Rollinson Challenged as New Top IRS International Tax Lawyer

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April 12 — The landscape of global taxation is becoming ever-broader and more complex as Marjorie Rollinson takes the spot of the IRS's top international tax lawyer—one with the tremendous task of implementing controversial, far-reaching guidance to curb corporate inversions, in partnership with the Treasury Department.

The government's effort to crack down on the ability of companies to change their tax residence and “strip” income out of the U.S. is one of the major issues Rollinson will face in her new role as the IRS associate chief counsel (International), among a host of others.

Rollinson took that chair April 1—just days before the administration released the guidance April 4. The action sent waves through the corporate world and effectively derailed a $160 billion inversion between health care giants Pfizer Inc. and Allergan Plc.

Inversions, Other Challenges

Given that the rules reach such a broad range of transactions—many more deals than simply inversions—Rollinson is among those who will have to take a close look at feedback from corporations that is due by July 7.

IRS Commissioner John Koskinen, when asked about the inversions rules, indicated April 12 that the agency will be trying to finalize major guidance projects by Labor Day as the election nears (see related story in this issue).
Rollinson could face big pressure on these and other sets of regulations.

“The ACCI will have some challenges,” Brian Kittle, co-practice leader of the Tax Controversy and Transfer Pricing practice at Mayer Brown LLP, said April 11.

Rollinson, who joined the Internal Revenue Service in October 2013 as the agency's deputy associate chief counsel (International-Technical), will confront a wide scope of responsibilities as more and more companies structure their businesses offshore—including a critical role in shaping the agency's approach to that guidance as well as tax litigation.

‘Deep Technical Expert.’

In interviews done before Treasury released the inversions guidance, practitioners said she is very well-suited for the job as ACCI, with broad experience across the ever-more expanding and more complicated world of global tax.

“She brings an ideal background, with both high-level technical expertise and strong experience in practice,” said Eric Solomon, co-director of the National Tax Department at EY LLP, where Rollinson spent most of her private-sector career.

Speaking to Bloomberg BNA March 28, he said Rollinson is “a deep technical expert” on the foreign tax credit, cross-border transactions, and Subpart F, which imposes tax on some types of income earned across borders. While at EY, she served as national director of international tax services-technical services.

“I couldn't be more happy for the Internal Revenue Service,” Linda Carlisle, a member of Miller & Chevalier Chartered, said March 25.

‘A Hard Job.’

Former IRS chief counsel Donald Korb called the ACCI's job “a hard job and a very important position” with cross-border structures constantly changing and growing scrutiny by the IRS and other countries of money hidden abroad.

Korb, now head of tax controversy and a partner at Sullivan & Cromwell LLP, said the IRS's top international tax lawyer will work closely with other IRS attorneys on both guidance and litigation, with international issues now affecting so many parts of the corporate tax universe.

Speaking to Bloomberg BNA March 31, Korb said during his tenure with the IRS, the ACCI met with all of the other associate chief counsels at least once every two weeks and spent “a fair amount of time interacting with the chief counsel,” as well as working with the Large Business & International Division.

The job carries with it the responsibility of deciding, from an IRS perspective, which international issues call for guidance and which cases attorneys should pursue, Korb said.

Rollinson is taking over for outgoing ACCI Steven Musher. He retired March 31 after more than a decade in that role. Both declined to be interviewed for this article.

Phil West, chairman of Steptoe & Johnson LLP, said March 28 Rollinson will be responsible for technical advice on legislation, treaties and policy efforts by Treasury at the same time that she has “the day in and day out of supporting the field, litigation, rulings. It's not easy. It's a big job.”

Complex Issues Ahead

In the March 25 interview, Carlisle said corporate mergers and acquisitions are one of Rollinson's key specialties, and said that will serve her well in her new role.

“Rules on those reorganizations and how they should appropriately work is one of the big challenges she will be confronting,” Carlisle said. “International tax is a huge awareness.”

Michael Mundaca, also a co-director of EY's National Tax Department, said companies will be closely watching a host of other international guidance projects as Rollinson takes her role.

Intangible Transfers a Question Mark

One of those projects, Mundaca told Bloomberg BNA March 28, is guidance (REG-139483-13) to stop U.S. companies from trying to escape taxes on overseas transfers of intangibles under tax code Section 367(d). Treasury officials have said the rules are intended to attack “aggressive” positions the government is seeing now. The guidance eliminates incentives for some types of transfer pricing deals.

Transfer pricing, practitioners said, is a major issue Rollinson will face, with questions about whether she will change the IRS litigating position on these issues after several recent, significant losses (see related story in this issue).

Another big issue, Mundaca and others said, is the question of what final rules on “country-by-country” reporting will look like. Under rules (REG-109822-15) proposed in December, big companies would have to report revenue, profit or loss, capital and accumulated earnings for every country where they operate. The IRS would then have to share this information with other countries.
Country-by-Country Reporting a Key Concern
Questions abound about the rules. They're consistent with what the Organization for Economic Cooperation and Development recommended as part of its project to stop global profit shifting and tax base erosion (BEPS), but U.S. companies could be faced with a struggle, practitioners said.

Both taxpayers and the U.S. government will be closely scrutinizing how BEPS is being implemented overseas and how that might affect U.S. companies, according to Joe Calianno, a partner with the international technical tax practice at BDO USA LLP.

“You have a lot of countries around the world that are implementing a lot of action items on BEPS,” Calianno said. “I think if you're the IRS and Treasury, you're watching what happens globally.”

Impact of BEPS Legislation

Practitioner Pamela Olson said even if the U.S. doesn't adopt legislation to put in place other parts of BEPS, “other countries are legislating and we need to respond to that.” Olson is the U.S. deputy tax leader and practice leader of the Washington National Tax Services office at PricewaterhouseCoopers LLC.

One big issue, she said, is how other countries are working to redefine when a company would be considered to be “permanently established” for tax purposes—a major question affecting U.S. multinational corporations.

Concerns on Earnings Stripping

In further specifics on the inversion regulations, the former EY practice leader will face what are likely to be huge concerns voiced by companies and their tax lawyers over guidance to prevent companies from moving earnings out of the U.S. to escape taxes.

In many cases, the rules may cause companies to pay withholding taxes on cross-border transactions and lose deductions on interest payments stemming from debt in those deals. The guidance casts a broad net that some say would pull in many common planning structures (67 DTR G-5, 4/7/16).

Hard Work Ahead on Proposed Rules

Regulations aimed directly at inversions were issued as proposed rules (REG-135734-15) cross-referencing final and temporary regulations (T.D. 9761), meaning they take immediate effect. The regulations on earnings stripping came in proposed form (REG-108060-15). That means the IRS will face the difficult task of finalizing those rules—with Rollinson playing a central role in that effort.

Koskinen said April 12 that the IRS expects “a lot of thoughtful comments,” as a July 7 deadline approaches. “We will try to process those as quickly as we can,” he said.

John Harrington, a partner with Dentons LLP, said April 11 that while a lot of the controversial aspects of the proposed rules are within Treasury's sphere, the immediate effective date in the proposed regulations “means that, if temporary or final regulations are issued with that effective date, the IRS has to be able to enforce the rules immediately upon issuance of such regulations.”

To contact the reporter on this story: Alison Bennett in Washington at
To contact the editor responsible for this story: Brett Ferguson at