Global High Wealth, High-Income Tax Audits
Not surprisingly given federal tax rate structures, high-wealth and high-income individuals pay the vast majority of personal income taxes in the U.S. In 2009, the IRS established its Global High Wealth business division, and WELTY has successfully represented some of the first and largest taxpayers selected for GHW audits.
In March 2021, certain research studies asserted that the top 1% of taxpayers improperly avoid or evade 20% of their taxable income. While these studies have questionable assumptions, the reality is that the IRS is significantly increasing the audit rate for GHW and high-income taxpayers. Often these audits involve extremely large, privately-held multi-national businesses. At other times, private equity and hedge funds—as well as their principals—are the subject of GHW and high-income audits. WELTY is highly experienced at representing these taxpayers in the face of aggressive IRS audits.
Estate and Gift Tax Disputes
Given the incredible businesses and wealth built by Baby Boomers, the United States faces a huge intergenerational wealth transfer in the coming years as Baby Boomers pass on this wealth to their children and grandchildren. Estate and gift taxes threaten to become confiscatory as relatively high estate and gift tax exemptions lapse at the end of 2026, if not sooner due to tax increases planned by the current administration, making $5 million estates taxable once again. Thus, closely-held businesses and family farms and ranches are in danger of being broken up due to estate taxes. Tax planning that seeks to mitigate this catastrophe will face significant IRS scrutiny, especially due to the political rhetoric about the wealthy “paying their fair share.” WELTY has long defended large estates in IRS valuation disputes and challenges to estate planning.
Client-Focused, Special Co-Counsel
WELTY’s attorneys often serve as special co-counsel for tax controversy and litigation matters. For understandable reasons, clients often want and need to have the law firms and accounting firms that helped with planning and the implementation of a transaction involved in the subsequent tax dispute. However, taxpayers and their tax advisors often want a fresh, independent look at the tax dispute, and WELTY’s attorneys serve that role. The Firm takes pride in staying focused on the client’s interests by leaving their egos at the door while working with other tax and legal advisors. WELTY prioritizes the best result for the client and does not unnecessarily drag out a tax dispute, which often is a disservice to the client. In short, WELTY teams well with other tax advisors to resolve tax disputes at the earliest possible stage of a controversy.
Transfer Pricing and Valuation Disputes
Transfer pricing has been and will continue to be the focus of significant IRS enforcement resources. Multinational taxpayers often face the IRS and other taxing authorities making competing claims for the right to tax the same income and profits. Navigating these competing claims, while also understanding and planning appropriately for tax minimization and double taxation avoidance, is an increasingly difficult hurdle to clear. In many transfer pricing tax disputes, economics and valuation are front and center. When such controversies arise, WELTY has experience working with a taxpayer’s existing in-house and outside transfer pricing advisors in what routinely become a “battle of the experts” between taxpayers and taxing authorities.
Civil and Criminal Tax Fraud Defense
The line between aggressive, though acceptable, tax planning and willful misinterpretation of the law is not static. Indeed, what was commonly understood as acceptable when implemented often later becomes the subject of political pressure and hindsight, shifting the lines between a normal tax dispute and allegations of civil or criminal tax fraud. WELTY has extensive experience defending taxpayers against allegations that they engaged in tax fraud. In fact, WELTY has successfully defended central figures in some of the largest criminal tax cases ever brought in the United States.
Executives and Tax Advisors
The IRS and Department of Justice Tax Division often target individuals instead of their businesses or firms. As a result, corporate executives as well as accounting and law firm partners often find themselves at the center of tax disputes and related controversies. WELTY is adept at defending executives and tax advisors and navigating the complexities associated with these controversies.
Corporate Tax Controversy – IRS Audits, Administrative Appeals, and Tax Litigation
WELTY attorneys have represented Fortune 100, multi-national corporations in IRS audits, administrative appeals, and tax litigation handling complex issues including cross-border debt, financial instruments, Subpart F income, acquisition costs, research credits, inventory issues, and other sophisticated matters.