Mark Allison Quoted in Tax Notes, Practitioners Parse Promoters' Wins in Sale-Leaseback Tenant Improvements Transaction

Tax Notes
Excerpt taken from the article.

The acquittal and a finding of not guilty for two former practitioners who participated in an alleged sale-leaseback tax shelter highlight the difficulty the government had in proving a substantive tax crime and generally show the risks for practitioners in designing and defending the same transaction, according to members of the defense bar.


Mark D. Allison of Caplin & Drysdale said he sees the government's prosecution of the case as based on "the alleged coverup rather than the substantive act itself." The criminal prosecutions stemming from tax shelter cases in recent memory, like in the son-of-BOSS contact, involve individuals' roles in the subsequent audit of the taxpayer, he said, adding, "I got the sense...that the focus of the government was on what was said during the audit and any alleged misrepresentations about the transaction."

"The flavor of this seems to be that the IRS was annoyed that there was not more forthrightness in the audit from the same people who happened to also be involved in the transaction," Allison said. He said that leads the IRS to believe that if a practitioner is misrepresenting the facts in the audit, the practitioner is also misrepresenting the facts in the underlying transaction.

This is "really a cautionary tale of the dangers of trying to defend yourself of your own transaction, because you're walking this fine line between being a representative...and being the fact witness," Allison said. The taxpayer's representative in an audit "really should not be the person who is involved in the underlying transaction," he said, adding, "You want distance between the fact witness and your independent representative."

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