Winston & Strawn now has one of the country’s leading financial tax practices. We represent major banks from Australia, Canada, France, Germany, Israel, Japan, the United Kingdom, and many other countries in connection with their operations in the United States. We represent significant domestic participants in the financial services industry, including hedge funds and private equity firms.
Winston & Strawn attorneys have represented financial firms at all stages of the IRS audit process, including appeals proceedings before the IRS seeking to modify or reverse audit determinations. We have obtained a number of favorable settlements and, in one case, an outright reversal of the IRS’s position, enabling our clients to avoid substantial tax assessments without litigation.
Winston & Strawn’s financial tax practice also has experience representing clients in controversy matters that proceed to litigation. Our attorneys were involved in the first two substantial tax cases ever brought by foreign banks in the U.S. courts. In the first case, we obtained a very favorable settlement for our client. The second case, National Westminster Bank PLC v. United States, involves treaty interpretation issues of first impression and is one of the largest tax refund cases ever brought in the Court of Federal Claims.
We represent several of our bank clients in connection with the U.S. tax aspects of merger and acquisition transactions in their home countries. Our work in this area includes advice on the restructuring of the combined U.S. operations of the acquiror and target banks, as well as on the opportunities to reduce the U.S. tax burden on their U.S. operations. Such planning may involve the following strategies:
- Using limited liability companies or partnership vehicles for certain U.S. business activities
- Structuring operations to take advantage of tax treaty benefits
- Structuring the assets and liabilities of a foreign bank’s U.S. branches to maximize the interest deduction provided by section 1.882-5
- Minimizing the impact of the branch profits tax or branch-level interest tax on the bank
Our tax attorneys regularly advise clients on the use of limited liability companies, partnerships, and other “pass through” entities in asset acquisitions and divestitures, real estate investments, and private equity and hedge fund investments.
We also have substantial experience negotiating advance pricing agreements (APAs) with the IRS. An APA is a contract between the IRS and a taxpayer setting forth an agreed method of allocating profits from a taxpayer’s cross-border business activities between the United States and other jurisdictions. APAs can be particularly useful in resolving complex issues related to the taxation of foreign banks’ cross-border trading activities in foreign currency, swap agreements, and other financial derivatives. Although the APA process can be complex and time-consuming, many of our foreign bank clients have found the process to be worth the effort.