Tax Dispute Case Study

$3.2M Tax Assessment Successfully Challenged and Reduced

Our client, a successful manufacturing company, received a devastating $3.2 million tax assessment from the IRS following an audit that questioned the legitimacy of certain business deductions and transfer pricing arrangements with their overseas subsidiaries. The assessment threatened the company's financial stability and future operations.

Our tax litigation team conducted a comprehensive review of the company's financial records, transfer pricing documentation, and international tax compliance. We identified several errors in the IRS's analysis and gathered expert testimony from international tax specialists and forensic accountants to support our client's position.

The Challenge

The IRS claimed that the company's transfer pricing arrangements were not at arm's length and that certain business expenses were personal in nature. We had to demonstrate the legitimate business purpose of all transactions while providing extensive documentation to support the company's tax positions across multiple years.

Proper tax planning and documentation are essential for business success and compliance.

The Solution

We assembled a team of tax attorneys, forensic accountants, and international tax experts to challenge the IRS assessment. Our strategy included detailed economic analysis of the transfer pricing arrangements, comprehensive documentation of business expenses, and negotiation with IRS appeals officers to reach a fair resolution.

The Result

Through skilled negotiation and compelling evidence presentation, we successfully reduced the tax assessment by 85%, saving our client over $2.7 million. The final settlement of $480,000 was manageable for the company and allowed them to continue operations without financial distress. We also helped implement improved tax compliance procedures to prevent future issues.