Tax Controversy

Davis Polk has long had a leading tax litigation practice. The firm’s Tax Controversy Group includes partners, senior counsel, counsel and associates from Davis Polk’s Tax and Litigation Departments.

Our lawyers are widely recognized for their experience, innovative planning and understanding of business needs and objectives, particularly with respect to tax litigation involving:

  • Partnership taxation
  • Debt-­equity issues
  • Intercompany pricing
  • Interest capitalization and allocation
  • Accounting for bad debts
  • Amortization of intangibles
  • Deductibility of takeover expenses
  • Foreign tax credit issues

We have represented our clients before federal courts (including the U.S. Court of Claims, the U.S. Tax Court and the U.S. Court of Appeals for the Federal Circuit) and state courts (including the New York Court of Appeals), as well as before federal and state agencies. We regularly negotiate settlements with the Internal Revenue Service involving billions of dollars of disputed taxes, and pursue high-­stakes administrative appeals in complex tax matters.

Recent Recognition

  • Law360 – "Tax Practice Group of the Year," 2017, 2018
  • International Tax Review – U.S. Tax Court/Federal Claims Court Firm of the Year, 2013 

Recent Notable Matters

  • We represent a number of financial institutions in connection with investigations by DOJ and IRS into alleged aiding and abetting of tax evasion by U.S. persons hiding assets overseas.
  • We represent an international banking organization in connection with DOJ, IRS and foreign regulators' criminal investigations into the use of offshore vehicles to evade U.S. taxes. While this matter is confidential, our tax-related engagements on behalf of financial institutions routinely include U.S. and non-U.S. banks in connection with internal risk assessments and investigations, potential high-value settlements or penalties, and, in some cases, federal or state litigation.
  • We successfully represented a prominent U.K.-based financial institution which was informed by DOJ, based on our presentation, that it would not be prosecuted or otherwise subject to penalties based on the specific conduct under investigation.  
  • We are assisting a Swiss bank in evaluating its position as a Category II or Category III bank under U.S.-Swiss Agreement.
  • We represent many individuals making voluntary disclosures of non-U.S. bank accounts.
  • We are advising a leading industry group of 10 large international banks advocating for improvements in the rules for reporting non-U.S. bank accounts (the FBAR).
  • We regularly advise clients on compliance with the Foreign Account Tax Compliance Act (FATCA).
  • We represent a large U.S. financial institution and its Swiss subsidiary in its efforts to obtain a non-prosecution agreement pursuant to procedures recently agreed upon between DOJ and Switzerland's main banking regulator.
  • We represent a major financial institution in connection with parallel investigations conducted by DOJ, SEC, NASD, OCC, Manhattan District Attorney and the Permanent Subcommittee of Investigations of the U.S. Congress into allegations involving customer use of offshore accounts to violate tax and securities laws.
  • We won a $300 million federal tax refund for a large money center U.K. bank, arising out of a dispute between the United Kingdom and the United States as to whether the IRS could apply certain U.S. tax regulations to U.S. branches of U.K. banks. The Federal Circuit unanimously affirmed the Court of Claims’ judgment in favor of our client, accepting our arguments that the IRS’s tax position was contrary to the relevant U.S.-U.K. treaty.
  • We represented a major financial institution before the New York Division of Tax Appeals in test cases regarding the taxation of trusts.
  • We have represented financial institutions and professional firms in connection with grand jury investigations into tax shelters. 
  • We won a decision in favor of a client from the Tax Court respecting a Netherlands Antilles finance subsidiary as the issuer of debt guaranteed by its parent.
  • We won a decision in favor of a client from the New York Court of Appeals holding that imposition of New York’s real property gains tax on corporate pension plans is preempted by ERISA.
  • We won a decision from the Tax Court upholding AT&T’s tax-free breakup.