Read the Case Study
Case Study
WilliamsMarston Clears the Way for Navigating High-Stakes International Tax Challenge
Discover how WM helped a U.S. subsidiary navigate unexpected IRS notices and potential exposure of $1.3M amid high tensions and pressure.
The Challenge
U.S subsidiary found themselves in an international tax dilemma as they failed to remit withholding tax on interest payments made to foreign parent.
In a constant state of attrition among the finance group and having experienced a change in their tax service provider, a U.S. subsidiary was caught by surprise when they began receiving Internal Revenue Service (IRS) notices and collections for failure to remit withholding tax that had been reported to the IRS as paid by the U.S. subsidiary by prior tax service provider.
The company confirmed that large interest payments had been made over the years and reported to the IRS, but the proper 10% tax was never withheld and remitted to the IRS. In a state of frequent attrition, the company acknowledged that they failed to implement a withholding payment system and comply with the tax laws. As a result, the foreign corporate parent was facing a potential U.S. tax exposure of over $1.3M, including interest and penalties for the remittance failures.
Tensions were high, blame was rampant and the IRS was aggressively pursuing the unpaid taxes with frequent notices and collection attempts, even threatening liens and passport deactivation. Worse, the cash to pay the outstanding liability was not on hand.
The Solution
WM conducted in-depth research and fact-checking for the company and prepared a thorough appeal to the IRS, while providing consistent support during the nine-month case review.
WM immediately researched the issues, confirmed the applicable withholding tax rates, prepared the treaty-based documentation and interviewed management and the internal finance team to obtain all the necessary facts going back to 2016.
Based on the historical facts and circumstances, WM prepared a thorough appeal to the IRS based on reasonable cause standards for failure to remit the withholding tax. The team analogized to favorable case law and distinguished unfavorable authority, coordinating with the company’s attorneys and senior-level management at the foreign parent company to finalize a detailed letter to the IRS seeking penalty and interest abatement.
During the nine-month waiting period while the IRS reviewed the case, the team maintained constant communication with the foreign parent and U.S. subsidiary, reassuring them as the subsidiary continued receiving ominous notices and collections attempts from the IRS.
WM diligently drove consistent communication with the appointed IRS agent—via a Power of Attorney (POA)—regarding status updates and meeting information requests promptly to ensure the case’s progression.
The Result
The company successfully resolved the case with no outstanding liability.
After almost two years since the U.S. subsidiary contacted WM, the IRS finally issued a notice of case resolution two weeks before year-end. The IRS closed and resolved all taxes and tax returns for the years 2016 through 2021, concluding that the U.S. subsidiary has no outstanding liability.
THE TEAM RESPONSIBLE
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Meet the Entire Team
Marianne Kane
Partner – Tax
Marianne brings over 25 years of tax advisory experience to WilliamsMarston with international tax as her primary practice area, focusing on cross border investments and transactions. Her experience includes both inbound and outbound tax planning, structuring for private equity fund investors and investments (domestic, offshore, fund of funds, and real estate funds), and multinational corporations, including advising on taxable presence, treaty application, choice of entity and jurisdiction, cross border corporate restructuring, entity rationalization, mergers, acquisitions, dispositions, tax-efficient repatriation, Subpart F and GILTI management, foreign tax credits and withholding taxes. Her experience is broadly applicable to companies in all industries, with extensive experience in the financial services, life sciences and technology industries.
Prior to joining WilliamsMarston, Marianne was a co-founder and partner at 704beantown advisers, LLC. Prior to 704beantown, Marianne was a principal at RSM US LLP where she led their Boston international tax practice. Marianne began her career as a tax attorney at WilmerHale.
Marianne holds a J.D. from Harvard Law School, where she graduated cum laude, and a B.A. in psychology from Tufts University, where she graduated magna cum laude. She is a member of the Massachusetts Bar and active in various professional organizations in the Northeast.
Dan Moyer
Partner – Tax
Dan brings over 25 years of corporate income tax accounting and financial reporting experience to WilliamsMarston. Dan focuses on primarily income tax provision and financial statement tax reporting for public and private companies located throughout the country. He has assisted companies with IPO readiness, mergers and acquisitions, tax return compliance, tax considerations associated with various stock compensation plans, US tax implications of international operations, reporting of uncertain tax positions and other general tax consulting projects. Additionally, he has led a number of teams providing outsourced tax department services to a variety of clients over his career. Dan’s extensive industry experience includes health industries, retail and consumer products, technology, energy, aviation, restaurants and defense contracting.
Prior to joining WilliamsMarston, Dan spent seven years at boutique tax firms in Southern California where he specialized in accounting for income taxes for public and private companies nationwide. Dan started his career in the Tax practice of Deloitte LLP where he rose to the level of Senior Manager. Dan then spent several years at PricewaterhouseCoopers LLP in San Diego serving tax clients across a variety of industries.
Dan is a Certified Public Accountant in both the State of California and the Commonwealth of Massachusetts and holds a Masters in Taxation from Northeastern University. He also holds a Bachelors of Science degree in Accounting and Information Systems from the University of Massachusetts Amherst, where he graduated summa cum laude.
Matthew Borges
Director – Tax
Matt brings 11 years of corporate income tax accounting and compliance experience to WilliamsMarston. Since joining WilliamsMarston, Matt has advised clients in the life sciences, pharmaceuticals, biotechnology, software and manufacturing industries. He has advised multi-national publicly traded, as well as privately held clients on a variety of income tax matters including accounting for income taxes under ASC 740, the preparation of annual and interim income tax provisions and the related financial statement disclosures, and income tax compliance. Additionally, he has advised clients on complex income tax matters, such as initial public offerings, mergers and acquisitions, income tax audit preparedness and due diligence. Matt has recently served as interim tax director for a public multi-national pharmaceutical company and a privately held, software-as-a-service company.
Prior to joining WilliamsMarston, Matt worked in EY LLP’s Tax Accounting & Risk Advisory Services practice in Boston. While at EY, he prepared and audited carve-out income tax provisions for clients pursuing initial public offerings or divestitures of a business, prepared and audited domestic and multi-national income tax provisions, prepared US federal and state income tax returns, and advised clients on a variety of domestic and international corporate tax accounting matters.
Matt holds a Master of Professional Accountancy degree from Bryant University as well as a Bachelor of Accountancy degree from The George Washington University, where he graduated cum laude.
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