Starr Gern Tax Department Obtains Reduction of $35 Million in Income Taxes and Penalties in U.S. Tax Court

March 2013

Chair of Starr Gern Tax Department Harvey R. Poe and Associate Jeffrey R. Pittard settled a United States Tax Court case, in which the Internal Revenue Service sought to assess approximately $35,600,000 in income tax and penalties, for less than $100,000.

A multi-state corporation received a notice of deficiency from the Internal Revenue Service seeking to assess $35,600,000 in income tax and penalties. The IRS auditor sought to disallow amounts the client deducted for wages and salaries paid, cost of goods sold, outside services and promotional expenses. After filing a petition in the United States, Starr Gern reached a settlement agreement with the Internal Revenue Service whereby the Service dropped its claim for deficiencies for some years based on the auditor’s failure to follow the Internal Revenue Service guidelines, allowed the entire amount of deductions claimed for wages and salaries paid and costs of goods sold, and allowed 90% of the other deductions claimed. After factoring in the amount of interest that would have been due had the IRS been successful, the client saved over $60,000,000 in taxes, penalties and interest as a result of the firm’s efforts.

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