tax. Negotiated a favorable settlement with the DOR.
Successfully defended assertion of use tax against government contractor who built prototypes for the Defense Department.
Represented a construction company in an audit involving the proper classification of workers; negotiations led to a settlement resulting in 90% concession by the Department of Labor & Industries.
Represented a general contractor in an audit involving employment of undocumented workers, and worker classification over a multi-year period. The resolution limited the contractor’s exposure to a single year.
Obtained full concession that DOR’s assertion that services provided by client were not subject to retail sales tax.
Successfully shielded client from L&I’s attempt to assert personal liability against client for unpaid corporate L&I premiums.