The Internal Revenue Service Office of Appeals (IRS Appeals) recently announced that it will offer a new virtual “face-to-face” option in the form of web-based communication to taxpayers and representatives to resolve tax disputes. IRS Office of Appeals Pilots Virtual Service, IRS (July 24, 2017. This announcement comes on the heels of other changes at IRS Appeals that curtail the ability of taxpayers to have face-to-face hearings with IRS Appeals. The IRS cites the need for the new service because of IRS Appeals’ large (and growing) case load—more than 100,000 cases each year! For some our prior coverage on recent changes at IRS Appeals, see here, here, here and here.

Practice Point: In the wake of an ever-shrinking budget, resources and staff, the IRS really has no choice but to try new and arguably more efficient methods to move cases along. The backlog of cases at IRS Appeals is staggering, and our clients are experiencing long wait times until a case is even assigned to an IRS Appeals officer. Then when the case is assigned, it typically sits for months until real progress can be made. This is not the fault of the IRS or the individual Appeals’ officers, but really the reality of a resource-starved governmental agency. The virtual appeals conference is seemingly a good method to conduct an Appeals conference for simple cases. If a case is complex, however, a virtual conference may be no different (or no more effective) than a telephonic conference. In cases that require extensive explanation, it is hard to see how the IRS Appeals conference will be effectively conducted virtually. But “hope springs eternal.”

Chambers USA, which releases an annual listing of rankings of law firms and attorneys in various practice areas, has released its 2017 edition. We are honored that Chambers USA has recognized McDermott’s tax practice and several of its attorneys in the latest rankings. A summary of McDermott’s tax rankings is listed below along with a complete list available here to all McDermott rankings.

In the nationwide rankings for Tax Controversy, we maintained our Band 2 ranking. In the state rankings for Tax, we are ranked in Band 1 for Illinois, Band 2 for Washington, DC and Band 3 for Texas.

On the tax controversy side, our team was recognized as known for a “Dominant presence in high-value tax disputes across the USA, fielding particular expertise in transfer pricing litigation and SALT work.” Clients gave us “10 out of 10 for client service,” and added: “They are great at investing in and building a long-term relationship.”  Particularly noted is the value for money we provide.  Clients agreed that they get good value from us: “It’s outstanding client service and worth every penny. Billing has been very detailed and understandable.

Several of our tax controversy attorneys were recognized by Chambers USA on the nationwide and state levels:

Chair of the firm’s tax controversy practice Todd Welty maintains an excellent reputation in the market for his tax controversy and litigation expertise. One impressed source comments: “His knowledge and trial expertise was phenomenal.” His impressive list of clients includes multinationals and Fortune 100 companies.

I have the utmost respect for Roger Jones’s litigation and controversy skills,” states one interviewee. His expert litigation practice sees him frequently act for major corporations at all levels of the federal court system.

Jean Pawlow regularly advises financial institutions on complex tax controversy matters. Observers indicate: “Her practice is very deep and diverse, and her clients benefit from that.

Andrew Roberson comes recommended as an “excellent tax controversy lawyer who has great instincts, is extremely personable and offers really good client skills.” His strong litigation practice is complemented by additional experience in resolving tax disputes in ADR proceedings.

Thomas Borders is a “great and experienced trial lawyer,” according to interviewees. He draws on his experience as a former IRS attorney to act on the full range of federal tax controversy matters, including defending against criminal investigations.

Recently, we published a Special Report in Tax Notes International, “Preparing for a Tsunami of International Tax Disputes.”  The article can be accessed here.  While there is near-universal agreement that the number of tax disputes is going to increase, existing international tax dispute resolution processes remain in serious need of improvement. A global consensus must be reached on a process for resolving worldwide tax disputes that appeals to all stakeholders. This article focuses on recent attempts by the Organisation for Economic Development (OECD), United Nations (UN) and international tax community to achieve such a consensus.

In short, the predictability of tax base results is a serious concern for countries and multi-national enterprises alike.  The only realistic solution is to design a dependable and independent treaty-based dispute resolution process that accommodates the needs of all stakeholders. A foundation for this process has been provided by the inclusion of arbitration in both the OECD and UN model income tax treaties and its successful implementation in a few countries. Arbitration and alternative dispute resolution (ADR) have already evolved successfully in nontax government and commercial contexts. As with any such evolution, there have been both positive and negative experiences for countries and private parties. In the realm of international taxation, the development of these processes is in the early stages. It is important for all stakeholders in the tax arena to explore ways of using experiences from non-tax contexts to develop processes that can relieve emerging pressures relating to international taxation. To distinguish the international tax context from others, the new dispute resolution process could be referred to as the International Taxation Dispute Resolution Process (ITDRP), as suggested in the UN Secretariat Paper on Alternative Dispute Resolution in Taxation released on October 8, 2015.

While the development of a successful ITDRP will inevitably take time and will no doubt be contentious, significant advancements have been made in the past few months that suggest it could soon be on the horizon.  These include the initial Base Erosion and Profit Shifting (BEPS) paper on dispute resolution, the January 2015 Dispute Resolution Conference in Vienna, the OECD Action 14 Final Report (released in October 2015) and the UN Secretariat ADR Paper.

Almost all stakeholders in the international taxation community agree that: (i) the number of disputes will increase; (ii) existing dispute resolution processes are in serious need of improvement; and (iii) a global consensus must be achieved so that global tax disputes can be resolved in a way that serves the interests of all stakeholders. In this regard, it may be fortunate for the tax community that it is arriving late to the ADR processes that have evolved in other areas over the past century. As the OECD and UN processes continue to evolve, it is hoped that lessons from these other areas can be drawn upon to develop an ITDRP that serves the interests of all parties.