Davis Polk partner Mario Verdolini discussed the prominent federal tax cases to monitor this year with Law360.

The article notes that – in the coming months – the Tenth Circuit will hand down an eagerly awaited opinion on Liberty Global’s challenge to the Internal Revenue Service’s interpretation of the economic substance doctrine, which allows the agency to disregard transactions whose sole purpose is tax avoidance. Mario said he hopes the Tenth Circuit decision will not favor the “extreme version of the government’s argument” because any tax planning for a corporation or even a partnership would be vulnerable under the IRS’ reading of Section 7701.

“That introduces an enormous amount of uncertainty,” Mario added.

Mario was also asked about the legal challenges to the Financial Crimes Enforcement Network’s (FinCEN) beneficial ownership reporting requirement. He said that the case highlights privacy objections to requiring entities to report personal information of every owner of an entity to FinCEN and questions the proper role of the federal government to collect that kind of information.

“It’ll be interesting to follow that [case],” he noted. “Certainly, it’s a headache to comply with those rules.”

“Top Federal Tax Cases To Watch In 2025,” Law360 (January 1, 2025) (subscription required)

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