Cross-Border and Whistle-Blower Audits

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Two of the most hotly-contested topics in which the IRS is aggressively engaged surround audits of cross-border intercompany debt and audits triggered by the IRS Whistleblower program. But how can you effectively prepare for either? Kevin Johnson, a partner in the Philadelphia office of Pepper Hamilton, LLP and former IRS revenue agent who also worked in IRS Appeals, will bring a unique perspective and an insider’s understanding of IRS practice and procedure in tax controversy issues.

During this recorded webinar, Johnson will cover:
• IRS Audits Challenging Intercompany Debt
• U.S. Earning Stripping Rules 163(j) and Compliance
• IRS Debt Equity Challenges
• Debt Equity factors: Estate of Mixon
• 3rd Party Lender test
• Building and Winning an Intercompany Debt case
• Planning for and Structuring the Debt
• Contemporaneous Documentation of Debt
• Defending an IRS Audit of Cross-border Intercompany Debt
• Preemptive Presentations to the IRS – a Tactic
• IRS Whistleblower Audits
• Potential IRS Whistleblowers – Internal Policies & Internal Reporting
• After the Whistle is Blown – Defending an Audit
• A new Age for Whistleblowers?

Educational Objectives:
• Determine when the IRS can challenge intercompany debt
• Defend against IRS challenges to debt structuring
• Identify potential whistleblowers and take appropriate steps to mitigate consequences
• Develop strategies to deal with whistleblower audits.



Kevin Johnson is a partner in the Tax Practice Group of Pepper Hamilton LLP, resident in the Philadelphia office. He focuses his practice on tax controversy and litigation, as well as domestic and international tax planning.

Mr. Johnson has worked in the tax controversy area for over 20 years. Early in his career, he joined the IRS as a revenue agent and also worked in IRS Appeals. As a result of his experience with the IRS, he brings a unique perspective and an insider’s understanding of IRS practice and procedure to his tax controversy practice.

Mr. Johnson’s significant matters include:
• Settlement of a multi-year appeal for a Fortune 100 manufacturer involving research credits, research and development expenses, foreign tax credits and capitalization issues. Favorable resolution included changing a proposed tax deficiency in excess of $100 million to a net multi-million dollar refund for the client. 
• Successful representation of an accounting firm in an E-file compliance audit. In addition to proposing substantial preparer penalties, the IRS proposed to suspend the accounting firm from the E-file Program for one or more years due to compliance issues. A suspension from the E-filing program would have had a devastating impact on the accounting firm’s tax return preparation business and its professional reputation. Negotiated a settlement that substantially reduced the penalties and convinced the IRS not to suspend the accounting firm from the E-file program. 
• Representation of Fortune 100 company on the restructuring of its foreign operations, including contract manufacturing operations 
• Successful negotiation of a settlement with IRS Appeals for large energy-industry company that reduced a $500 million proposed tax liability to less than $30 million 
• Member of trial team in Black & Decker Corp. v. United States, 340 F. Supp. 2d 621 (D. Md. 2004), aff'd in part, rev'd in part and remanded, 436 F.3d 431 (4th Cir. 2006) 
• Member of trial team in Kohler Co. v. United States, 468 F.3d 1032 (7th Cir. 2006), aff'g. 387 F. Supp. 2d 921 (E.D. Wis. 2005), where taxpayer obtained Seventh Circuit decision affirming summary judgment in favor of taxpayer's claim that participation in Mexican debt-equity swap did not produce short-term capital gain 
• Trial team member in VF Corp. v. Commissioner, No. 23340-95 (U.S. Tax Court, filed Nov. 9, 1995), where taxpayer obtained full IRS concession in Tax Court case involving the question of whether taxpayer could accrue and deduct costs for cooperative advertising with its retailers before claims were submitted and payments were made.

Mr. Johnson is chair of the ABA Tax Section’s Administrative Practice Committee. He is a member of the Tax Council of the Philadelphia Bar Association’s Tax Section.   He received an LL.M. in taxation from New York University School of Law in 2000 and his J.D. from Columbia Law School in 1995, where he was a Harlan Fiske Stone Scholar. He received an M.S. in taxation from Temple University in 1997 and a B.B.A. in 1985.