Tax Law: Do You Have What It Takes?

Few international business transactions can take place without the advice of a tax lawyer. Indeed, many transactions are pursued solely for the tax advantages that can result therefrom and are structured primarily by a tax specialist. With the profitability of an enterprise sometimes limited to the low single digits, a well-designed tax strategy can often mean the difference between gain and loss. Tax lawyers are certainly valuable advisors when it comes to single-country matters, but for international projects, their advice is absolutely indispensible.

What is Tax Law?

Tax law is the legal field focused on taxes, levies, duties and other charges imposed by governmental authorities at local, state and national levels. Because a tax can be tied to any type of activity, tax lawyers must be comfortable dealing with a wide variety of legal concepts. While tax practitioners are generally needed to identify applicable tax laws and regulations, and to bring clients into compliance therewith, particular importance is placed on minimizing taxes payable. Tax lawyers may work on litigation matters (especially in specialized proceedings) and are often centrally involved in transactional matters.

Here are some specific examples of the typical responsibilities of tax lawyers:

  • Researching tax laws and regulations;
  • Structuring transactions to obtain the most favorable tax treatment possible (e.g. if a client is acquiring a company, a tax lawyer will help a client decide whether it is in the client’s best interests to purchase the company’s assets or simply purchase outstanding equity interests);
  • Designing organizational structures of businesses to take advantage of favorable international taxation strategies;
  • Advising individuals in connection with estate planning matters to minimize taxes payable upon transfers of wealth;
  • Representing clients who are under investigation by a tax authority (e.g. a U.S. taxpayer that is subject to an audit by the Internal Revenue Service) or are subject to litigation;
  • Assisting the organizers of a charity with obtaining tax-exempt status;
  • Advising international business entities with respect to the multitude of non-income-based taxes they may be subject to (e.g. import/export duties, taxes related to environmental impact).

Notable Tax Law Matters

A recent tax case that reached the United States Supreme Court involved PPL Corporation, a U.S.-based energy company. PPL had paid a roughly $40 million “windfall tax” to the United Kingdom and claimed it as a creditable payment on its United States tax return, thus reducing its U.S. tax burden. The U.S. Tax Code allows for credits to be taken for payments to certain foreign authorities that are similar in nature to the United State’s own income taxes; PPL claimed that its payment fit this rule. After review of PPL’s filings, however, the IRS disagreed with the eligibility of the payment for credit status and sued PPL. Ultimately, the U.S. Supreme Court sided with PPL, holding that the tax paid was a “category of income tax in the U.S. sense” and therefore creditable.

The Value of an LL.M. in U.S. Law for International Tax Lawyers

The online LL.M. in U.S. Law offered by @WashULaw is a good option for foreign lawyers who want to enter into the practice of tax law, especially internationally. Coursework focuses heavily on the topics central to representation of business entities with U.S. involvement, including the basics of American business law, but also includes courses such as “International Business Transactions,” which help practitioners gain familiarity with cross-border business deals. This course is taught by @WashULaw Professor Adam Rosenzweig, who has expertise in taxation and international business. He is the co-author of a casebook on federal income taxation, now in its seventh edition. His other publications have appeared in law journals and reviews on legal issues ranging from the hidden costs of a modern income tax to harnessing the cost of international tax arbitrage.

By obtaining an LL.M. in U.S. Law from @WashULaw, a foreign practitioner would gain expertise not just with American legal concepts, but with some of the business issues that are central to today’s modern international law practice.