Tax Disputes & Litigation

Our tax litigators come from a variety of backgrounds and many have experience as government counsel representing the State of Minnesota and federal taxing authorities.

MAIN CONTACTS

Sue Ann Nelson

Email: snelson@fredlaw.com
Office: 612.492.7318

Masha Yevzelman

Email: myevzelman@fredlaw.com
Office: 612.492.7410

“Throughout our representation, we strive to obtain fair and thoughtful review of the dispute to achieve the best possible result for our client at the earliest opportunity.”

What We Do

Our tax litigators provide experienced, effective representation in tax controversies. Lead attorneys in the group include Steve Kaplan, formerly a trial attorney with the U.S. Justice Department Tax Division; Tom Muck, formerly chief litigator for the Minnesota Department of Revenue; and Sue Ann Nelson, formerly a senior trial attorney with the Office of Chief Counsel, Internal Revenue Service, in Saint Paul, Minnesota. They also include Tom Wilhelmy, who is certified as a Real Estate Specialist by the State Bar Association and brings more than two decades of experience in property tax litigation.

We represent publicly owned and privately held corporations, partnerships, cooperatives, individuals and fiduciaries in tax disputes and litigation of all types against the Minnesota Department of Revenue, the Internal Revenue Service and the Department of Justice Tax Division. Our clients are well-recognized national, regional and local businesses. We regularly negotiate and litigate tax disputes involving, for example, corporate and personal income taxes, sales tax, estate and gift tax, employment taxes and property taxes.

We offer full‑service representation at every stage of the tax controversy process, be it the agency examination or appeals process, the trial court, or, if necessary, on appeal. Frequently, our early involvement at the examination or protest stages permits us to help the taxpayer marshal the critical underlying facts and to define the arguments most likely to prevail. In addition, we bring the benefits of attorney‑client confidentiality and privilege to the controversy.

When litigation is advisable or necessary, we draw upon our trial experience to choose the appropriate court, develop the case through formal and informal discovery, and aggressively advocate the taxpayer’s position before the judge or jury. Our tax litigators have extensive experience in the federal district court for the District of Minnesota, the United States Tax Court, the Minnesota Tax Court, the Minnesota District Courts, the Eighth Circuit Court of Appeals, the Minnesota Supreme Court, and the Minnesota Court of Appeals. We know tax law, but more importantly, we have the experienced advocate’s ability to develop and present the most persuasive arguments and themes.

Throughout our representation, we strive to obtain fair and thoughtful review of the dispute to achieve the best possible result for our client at the earliest opportunity.

Experience

Representative Cases

Federal Tax

Astleford v. Commissioner, T.C. Memo 2008-12 (gift tax case involving valuation of gifts of interests in a family limited partnership; three tiers of discounts approved by court).
Xcel Energy Inc. v. United States (D. Minn.) (tax treatment of leveraged company-owned life insurance plan).
O’Shaughnessy v. Commissioner, 332 F.2d 1125 (8th Cir. 2003) (multi-issue litigation involving inter alia, depreciation, abandonment loss, and change of method of accounting issues for glass manufacturing company).
Northern States Power Company v. United States, 151 F.3d 876 (8th Cir. 1998) (multi-issue income tax case involving inter alia, placed in service date for nuclear fuel assemblies, and change of method of accounting questions).
U.S. Sprint Communications, Ltd v. Comm'r, 578 N.W.2d 752 (Minn. 1998) (dispute over whether federal telecommunications excise tax that taxpayer collects from its customers should be included in “sales price” and taxed by the Minnesota sales tax).
Northern States Power Company v. United States, 73 F.3d 764 (8th Cir. 1996) (multi-issue income tax case, including an “interest netting” dispute).
O’Hagan v. United States, 95-1 USTC 50,082, aff’d, 96-1 USTC 50,311 (8th Cir. 1996) (injunction action against IRS to restrain levy on homestead).
O’Shaughnessy v. United States, 517 N.W. 2d 574 (Minn. 1994) (federal tax lien held unenforceable against assets of discretionary trust).
Landmark v. United States, 25 Cl. Ct. 100 (1992) (first case in the country to hold that cooperatives are not subject to the deduction limitations of I.R.C. § 277).
Security Bank Minnesota v. Commissioner, 98 T.C. 33 (1992), aff’d, 994 N.W. 2d 432 (8th Cir. 1993) (tax case affecting 40 Midwestern banks, which held that small cash-basis banks were not subject to the interest accrual rules under I.R.C. § 1281).

Sales/Use Tax

Northern X-Ray Co. v. Commissioner of Revenue, 2009 WL 4755165 (Minn. Tax. Ct. Dec. 8, 2009) (holding that credits received by a company from a manufacturer in exchange for honoring pricing agreements with its customers, which entitled the customers to discounts off the retail price, are not part of the gross receipts from the end user retail sale with its customers, and as such are not subject to sales and use tax).
Sprint Spectrum LP, et al. v. Commissioner of Revenue, 676 N.W.2d 656 (Minn. 2004) (Minn. Sales/Use Tax . . . telecommunications equipment, which produces telecommunication signals that have physical properties, is exempt from sales tax as capital equipment because it is used to manufacture tangible personal property).
Bailey Nurseries v. Commissioner of Revenue, 2002 WL 1077273 (Minn. Tax), Docket No. 7255-R (May 16, 2002) (Minn. Sales/Use Tax . . . machinery and equipment for preparing soil, cultivating, harvesting and irrigating purposes, purchased by the taxpayer for use in its wholesale shrub nursery business were entitled to “farm machinery” tax rate).
St. Paul Abrasives, Inc., et al. v. Commissioner of Revenue, 1998 WL 726457 (Minn. Tax), Docket Nos. 6814-6817 (October 12, 1998) (Minn. Sales Tax . . . taxpayers, who ran an abrasives supply business, not liable for sales/use tax on purchase of incentive items they provided to customers in a trading stamp-like redemption program, since the purchases were for resale in other states where customers redeemed their incentive points).
Northern States Power Company and United Power Association v. Commissioner of Revenue, 571 N.W. 2d 573 (Minn. 1997) (Minnesota sales tax exemption for capital equipment held to apply to electrical transformers located outside the power plant).
Dahlberg Hearing Systems, Inc. v. Commissioner of Revenue, 546 N.W.2d 739 (Minn. 1996) (Minn. Use Tax . . . computers destined for business use in other states not subject to Minnesota use tax simply because software was loaded at company’s Minnesota headquarters).
Northern X-Ray Company v. Tax Commissioner, 542 N.W.2d 733 (North Dakota 1996) (defense of North Dakota contractor’s use tax claims).
Copy Duplicating Products Inc. v. Commissioner of Revenue, Minn. Tax Court, Docket No. 6378 (July 10, 1995) (Minn. Sales Tax . . . copiers purchased by copier leasing company free of sales tax as sales for resale continued to be sold for resale when they were converted to coin-operated use because the “license to use” sold by the company to its coin-operation customers was also a resale).
Burlington Northern Railroad Company v. Commissioner, 509 N.W. 2d 551 (Minn. 1993) (Minnesota sales tax attempted to be imposed on railroad rolling stock was held invalid under the Railroad Revitalization and Regulatory Reform Act of 1976).

Minnesota Corporate Income Tax

Amoco Corporation and Affiliates v. Commissioner of Revenue, 658 N.W.2d 859 (Minn. 2003) (Minn. Corporate Income Tax . . . exploration and production operations of integrated oil company held not unitary with refining and marketing operations, under statutory definition of unitary business).
Green Giant v. Commissioner of Revenue, 534 N.W.2d 710 (Minn. 1995) (Minn. Corporate Income Tax . . . income assigned to corporation jointly owned by Green Giant and Alaskan Native Corporation should be excluded from the tax computation).

Minnesota Individual Income Tax

Chapman v. Commissioner, 651 N.W. 2d 825 (Minn. 2002) (Minnesota alternative minimum tax provision limiting charitable contribution deductions solely to Minnesota charities declared unconstitutional as discriminatory to interstate commerce).

Property Tax

Cooperative Power Association v. Hennepin County, Minn. Tax Court, Docket Nos. 20070, 22041 and 24007 (March 20, 1996) (Minn. Property Tax . . . property tax valuation on headquarters of electric power cooperative reduced approx. 32 percent).
Department Stores and Shopping Centers. We are the leading representative of department stores and major shopping center owners, developers and managers.
Hotels and Motels. We have cutting-edge experience with the complexities of hotel and motel properties as those issues continue to evolve in national circles, and our clients include a number of national flags.
Office Buildings. We have unsurpassed experience in the representation of office properties in both the Minneapolis and Saint Paul central business districts and in the suburban office markets.
Environmentally Contaminated Properties. We are nationally recognized for our knowledge in the negotiation and trial of cases where the market value of the subject property is adversely affected by petroleum derivatives, asbestos, PCBs, landfills, and other forms of contaminants.
Medical Office Buildings. We have developed considerable expertise in the valuation of medical office buildings, both in the Twin Cities Metropolitan Area and in Greater Minnesota.
Restaurants. We have extensive experience with the difficult issues in valuing restaurant properties.
Industrial and Manufacturing Properties. We have considerable experience with large and not-so-large industrial properties, including manufacturing, distribution and headquarters facilities.
Apartment Buildings. We represent regional and local owners and managers of apartment complexes and properties of all types.
Office Warehouse and Office Showroom Facilities. We regularly represent the owners and managers of office warehouse and office showroom facilities.
Bank Properties. We have successfully represented major banks in trial and in negotiations involving branch bank and other bank properties.

News & Articles

Offshore Voluntary Disclosure Program to End September 28, 2018

September 10, 2018

By Masha M. Yevzelman

Individuals or companies with undisclosed foreign financial assets or income have until September 28, 2018 to enter the IRS’s Offshore Voluntary Disclosure Program.

Nexus in a Post-Wayfair World

June 22, 2018

By Masha M. Yevzelman & Thomas R. Muck

A merchant of goods and services that makes sales in multiple states is no longer required to have physical presence in a state in order to be subject to sales and use tax in that state.

IRS to Begin Enforcing Passport Revocations for ‘Seriously Delinquent Tax Debt’

February 6, 2018

By Michael S. Raum

In 2015, Congress passed 26 U.S.C. Section 7345, entitled “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” Although this law was passed in 2015, the IRS did not begin coordinating with the State Department immediately. However, it has announced that it will begin that process in January 2018.

Residency Legislative Alert: Location of Attorney, CPA, Financial Adviser or Bank Account May No Longer Be Considered in Domicile Determinations

May 31, 2017

By Masha M. Yevzelman & Thomas R. Muck

When evaluating whether an individual is a Minnesota resident, the Minnesota Department of Revenue has been considering, among many factors, the location of a person’s attorney, accountant, financial adviser and bank accounts.

When is an Audit an Audit? Dealing with the ND Tax Commissioner

January 18, 2017

By Wayne W. Carlson, Michael S. Raum & Elizabeth L. Alvine

No one wants to be audited, whether by the IRS or the state tax authorities. However, there may be instances in which it is important to make sure that you are actually subject to an audit, in order to ensure that your rights are protected.

Our Team