Our Tax attorneys advise clients from small local enterprises to large publicly traded corporations about a full range of tax matters. We monitor legislative and regulatory developments daily and have participated on policy-forming committees of tax agencies and bar associations. This level of knowledge enables our tax attorneys to speak with authority on critical tax developments, to formulate and implement appropriate tax strategies at the federal and state level, and to represent clients effectively in controversies with tax authorities. We have particular strength advising on:
Corporate tax planning
With detailed legal and business analysis, we determine the most effective tax structures for the myriad corporate transactions on which the firm advises. From tax-free spin-offs and mergers to taxable asset sales, like-kind exchanges and other arrangements, the tax consequences of a transaction frequently drive the business deal. Our Tax attorneys work closely with lawyers in other practice areas, especially Corporate and Real Estate, to ensure that our clients achieve the highest possible after-tax returns from a transaction.
Individual tax planning
We counsel shareholder clients and closely held businesses on personal tax planning issues, which include structuring investments, planning the timing of transactions that create income or deductions, and tax planning for the owners of closely held businesses.
State and local tax
Navigating state and local taxation can be critical for companies in many industries and for those engaged in interstate sales. Our Tax attorneys frequently plan business transactions to ensure the most advantageous state and local tax consequences.
Tax controversy counsel
Merely halting operations or selling assets does not enable a company to leave New York State. Careful tax planning – an exit strategy – is essential. Our attorneys have extensive experience representing clients in the resolution of disputes with tax authorities. Frequently, these controversies are resolved at the audit level. We also represent clients in administrative appeals and before the U.S. Tax Court, the New York State Tax Appeals Tribunal, and other federal and state courts.
Private letter rulings
Clients contemplating business or personal transactions often want assurance of the tax results of their plans before they are implemented. We represent clients in obtaining private letter rulings from the IRS and similar rulings from the New York State Department of Taxation and Finance.
Regulatory and legislative monitoring
We monitor state and federal tax legislation, and any corresponding regulatory updates, to assist our business and personal clients in planning and maintaining their business operations and investment plans.
Employment taxes
Businesses with employees are obligated to withhold payroll or “employment” taxes. We work with employers on the full range of employment tax issues, including federal, state and local Income tax, Social Security tax, Medicare tax, and state and federal unemployment tax.
What We See on the Horizon
Contact our HSE Tax team for our latest insights about the following:
- Estate tax. In anticipation of possible future estate tax changes, small businesses may wish to consider restructuring to take best advantage of current estate and gift tax laws.
- A changing tax landscape. As elections bring new officials to the policymaking arena, the HSE Tax team watches closely as new legislation and tax policy develops. Often, even after tax laws change, it can take the IRS and state tax authorities time to issue appropriate guidance. We monitor legislative activity and keep clients and HSE attorneys up to date on changes – both enacted and proposed.
- Inflation Reduction Act. The federal tax legislation which was enacted in 2022 created new incentives for renewable energy projects. We are counseling clients on how to take advantage of these new incentives.
Deep Knowledge and Solid Working Relationships with Tax Authorities Resulted in 98% Reduction in Tax Bill
Where we started: A telecom company that had been owned by several private equity firms came to us after executives at the newly independent company attempted unsuccessfully for several months to settle an audit by the City of New York, after having discovered that it had never filed excise tax returns. Our task was to bring company fully into compliance in meeting its tax obligations to the City of New York. A key challenge was that much of the data needed to determine tax liability – over 10 years had passed – was no longer available, and nearly all of the employees who had been responsible for the data were no longer employed by the company.
Our strategy: We determined that our job was three-fold. First, since the data which were needed were incomplete and at times unavailable, we needed to create a body of credible data from which to establish the company’s tax liability. Second, we needed to develop valid arguments that the tax authorities would accept for the tax liability we computed. Third, the company’s previous ownership by several private equity firms complicated how the tax liability was to be apportioned once it was finally determined. We needed to both navigate the complexity and account for it in the presentation we made to tax authorities. We worked with the company’s current employees to identify existing data to create a credible picture of the company’s operations which we could present to tax authorities.
The outcome: Working with tax officials in New York City, we negotiated a significant decrease in the company’s tax liability. Where the City had initially valued the liability (including interest and penalties) at approximately $1 million, based on our data and arguments, we arrived at a settlement of approximately $20,000. While the company might have relied on a law firm specializing in the telecom industry, our deep experience in both tax and private equity enabled us to develop a solution to the company’s problem and persuade the tax authorities to accept it.
When Selling an S Corporation, Detailed Tax Models Helped Optimize the Tax Consequences for Shareholders in Multiple States
Where we started: Our client, a manufacturer of electronic ID badges and security-swipe cards, established as an S Corporation, was being acquired by a private equity firm. With shareholders in several states, the transaction needed to address tax law in each of them. The company’s accountants, while fully qualified, were not familiar with the unique tax obligations for an S Corporation which would ensue in the course of the sale of the company.
Our strategy: Working side-by-side with the deal counsel, namely HSE’s Mergers and Acquisitions team our Tax team – including one member who has experience as deal counsel before developing a dedicated tax practice – came in at the very beginning of the transaction to help structure the deal. With the company’s accountants, we found the most advantageous tax structure for the deal. We took into account both the buyer’s requirements and the selling shareholders’ tax liabilities in multiple states.
The outcome: The sale, valued in the millions, closed successfully. In addition to working closely with deal counsel, the HSE Tax team worked with the individual accountants of each of the five shareholders to make sure they understood how the transaction worked and how to report it for tax purposes. In the course of negotiating the transaction, our Tax team assisted accountants on the mathematical structure of the tax models which enabled them to speed communication with principals in the deal and bring the deal to a smooth closing.
Key Contacts
Team
According to our clients:
“This firm is better than the large N.Y. and California firms. They are extremely smart, cost-effective, and responsive. They consistently exceed expectations with respect to client service.”
“Our experience with the attorneys and staff at Harter Secrest & Emery has been nothing short of spectacular. They are leaders in their fields, knowledgeable, thoughtful, responsive, and a pleasure to work with.”