Legal Series: Global High Wealth Audits and IRS Audits of Partnerships

Tom Cullinan, a member of Sutherland’s Tax Practice Group, focuses on tax controversies against the Internal Revenue Service (IRS). He has represented a large number of corporations, partnerships, and high net-worth individuals in all phases of tax controversy. Tom has handled well over 100 IRS audits, and he has represented many clients before the Appeals Division of the IRS. Tom has extensive experience in resolving tax matters either through settlement or litigation. Tom has practiced in front of several U.S. district courts, the U.S. Tax Court, the U.S. Court of Federal Claims, and several appellate courts. Tom started his career as a CPA in New York, where he worked with clients in the retail, manufacturing and real estate sectors. Before joining Sutherland, Tom served as a law clerk for the Honorable Jerome Turner, U.S. District Court, Western District of Tennessee.

Edward Froelich represents clients in audit and litigation on all Federal tax issues. Mr. Froelich has litigated a number of tax cases and represented clients in numerous IRS audits and Appeals proceedings. He is a former trial attorney of the Department of Justice Tax Division where he litigated numerous cases, including complex corporate cases, in the U.S. Court of Federal Claims. In private practice he continues to litigate cases and represents clients in administrative controversies at both the audit and appeals level before the IRS. His Government experience informs his approach to administrative controversies. His litigation experience has been crucial to securing favorable resolutions of matters with the IRS Appeals Office. His representation is varied and includes large public companies, privately-held companies, partnerships, trusts, and individuals. Many of his clients are in the finance, technology, and real estate industries. He has successfully dealt with a variety of issues including international tax issues, income tax accounting issues, research credit issues, listed transaction issues, accuracy-related penalties, privilege and work product questions.

For example, some of the recent issues Mr. Froelich has handled include change of accounting method issues under Section 453, corresponding issues under Section 481, and economic performance issues under Section 461. Most recently, he has participated in litigation and mediation efforts in a major bankruptcy matter involving complex financial products and income tax accounting issues. He also litigated to concession an issue of deductibility of legal fees in the U.S. Tax Court. Mr. Froelich has settled on favorable terms for a banking client a dispute involving what the IRS characterized as a double-deduction transaction under Section 351, and for a major service provider in a dispute involving a contested liability trust where IRS Appeals recognized a significant litigation risk relating to the economic performance rules. On an international level, he has advised several clients on foreign bank account reporting issues both at a corporate and individual level, and he has handled several tax controversies. In one matter, which involved swap losses incurred by an overseas bank, the issue turned on the specific language in Code Section 864(c), which relates to deemed effectively-connected income. He also advised a public company regarding foreign tax credit redetermination events under Section 905(c), with respect to the United Kingdom and Canadian tax treaties. He also advised an apparel company regarding exposure to tax and penalties for failure to withhold under Section 1442 on payments of license fees to a European licensor. Mr. Froelich is currently advising two insurance companies on the impact of the proposed revocation of an election under Section 953(d) (allowing for domestic status of a foreign insurance company), with the potential result of deemed Section 367 transfers of assets and tax on built-in gain. Mr. Froelich also advises clients in connection with compliance issues including those involving the scope and application of FATCA and reporting obligations under IRC section 6050W.

Mr. Froelich’s practice group is known for its creative and effective approach to controversies. A testament to its effectiveness is the victory in UPS v. Commissioner in the Eleventh Circuit, where a team of our tax, civil and appellate litigators persuaded the appellate court to reverse the Tax Court on a question of economic substance. This victory is a singular distinction for the practice group because the IRS has since won other appeals in cases where economic substance was a major issue. Furthermore, the creativity of the practice group resulted in a comparably favorable settlement with IRS Appeals on the double deduction and economic performance issues noted above.