Rising to New Challenges
Recent disclosures of perks provided to executives of high-profile companies have captured the media's interest and aimed the spotlight at examples of perceived "irrational corporate largesse." As a result, fringe benefits have become the focus of renewed Internal Revenue Service (IRS) scrutiny designed to determine whether they were treated properly for payroll tax, deduction, and reporting purposes. With the allocation of more audit resources to this area, compliance with the requirements has become more critical.
Employer-provided cellular phones and services, expense arrangements, and executive use of corporate aircraft rank among the issues currently attracting the most attention. For example, companies owning or leasing aircraft must comply with not only the IRS rules for income inclusion, but also the new special deduction limitation applicable to entertainment use by certain "specified individuals" as well. Likewise, companies providing cell phones or other telecommunication devices (and related services) must deal with the IRS rules requiring the substantiation of business use. In the case of expense arrangements and per diem allowances, companies must make sure that employees meet the IRS's accountable plan rules in order to avoid having to treat these benefits as taxable wages.
At the Forefront of Fringe Benefits and Executive Perks Issues
Miller & Chevalier's Fringe Benefits team, led by a former IRS senior lawyer responsible for fringe benefits, offers a deep and nuanced understanding of the tax issues facing employers.
Our lawyers have extensive experience in the array of fringe benefits programs, including:
- expense reimbursements and per diem plans, qualified transportation benefits, meals and lodging, and vacation/paid time off (PTO);
- employee awards, prizes and gift certificates;
- adoption assistance and educational assistance;
- housing assistance, moving expenses, and relocation loans (including below-market interest loans);
- company athletic facilities and cafeterias;
- company-provided automobiles;
- corporate aircraft (including spousal travel, personal use of corporate aircraft, mixed business-personal flights, and the recently revised deduction disallowance rules for the entertainment use of corporate aircraft); and
- executive loans and other fringe benefits that may qualify for favorable tax treatment.
We advise employers on how to manage any and all aspects of these programs, from planning through implementation and reduction of costs through strategies that advance business objectives, improve compliance, and mitigate audit risk. Our lawyers guide clients through these issues within the context of day-to-day business operations, as well as in the case of singular events, such as downsizing or mergers and acquisitions.
We have significant experience advising clients on how to structure employee perks and prepare for IRS audits and compliance reviews. Clients routinely engage us to conduct compliance reviews to spot areas of potential exposure and, where defects exist, to take proactive steps to correct them. Miller & Chevalier's Fringe Benefits team has an established reputation for crafting innovative and practical solutions to our clients' business challenges.
The Advantage of Government Know-How
With offices next door to the U.S. Department of the Treasury and down the street from the IRS and Capitol Hill, our inside-the-beltway team routinely helps clients navigate federal bureaucracy and successfully resolve issues before they develop into costly legal problems. Our considerable experience and long-standing relationships with key regulatory agencies and legislative bodies make us particularly effective in presenting our clients' positions and achieving precise solutions to their needs. The experience of our many lawyers who have served previously in senior government posts, including as IRS Commissioner, IRS Deputy Chief Counsel (Operations), senior attorneys in the Office of IRS Chief Counsel, and Majority Tax Counsel for the House Committee on Ways and Means, is a clear benefit to our clients.
Miller & Chevalier lawyers are recognized in government for their subject matter knowledge, their integrity, and their policy acumen -- a distinction we value greatly.
Leaders in Tax Controversy
Handling audits and resolving controversies administratively are significant aspects of Miller & Chevalier's Tax and Employee Benefits practices. We have a long history of helping clients plan for audits and manage the range of audit issues. We have achieved extraordinary outcomes for our clients at every stage of the IRS administrative process, including alternative dispute resolution. In our Fringe Benefits practice, these matters regularly involve significant payroll tax assessments, corporate tax deductions related to employee fringe benefits, abatement of penalties, and reporting issues.
For most clients, litigation is an option of last resort. However, when litigation is necessary, companies with multi-million dollar amounts in controversy choose Miller & Chevalier for our extensive experience, our approach to litigation, and our record of achievement in court. They know that they will be represented by top-tier litigators with a keen understanding of employee benefits issues and an established reputation for guiding clients through complex and high-stakes projects, who will defend them vigorously and persuasively.
Focused on Our Clients' Business Objectives
Our lawyers are pragmatic business professionals who never lose sight of clients' business objectives. Clients appreciate our ability to work easily within their organizations and to integrate seamlessly with their team of internal and external specialists.
We know that having critical information as early as possible can be valuable to employers in planning and shaping their fringe benefits programs. Accordingly, we pay exceptional attention to keeping our clients well informed. We regularly issue up-to-the-minute alerts and present timely teleconferences and workshops to brief clients on the latest regulatory developments and trends and on their impact on employers. Often, we are able to alert our clients to developments well in advance of their formal publication or announcement.