PITCHING THE PERFECT GAME:

Transcription

1 PITCHING THE PERFECT GAME: BEST PRACTICES FOR ADMINISTRATIVE PROCEDURES Hollis L. Hyans, Esq. Partner Morrison & Foerster LLP New York, NY Paul H. Masters Counsel for State Tax Disputes Shell Oil Company Houston, Texas

2 PRE-GAME WARM UP If you don t know where you are going, you might wind up someplace else. Yogi Berra Organize your team for future audits Specific issues for certain transactions 2

3 ORGANIZE YOUR TEAM Know the controversial positions Asset sales Acquisitions and dispositions Restructurings Contrary to established positions Anticipate and prepare Workpapers, compliance memoranda, opinions 3

4 INFORMING THE TEAM OF THE PLAN Align the stakeholders No surprises FIN 48 Litigation support People in the business Free agency and remember the fans Turnover in company of key fact holders Consider non-tax people Document retention policy 4

5 SAW IT ON ESPN FIRST Google is not your friend Auditors find information from both live and cached information (this PowerPoint) Vet information prior to release Keep government relations informed 5

6 THOSE CERTAIN TRANSACTIONS Dispositions of assets/entities Why and why now? (Hercules) Relationship and filing prior to disposition Tax advantaged and filing positions Key witnesses sticking around Beware: Disgruntled trades or free agents Documentation preserved Responsibility for pre-disposition tax or mandating cooperation in future audits 6

7 THOSE CERTAIN TRANSACTIONS Acquisitions Unitary or not (and long term consequence) Tax issues in organization s placement Tax attributes of acquired entity Due diligence performed/adequate Who is responsible for prior tax or cooperation on a go forward What happens to the minor league team And what is happening to all their records 7

8 TELLING THE UMPIRES THEY ARE WRONG IPT 2014 ANNUAL CONFERENCE Position contrary to tax authority s view Presume they will know Sufficient support Agreement by other taxpayers Penalty review Reputational risk Tax benefit vs. litigation cost 8

9 PLAY BALL In theory there is no difference between theory and practice. In practice there is. Yogi Berra Game plan before the auditor arrives Avoid the curve ball What will you do if you strike out? 9

10 GAME PLAN BEFORE THE UMP ARRIVES Review records for prior audits Ongoing but identified issues: new facts or law Missed issues Different audit = different take Ready to address the issues Get up to speed on recent legal changes Stay engaged with tax industry Voluntary compliance that you opt out of 10

11 GAME PLAN BEFORE THE UMP ARRIVES Documentation Preservation once an issue is identified How to provide the documentation Paper or electronic Access to originals Maintaining copies of what is provided 11

12 THE CURVE BALL Play fair Groom a good relationship Be on time Answer the question Do not circumvent Conceding errors Location, location, location 12

13 THE CURVE BALL Insist the auditor plays fair Know the rules (Illinois?) Get the IDRs in writing Notice in contacting third parties Get a timeline Know the line of authority 13

14 THE CURVE BALL Think about that IDR Relevant? Additional documents to tell the story Not yours to give 14

15 THE CURVE BALL Special issues with IDRs Consolidated returns in separate return state 50-state spreadsheet Documentation on treatment of transaction in another state Other states tax returns or an affiliate s 15

16 THE CURVE BALL Privilege Attorney vs. accountant-client (FL, CA, NY) Kovel Procedures to maintain privilege Waiver Tax accrual workpapers 16

17 THE CURVE BALL IPT 2014 ANNUAL CONFERENCE Tax authority subpoena How did we get here? Sufficient basis to support subpoena Timely issued Convert to an IDR Know the third parties that might be hit Show me YOUR records Require documentation of legal positions Get the audit file Get the policy file Dealing with privilege and redaction 17

18 THE CURVE BALL Time to settle? What authority does the auditor have to settle now Each party concedes But do you want to settle now 18

19 THREE STRIKES Exit conference Available and should you request it? Clarify and settle Instant replay: Appeal? Dollars at stake Non-recurring issue Public record Administrative appeal history 19

20 EXTRA INNINGS It ain t over till it s over. Yogi Berra Reevaluate the game plan Know the different state appellate systems Never forget settlement options 20

21 REEVALUATE THAT GAME PLAN Preservation of evidence Litigation holds Give it all Expense in producing may not be an excuse Spoliation = adverse inference, sanctions, publicity Electronic data, PSTs, wireless data and the cloud 21

22 REEVALUATE THAT GAME PLAN What you have or don t Witness testimony may not be enough Trial plan: review of evidence Get the detail Witnesses Informal discussions with potential witnesses Preservation through affidavits Disgruntled witnesses 22

23 KNOW THE SYSTEM Wide variance by state Where to file (independent or not) Right to appeal Exhaust administrative remedies or not Fix the strategy Question of law or facts First impression with administrative body Constitutional questions 23

24 KNOW THE SYSTEM Where s the record and raise the issues If at administrative then must establish everything or precluded Issues not raised may be precluded De novo review: trial run at admin? When counsel is crucial Prerequisites to litigation Payment of tax Posting bond Open courts (Texas) 24

25 REMEMBER SETTLEMENT AS AN OPTION Formal Mediation or settlement programs NY and CA Informal Working with audit, policy, and hearings attorneys 25

26 ODE TO THE END OF THE SEASON The price of success is hard work, dedication to the job at hand, and the determination that whether we win or lose, we have applied the best of ourselves to the task at hand. --Vince Lombardi 26