Tax
Practice Leader: Joan C. Arnold
Pepper Hamilton
LLP’s tax practice group assists clients with proactive tax planning, including mergers and acquisitions, dispositions, public offerings, reorganizations, restructurings, liquidations and structured finance vehicles. Our tax lawyers are integrally involved in the structure and formation of partnerships, and have significant experience in private equity funds, hedge funds, mezzanine funds and their investments.
Federal Tax Our federal tax practice provides tailored business services to address client needs in a post-Sarbanes-Oxley Act environment, including:
- transaction structuring and tax planning for international and domestic companies, including obtaining IRS private letter rulings and delivering opinions
- net operating loss (382) analysis for impact on purchase price and financial disclosure
- analysis of deductibility of transaction expenses
- accounting method changes
- tax due diligence and data room preparation
- domestic manufacturing deduction (199) opportunities
- consolidated return issues
- internal restructuring
- international tax controversy support, including competent authority representation
- tax litigation and IRS controversy support
- tax shelter reporting and disclosure assistance
- independent tax opinions on significant corporate tax matters
- bankruptcy and workout tax planning.
We go beyond answering your tax questions and offer tax consulting services that are more comprehensive than the practices of many law firms. Our experience enables us to provide advice that is relevant to your local and global business objectives, and, because we do not serve a dual role as auditor/tax advisor, we can provide independent tax advice. Our tax professionals understand the “big picture,” and in addition to legal tax analysis, we can produce the numbers. Also, because of our M&A tax team’s Big Four background, we understand the financial statement implications of our tax advice.
Some of our recent matters are listed below:
Structuring
- structured two $200 million-plus tax-free reorganizations and issued opinions on the tax consequences
- provided special tax counsel for public offering of $200 million in limited partnership interests
- structured and drafted partnership agreements for investment funds, venture funds, leveraged buyout funds, hedge funds and small business investment companies
- performed tax basis analysis for sale of an operating division of a large publicly traded company.
Tax Controversy
- initiated proceedings in Tax Court to litigate timing of deduction of warrants issued as sales discounts
- achieved successful resolution of an international tax matter under Competent Authority
- managed a refund claim (in excess of $10 million) for a fraudulent investment
- managed to a “no change” the appeal of an IRS assessment of excise tax
- managed transfer pricing audit and appeal for a Swiss company
- managed audit and appeal of determination of proper depreciation conventions for real estate developer
- managed audit and appeal of determination of proper net operating losses for company
- prepared Treasury Comment Letter regarding new manufacturing deduction (Section 199)
- managed competent authority claim for withholding tax issue with the Japanese NTA
- represented clients as part of recent federal tax shelter initiative
- negotiated on behalf of client for collection issues.
Financing
- provided tax counsel for an international investment master-feeder organization, including advising on impact of U.S. investments by non-U.S. participant
- provided tax counsel for private placement of $92 million in discount bonds
- represented issuers in complex securitizations of debt obligations
- represented insurance issuer before the IRS in successful remediation of non-complying financial product
- counseled a public transportation company on the tax consequences of various public offerings of straight and hybrid debt instruments
- counseled investors in a public tender offer in complex reorganization.
Merger and Post Merger Services
- obtained IRS private letter ruling on $3.2 billion corporate combination
- obtained IRS private letter ruling for a $2 billion tax-free spin off and subsequent merger of a subsidiary of a U.S. public company
- initiated an IRS private letter ruling on determination of change of control for NOL limitation analysis
- performed federal, state and local tax due diligence study for several stock and asset acquisitions
- represented the target company in a recent merger and performed NOL availability analysis as part of seller side due diligence to support purchase price adjustment
- performed an analysis and delivered a tax opinion on the federal income tax treatment of transaction costs after several acquisitions and equity offerings for large life insurance company
- represented Fortune 50 company undergoing merger in all aspects of merger and post-merger planning; involved with integration teams and reviewing structure and function of tax department for Day Zero planning.
State and Local Tax Pepper has handled state tax appeals for
Fortune 1000 companies, small businesses and individuals. We have particular experience and contacts in the Pennsylvania state and local appeals and court system, and we have litigated significant Pennsylvania tax cases. We have handled appeals and/or litigation matters in numerous other states, including California, Florida, Georgia, Illinois, Indiana, Kentucky, Ohio, New Jersey, New York, North Carolina, Virginia and West Virginia. We have worked with our clients to ensure proper tax compliance through nexus reviews and, where necessary, by entering into voluntary disclosure and amnesty programs. We also have worked with our clients and lawmakers to draft and propose state tax legislation. Our state and local tax services include:
- transaction structuring and tax planning
- income tax planning
- credits and incentives
- net operating loss analysis
- tax due diligence
- internal restructuring
- property tax planning
- controversy/voluntary disclosure
- nexus analysis.
Tax Structuring and Tax Planning Recent matters include:
- assisting a large financial institution in obtaining an alternative method of income tax apportionment, resulting in millions of dollars of tax savings
- advising a financial institution on the availability of various credits and incentives to reduce its state income tax liability
- assisting a manufacturing client in understanding the state tax implications to switch to new ERP system
- performed a nexus study for a public company after acquisition of a new business
- assisted U.S.-based multinational with restructuring of global debt to achieve better global tax rate
- performed a global transfer pricing study for an acquisitive software company.
Net Operating Loss Analysis
- assisting a telecommunications company to assess the state impact of its federal net operating loss carryover.
Tax Due Diligence
- performing due diligence for a government contractor acquiring a multinational target
- assisting a telecommunications company in assessing the state tax implications of the movement of significant portions of its back office operations.
Internal Restructuring
- advising a broker/dealer on restructuring its information technology department in a tax-efficient manner, saving millions of dollars
- advising a telecommunications company about proactively structuring its operations to limit tax exposure
- assisting several financial institutions in securitization of loan portfolios to achieve state tax savings in accord with other viable business purposes
- advising a financial institution to restructure its business operations in light of unfavorable legislative changes to keep its income tax costs stable
- using captive real estate investment trusts to minimize state income and franchise taxes for retailers and financial institutions.
Property Tax Planning
- analyzing costs involved in equipment purchases, saving a telecommunications company millions of dollars in property taxes.
Tax Controversy
- ensured the manufacturing exemption for the Pennsylvania capital stock and franchise tax for a sausage-making company
- negotiated complete relief from a $1.5 million business privilege tax assessment for a highway construction contractor
- represented a manufacturer of medical devices in a corporate net income tax dispute over royalty and interest payments to a DIHC
- reduced a $1.5 million sales and use tax assessment by $1.2 million for a manufacturer of railroad equipment
- managed to a “no change” the appeal of IRS denial of partnership debt financed distribution treatment of $50 million
- managed the appeal of IRS denial of deduction for rebate in the form of warrants ($23 million); at TAM stage
- managed audit and appeal regarding proper accounting methods and treatment of syndication fees for oil and gas syndicators
- handling more than 200 pending state and local tax appeal cases for a variety of clients
- advising a broker/dealer on restructuring its information technology department in a tax efficient manner, saving millions of dollars
- advised multiple corporations during Maryland’s SYL tax amnesty period that ended November 1, 2004.
