[private]The Internal Revenue Service’s Advisory Committee on Tax Exempt and Government Entities (ACT) will hold a public meeting on June 10, when the panel will submit its latest round of recommendations to senior IRS executives.
Ten newly named members of the panel (listed below) will also be introduced at the public meeting. They will begin two-year terms and join 11 returning members.
ACT includes external stakeholders and representatives who deal with employee retirement plans, tax-exempt organizations, tax-exempt bonds and federal, state, local and Indian tribal governments. ACT members are appointed by the Secretary of the Treasury and generally serve two-year terms. They advise the IRS on operational policies and procedures.
At the public meeting, four ACT project teams will present the following four reports that include recommendations:
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Exempt Organizations: Recommendations to Improve the Tax Rules Governing International Grant Making.
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International Pension Issues in a Global Economy: A Survey and Assessment of the IRS’ Role in Breaking Down Barriers
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Record Retention Requirements for Tax-Exempt Bonds and Tax Credit Bonds: A Specific Proposal for Published Guidance
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Federal-State-Local Government Compliance Verification Checklist for Public Employers
ACT was established in 2001 under the Federal Advisory Committee Act to provide an organized public forum for discussion of relevant issues affecting the tax exempt and government entities communities.
ACT’s public meeting will begin at 10 a.m. ET on June 10, 2009 at the IRS headquarters at 1111 Constitution Ave., N.W., Washington, D.C. ACT reports are available on IRS.gov.
Due to limited seating and security requirements, members of the public interested in attending the public meeting should call Cynthia PhillipsGrady to confirm their attendance. She can be reached at 202-283-9954 (not a toll-free call). Attendees must have photo identification and are encouraged to arrive at least 30 minutes before the session begins.
The 10 new members are listed below grouped by their relevant project team:
Employee Plans
Barbara A. Clark, University of California, Oakland
Clark is the benefits counsel for the retirement and health and welfare plans sponsored by the University of California, a state government agency and 501(c)(3) organization. The University provides a defined benefit pension plan and three defined contributions plans for its 124,000 employees and 41,000 retirees. Before joining the University in 2003, Clark had more than 20 years experience as an employee benefits attorney in the private sector. She received her Juris Doctorate from the Boalt Hall School of Law and is a member of the California State Bar.
Kathryn J. Kennedy, John Marshall Law School, Chicago
Kennedy is the Associate Dean for Advanced Studies and Professor of Law at the John Marshall Law School. As the Director for the Center for Tax Law & Employee Benefits at the school, she established the first LLM program in the nation for employee benefits and has since developed the curriculum for more than 20 employee benefits courses. Kennedy served for three years on the Department of Labor’s ERISA Advisory Council and co-authored an employee benefits law textbook. She received her Juris Doctorate from the Northwestern University School of Law.
Exempt Organizations
J. Daniel Gary, General Council on Finance and Administration, United Methodist Church, Nashville
Gary is Administrative Counsel for the General Council on Finance and Administration (GCFA) of The United Methodist Church, the third largest religious denomination in the United States, with approximately 8 million members and 35,000 local churches and affiliated entities. GCFA is responsible for protecting the legal interests of the denomination, and Gary provides guidance on a wide variety of issues related to tax-exempt organizations, including charitable giving, legislative and political campaign activities, and unrelated business income tax (UBIT). Gary received his Juris Doctorate from the Washington and Lee University School of Law and his Ph.D. in mathematics from the University of Illinois.
James P. Joseph, Arnold & Porter LLP, Washington, DC
Joseph is a partner and the head of the tax-exempt organizations practice at Arnold & Porter LLP. In the 10 years he has focused on representing tax-exempt organizations, he has advised public charities, colleges and universities, private foundations and advocacy groups on a variety of issues, including operating business ventures, conducting international activities and grant making, lobbying and advocacy, nonprofit governance, and executive compensation. His practice has involved several high-profile matters that have had broad impact on the nonprofit sector. Joseph received his Juris Doctorate from the Georgetown University Law Center and is currently Chair of the American Bar Association Subcommittee on Intermediate Sanctions.
Government Entities: Indian Tribal Governments
Bobette (Bobby Jo) Kramer, Alaska Manufacturing Extension Partnership, Inc., Anchorage
Kramer is the Operations Manager for the Alaska Manufacturing Extension Partnership, Inc., and serves as AMEP’s liaison to rural Alaska and the Alaska Department of Commerce. She has more than 25 years’ experience in business development and long-term enterprise planning, and has extensive hands-on knowledge of rural community development strategies. She was president and CEO of her Alaska Native Claims Settlement Act village corporation and is a member of the Native Village of Pilot Point. Kramer is pursuing a Bachelor’s degree in rural development at the College of Rural Alaska.
Wendy S. Pearson, of Counsel, Bennett, Bigelow, & Leedom, P.S., Seattle
Pearson has more than 20 years’ experience as a former IRS attorney and a taxpayer representative and has handled numerous Indian tribal government matters, including constructive receipt, taxation of member benefit programs, and withholding and information reporting. She also regularly consults with nonprofit entities, hospitals and health care organizations on matters like governance, excess benefit transactions, executive compensation and other compliance issues. In her practice she regularly consults with tribes and their representatives on tax issues. Pearson received her LLM in Taxation from the University of Florida School of Law and her Juris Doctorate from the Gonzaga School of Law in Spokane, Wash.
Government Entities: Federal, State and Local Governments
Paul Carlson, State of Nebraska, Lincoln
Carlson has been the Nebraska State Accounting Administrator since 2000, responsible for comptrollership functions for the State, including accounting systems for State agencies, State financial statements, accounting processes, procedures and payments, debt financing, and cash-flow analysis of the State’s general fund. He has been active in the National Association of State Comptrollers, recently serving as its president. Carlson is a Certified Public Accountant and the Nebraska State Social Security Administrator. He has completed the coursework for a Ph.D. in Educational Administration at the University of Nebraska, and holds a Masters of Business Administration from the University of Montana.
Patricia A. Phillips, City of Virginia Beach, Virginia Beach
Phillips is Director of Finance for the City of Virginia Beach, where she oversees accounting, payroll, purchasing, risk management, and debt administration for the city. She has served on the Government Financial Officers Association (GFOA) Standing Committee on Debt Management, the GFOA Standing Committee on Economic Development and Capital Planning, as well as the GFOA Executive Board. Phillips is a Certified Public Accountant and a Certified Government Financial Manager, and she holds a Masters in Business Administration from Old Dominion University.
Government Entities: Tax Exempt Bonds
David Cholst, Chapman and Cutler LLP, Chicago
Cholst is a partner in the tax department of Chapman and Cutler LLP, where he provides tax advice relating to tax-exempt bonds, Build America Bonds and tax credit bonds. He represents governmental issuers, underwriters, investment brokers, and attorneys in all matters relating to tax-exempt bonds, including arbitrage rebate. Cholst is in charge of his firm’s rebate computation service. Cholst has been a member of the faculty of the National Association of Bond Lawyers Tax Seminar and is a member of the ABA Tax Exempt Finance Committee. He received his Juris Doctorate from the University of Chicago Law School.
George T. Magnatta, Saul Ewing LLP, Philadelphia
Magnatta is the chair of Saul Ewing LLP’s public financing department and an experienced practitioner in the tax aspects of public finance. His practice focuses on serving as bond counsel, underwriters’ counsel, borrowers’ counsel and tax counsel for states, cities, economic development authorities, housing authorities and nonprofit entities. Magnatta served as Assistant Branch Chief of the Office of Chief Counsel, Legislation and Regulations Division of the IRS (1981-85). He is the co-author of ABCs of Industrial Development Bonds (5th Ed.) and is a frequent panelist at meetings of the National Association of Bond Lawyers. He received his Juris Doctorate from Temple University and an LLM in Taxation from the Georgetown University Law Center.
ACT Members Continuing on the Committee
Employee Plans
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G. Daniel Miller, Conner & Winters LLP, Washington, DC
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Susan P. Serota, Pillsbury Winthrop Shaw Pittman LLP, New York
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Michael M. Spickard, Summit Retirement Plan Services, Inc., Akron, Ohio
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Marcia S. Wagner, The Wagner Law Group, Boston
Exempt Organizations
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Fred T. Goldberg, Jr., Skadden, Arps, Slate, Meagher & Flom, LLP, Washington, DC
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Karin Kunstler Goldman, New York State Department of Law, New York
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Mary Rauschenberg, Deloitte Tax LLP, Chicago
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Jack B. Siegel, Charity Governance Consulting LLC, Chicago
Government Entities: Indian Tribal Governments
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Joe Lennihan, Sutin Thayer & Brown, Santa Fe
Government Entities: Tax Exempt Bonds
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Michael G. Bailey, Foley & Larnder LLP, Chicago
Government Entities: Federal, State and Local Governments
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Maryann Motza, State of Colorado, Denver
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[private]Berwin Leighton Paisner’s (BLP’s) tax team has been named the ‘Best Tax Team in a Law Firm’ at the LexisNexis Taxation Awards, which are based partly on client feedback and recognise client service, teamwork, innovation and determination to improve.
The award acknowledges the BLP team’s growth over the past 12 months. It is now the largest partner-led and broadest based legal tax practice in the City, and the only large City firm to offer the full range of legal tax services, including both contentious and advisory work for private and corporate clients.
BLP took the strategic decision to further expand its tax group and develop tax as a fifth pillar of expertise with the hire of industry specialist Michael Wistow in September 2007. This was followed by the creation of a highly regarded tax risk and resolution team in the form of Liesl Fichardt, Jonathan Levy and Andrew Watters. More recently, former Goldman Sachs International tax counsel, Michael McKenna and corporate tax expert Kevin Cummings have joined as partners taking the total number of tax partners at BLP to 21.
Michael Wistow, BLP’s head of tax said: “This recognition is very encouraging. These are challenging economic times but we have remained committed to serving our clients with market leading advice. BLP is the only City law firm with such a strong focus on tax issues and the team has gained significant instructions on transactions that have historically been the preserve of the Magic Circle or the Big Four accountancy firms.”[/private]
[private]Arab Banking Corporation has announced the appointment of Roy Gardner to the position of Group Chief Financial Officer.
Roy brings to the ABC Group over 32 years of experience in banking and financial services. He comes from Citibank, New York, where he was the Chief Financial Officer for their Treasury and Trade Solutions Division covering the Cash and Trade business worldwide.
However, Roy is not new to the region, having worked for 20 years in the Middle East, after starting his career in Scotland in management and financial accounting. In Saudi Arabia he worked mostly with Saudi American Bank (SAMBA) where he held the post of Chief Financial Strategist.
“Appointing Roy to the position of Group Chief Financial Officer is a move forward in our effort to enhance the implementation of initiatives set to increase revenue generation capabilities as he will be also looking after strategic planning for the Group,” said Mr. Hassan Juma, President & Chief Executive of ABC.
“This new appointment will propel the Group’s recently announced plan to realign its model in International Wholesale Banking and Universal Banking,, assuring continued growth,” he added.[/private]
Arab Banking Corporation, known as ABC, has consolidated assets of US$26.836 billion. ABC is an international universal bank headquartered in Manama, Kingdom of Bahrain, with a network spread across 21 countries in the MENA, Europe, the Americas and Asia. Founded in 1980, it is listed on the Bahrain stock exchange and its major shareholders are the Kuwait Investment Authority, Central Bank of Libya and Abu Dhabi Investment Authority.
[private]KBA Group LLP’s partners and staff will join Springfield, Missouri-based BKD, LLP, one of the 10 largest CPA and advisory firms in the United States, on June 1, 2009.
KBA Group, with approximately $17 million in annual revenue, will bring 8 partners and about 102 team members to BKD. The professionals at KBA provide audit, tax, risk management and transaction advisory services as well as profit enhancement and family-owned business services to private and public companies, in a variety of industries.
“We believe joining BKD is a perfect match,” said King. “Both Firms have exceptional credentials and both insist on an attentive service style and a people-first mentality. A wider array of services offered and industries served will allow us to better meet the needs of all of our clients in this growing global market.”
BKD serves clients from offices in Houston, San Antonio and now, Dallas. BKD, with headquarters in Springfield, Mo., is ranked among the 10 largest CPA and advisory firms in the country with approximately $354 million in annual revenues and more than 2,000 personnel, including approximately 250 partners, in 32 offices within 12 states. The firm provides consulting, tax, assurance, accounting outsourcing, information technology, investment advisory and corporate finance services, as well as specialized consulting for the technology, health care, financial, manufacturing, distribution, construction, real estate, not-for-profit and government industries.
“We want to continue our strategy of wise growth and the timing was right for us to have the partners and staff at KBA Group join us,” said BKD Chief Executive Officer Neal Spencer. “The commitment to excellence and client service of KBA’s partners makes them an excellent addition to BKD.” [/private]
The Court of Appeal yesterday handed down its judgement in the Vodafone 2 case – regarding the interpretation of the UK’s Controlled Foreign Companies (CFC) law in the light of European rulings.
The Court decided that [private]the UK’s CFC law should be interpreted as if it had a new additional exception – which applies with retrospective effect. The new exception would be that companies established in the European Economic Area (EEA) which carry on genuine economic activities there should benefit from this exception. This means that the CFC rules will still apply to companies operating outside the EEA and also to EEA companies without genuine economic activities.
What the Court wasn’t asked to consider is what qualifies as genuine economic activities. Once the basic scope of the law has been decided, this factual issue will then need to be considered.
Bill Dodwell, head of Deloitte’s Tax Policy Group commented: “This is a common-sense judgement and hopefully will offer a good way forward in CFC cases. However, what we really need is some helpful guidance on the sort of activities that fall within this new exemption.”[/private]
About the case
In March 2000 Vodafone acquired the Mannesmann AG group of companies and as part of this process established a wholly owned Luxembourg subsidiary, Vodafone Investments Luxembourg Sarl “VIL”. VIL was the intermediate holding company of Mannesmann AG and other European companies. The annual accounts of VIL at that time showed equity investments of €38 billion and debt investments amounting to €35 billion. HMRC’s contention is that the interest income earned by VIL on its debt investments should be taxed in the UK as a result of the UK Controlled Foreign Company (CFC) rules.
The UK CFC rules have long been in existence to prevent UK companies diverting income to overseas companies, to take advantage of lower levels of tax. Overseas companies to which the CFC rules apply are deemed to have their income arising in its UK parent, and taxed in the UK.
Certain exemptions are available. There are five objective exemptions, none of which applied to VIL. There is also subjective “motive test” test which Vodafone argued VIL fell within.
The “motive test” exempts companies from a CFC charge if the main reason, or one of the main reasons, for the company’s existence is not to achieve a reduction in UK tax by diverting profits from the UK.
Whilst Vodafone contended that VIL satisfied the “motive test”, its primary contention was that the CFC legislation is not compatible with the EC Treaty, in particular the right to freedom of establishment. This is in light of the European Court of Justice “ECJ” judgment in the Cadbury Schweppes case, published in September 2006. In that case the ECJ judged that the UK CFC rules were a restriction of the EC Treaty’s freedom of establishment. The Court decided that the UK CFC rules could only lawfully apply in respect of wholly artificial arrangements that had no genuine economic activity.
The ECJ judgement effectively allows UK groups to establish companies within the European Economic Area, even if the intention is specifically to save tax, provided the EEA company is engaged in “genuine economic activities”. The CFC legislation’s motive test could not be satisfied if a main reason was to save tax.
The ECJ did not decide whether the UK CFC rules, and more specifically the “motive test” exemption, can be interpreted so that the application is restricted to wholly artificial arrangements. Rather, the ECJ passed this question back down to the UK Courts.
The High Court considered this point and give its judgement on 4 July 2008. It held that the UK CFC rules, and more specifically the “motive test” exemption, cannot be interpreted such that the application of the rules is restricted to “wholly artificial arrangements intended to escape the national tax payable”. It also ruled that the UK CFC rules could not be applied to UK resident companies with subsidiaries in EEA States, until the legislation is corrected by Parliament. This decision was of course very favourable to the taxpayer.
The High Court’s decision was appealed to the Court of Appeal, whose decision has been given today. Given the very large sums of tax involved, an appeal to the House of Lords is expected.
Following the Cadbury Schweppes judgement Parliament modified the UK CFC rules in an attempt to reflect the judgement reached by the ECJ. These new measures took effect from 6 December 2006. It was interesting to note that although the Vodafone judgement strictly deals with the CFC rules before the introduction of the new legislation, the High Court expressed “some doubt” as to whether the modified measures are compliant with the EC Treaty. This view accords with that of most of the tax profession.
[private]Fladgate has announced the appointment of partner Huw Witty. Huw joins from Reed Smith where he was head of UK Tax and a partner for eight years.
Huw has substantial experience in advising on all aspects of UK corporate taxation and international tax. His first-rate credentials will complement Fladgate’s existing tax capability.
Huw has lectured regularly on taxation topics, including property taxes such as Stamp Duty Land Tax, joint ventures, international tax, mergers and acquisitions, management buyouts and property finance. He is the author of the tax chapter of the PLC tax manual on Property Tax and Tolley’s International Tax on stamp duty.
Commenting on the appointment, Fladgate’s head of tax, Andrew McKenzie, said: “Huw’s appointment is part of our strategy for expanding the firm’s tax team in response to client demand and we are delighted to welcome him to the firm. His experience will further diversify our capability in relation to the tax aspects of corporate transactions, employment issues and tax-driven property deals.”
Huw Witty added: “Fladgate’s commercial approach and commitment to expand this area of its business creates a platform from which I can further develop my practice. I very much look forward to working with the current team to develop its tax offering.”
This announcement builds upon other strategic appointments by the firm in recent weeks including employment partner Brian Palmer who joins from Charles Russell as head of Fladgate’s employment team and real estate litigation partner Jonathan Hibberts, previously at Denton Wilde Sapte.
Huw Witty
Career history
• Partner 2001 to date – Reed Smith (formerly Richards Butler)
• Partner 1995-2001 – Nabarro Nathanson
Publications and lecturing
• PLC tax manual chapter on property tax
• Tolley’s international tax and stamp duty
• Tolley’s Tax on Transactions
• Various articles in taxation journals on stamp duty, joint ventures, management buy outs and rent factoring
• Regularly lectures for BPP Professional Education on property tax and Hawksmere, IRR and IBL on property tax, mergers and acquisitions, international mergers and acquisitions and joint ventures
Professional memberships
• Member of the Chartered Institute of Tax
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Diane Hay has been appointed as a special adviser on international tax issues to PricewaterhouseCoopers LLP (PwC).
Diane will be working primarily with PwC’s tax transfer pricing and international structuring teams and will be integral to assisting clients settle the ever increasing number of cross-border tax disputes.
Barry Marshall, head of tax, PricewaterhouseCoopers LLP said:
“Diane brings with her many years of corporate tax experience excellence. Previously as a senior official with HMRC her knowledge of dealing with specialist and technical tax policy cases will be a major asset to the expertise of the transfer pricing tax team and our practice generally. We are extremely proud to be welcoming Diane on board.”
As more and more governments look at arbitration, and other new ways of solving large disputes, the PwC transfer pricing team have been developing ‘hands on’ expertise in this area to offer a multi jurisdiction dispute resolution capability.
Diane Hay, consultant tax adviser, said:
“I am really delighted to be working with PwC to help them deliver an outstanding transfer pricing and dispute resolution service to their clients worldwide.” [/private]
[private]Ernst & Young has announced the appointment of Aleksey Kondrashov, a Moscow based tax partner, as global oil and gas tax leader with immediate effect.
Aleksey will be responsible for coordinating the development of the firm’s tax services to some of its largest international oil and gas clients, as well as expanding the development of Ernst & Young’s oil and gas services in Moscow.
Wendy Fenwick, Ernst & Young global oil and gas leader, said, “The role of Russia in the global oil and gas business is expanding and Aleksey’s extensive experience will continue to bolster our commitment to client service excellence in Russia and globally. He will play a key role in coordinating our oil and gas tax activities.”
Aleksey noted, “We are witnessing dramatic changes in the oil and gas industry. The focus is shifting from traditional international oil and gas companies towards new significant market players, including national and international oil and gas companies operating in the Middle East, Russia, China, Latin America, India and Caspian countries.”
Aleksey has 17 years of experience advising oil and gas companies on Russian and international taxation. He joined Ernst & Young Moscow in December 2008 from another Big Four firm.
During his career Aleksey has advised a number of large Russian and global oil and gas and mining companies on restructuring, mergers and acquisitions and major projects involving the coordinated participation of Russian and foreign investors in hydrocarbon production projects (including PSA-based projects), oil and gas transportation projects in Russia and the Caspian region, and refinery business investment projects in the region.[/private]
