to The Tax Intelligence Report!
2005 issue of The Tax Intelligence Report
will highlight the impressive career track
of David Colker, Tax Partner at DLA Piper
Rudnick in Palo Alto, CA. Mr. Colker was
recognized as one of California’s
consummate tax attorneys in the Super
Lawyer Survey. We encourage you to read
this month’s interview and learn
about his remarkable career in tax.
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Holiday Message To Our Readers!
Leader In The Tax Profession"
- David Colker, Tax Partner,
DLA Piper Rudnick - Palo Alto, CA
"A Leader In The Tax Profession"
Tax Partner, DLA Piper Rudnick - Palo Alto,
has been a tax practitioner since
1978. After graduating from Stanford
Law School, he worked for 20 years
at Graham and James, an international
law firm. In 1998, he joined Gray
Cary, a West Coast law firm with a
focus on technology, where he managed
the tax practice. On January 1 of
2005, Gray Cary merged with Piper
Rudnick, a law firm with offices in
the East and Midwest, and both US
firms merged with DLA, an international
law firm based in London.
The new firm,
DLA Piper Rudnick Gray Cary, is one of
the world’s largest law firms. David
chairs the international tax practice
of DLA Piper Rudnick Gray Cary. I recently
interviewed David to learn more about
the merger and the firm’s tax practice.
We also talked about the growth of tax
practices within law firms and DLA’s
specific plans to expand their tax offerings.
Finally, I asked David to describe some
of his most challenging assignments over
the last few years and the lessons he
learned from them.
KJ - When
I talked with you last year, you were
managing the tax practice at Gray Cary.
Now you are with DLA Piper Rudnick Gray
Cary, one of the largest law firms in
the world. Can you give me a brief overview
of the new firm?
DC - The January 2005 transaction
that created DLA Piper Rudnick Gray Cary
was one of the largest combinations of
law firms from different countries and
the only such merger of firms with more
than 1,000 lawyers on each side of the
Atlantic. DLA Piper has more than 3,000
lawyers in 56 offices in 21 countries
worldwide. In the US, DLA Piper has more
than 1,500 lawyers located in key economic,
governmental, and technology centers including
Baltimore, Boston, Chicago, New York,
Los Angeles, San Diego, San Francisco,
Silicon Valley, and Washington, D.C. The
firm's clients include public and private
companies, ranging from Fortune 500 companies
to startup entities developing industry-leading
technologies. We joke that we also have
one of the longest names. But seriously,
the market reaction has been very positive.
KJ - How has Sarbanes effected the
tax work done by law firms?
DC - Most public companies no longer
use their audit firm for tax planning
work because of the obvious independence
issues. Also, audit firms are prohibited
from doing any tax controversy work for
their audit clients. As a consequence,
public companies have been seeking alternative
tax service providers and law firms have
captured some of that work. Also, since
under Sarbanes, audit firms are precluded
from doing tax controversy work, law firms
have experienced an increase in such work.
Our firm certainly has been doing much
more tax planning work. The work, however,
did not just fall in our laps. Since the
passage of Sarbanes, we added international
tax experts who had been providing tax
services at Big 4 accounting firms and
international law firms. We also have
economists on staff to help with transfer
pricing. By providing tax analysis and
planning, the legal documents necessary
to implement or modify international structures,
and transfer pricing analysis and support,
we offer clients a “turn key”
capability. The market has been very receptive
to that. We also are doing more tax controversy
work. In particular, we are getting involved
in such projects at an earlier stage—during
the audit— and can help “quarterback”
the audit with the client’s tax
KJ - With that additional work, what
steps is DLA taking to continue to grow
its international tax practice?
DC - First, we are continuing on
the course we set several years ago of
hiring more senior international tax lawyers.
During 2005 we added experienced international
tax partners in New York, Palo Alto, and
Los Angeles. At the same time our offices
outside of the US added experienced international
tax lawyers in China, the former Soviet
Republic, several countries in Europe,
and the UK. Second, the merger with DLA
has obviously strengthened our global
tax capabilities. During 2005 our ability
to service US-based clients with the help
of our colleagues in various foreign offices
helped us efficiently implement many projects
for clients. From a personal perspective,
China is a critical marketplace for almost
all of our Silicon Valley clients. The
additions to our tax team in China have
proved to be enormously valuable. For
2006, we would like to increase our recognition
in the marketplace as a premier provider
of international tax services. We are
building that reputation one client at
a time, and I am confident we will succeed.
KJ - Moving away from law firm issues,
what have been some of your more challenging
tax projects over the last few years?
DC - Several immediately come to
mind. One project was an appeal of an
IRS audit where the tax assessment, including
interest, was about $150,000,000. The
major issues were mostly international
including transfer pricing and cost sharing,
although there were domestic issues relating
to research credits and expensed equipment.
Particularly noteworthy were the complex
interaction among the issues and the complex
interaction of various carryforwards and
carrybacks with the issues. Although the
audit was only of three years, 10 years
were impacted. The first thing we did
was build an Excel model of the tax return
for a 10 year period so that we could
understand how the resolution of various
issues in combination impacted the bottom
line. Second, we investigated the returns
as filed to identify as many beneficial
adjustments as possible. In order to try
to favorably settle this case, it was
essential to identify new positions the
taxpayer could assert that offset the
bona fide adjustments identified by the
IRS. The IRS is not always 100% wrong.
In this case, among other things, we filed
two set-offs under section 482 which helped
us enormously. We also used our model
to identify a potentially achievable set
of issue resolutions that produced the
desired result. After about a one year
negotiation with the IRS Appeals Division,
the case was resolved with the client
receiving about a $500,000 refund. Two
other projects are worth noting. In both
cases, the accounting firm auditor of
a public company announced to the audit
committee that the international tax structure
that the accounting firm previously had
approved (and in one case designed and
implemented) in fact did not work. Over
a very short period of time, we had to
evaluate the problem and develop a solution
to the satisfaction of the auditors that
would not result in an adverse financial
impact on the client. Although the solutions
differed, we were able to achieve our
goal in both cases. The clear lesson here
is that companies continually need to
take a very close look at complex tax
structures to avoid year-end surprises.
KJ- David, I want to personally thank
you for the time you have taken to answer
my questions. Your perspective will undoubtedly
be very valuable to anyone considering
a tax career at a law firm.
Editor, The Tax Intelligence ReportDavid
Tax Partner, DLA Piper Rudnick, Palo Alto,
any comments you may have regarding The
Tax Intelligence Report! You may email
the Editor Kathleen Jennings at firstname.lastname@example.org or the subject of this
months feature article David Colker at
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Your interview with Eric Ryan is very impressive! I heard Eric Ryan had joined a law firm but I did not realize it was with DLA Piper in Palo Alto, CA… now I know! - P.B.
Fantastic profile of Brian Andreoli who is an International Tax Partner at DLA Piper in New York. What an inspiration to us all! It looks like DLA Piper has built a strong legal tax team! - J.C.
The article on Lisa Peschecke-Koedt was very valuable. She has some great ideas that will assist me in running my own tax department. - G.S.
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Thank you for The Tax Intelligence Report. You profiled my boss and I did not even realize how lucky I was to be working for someone so talented. I knew my boss was special but you confirmed their talents. - A.L.
Thank you for your profile on Nathan Zietlow. He has an impressive international tax career. He is very interesting and Harvard educated, too! - L.W. May I express my gratitude for The Tax Intelligence Report! It is so nice to learn about the tax careers of people who have worked hard to get to the top of the profession. - E.C.
How interesting to read the profile of Alfred de Lassence and his views on the US business environment and comparisons with the French business environment. This is knowledge that will be important for anyone operating within these two cultures. Thanks for sharing! - Y.R.
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