In a recent interview with Massachusetts Lawyers Weekly In House Counsel, D. Sean McMahon discusses trends in tax law, challenges to the legal profession and how McMahon & Associates assists taxpayers.
After leaving the Internal Revenue Service Chief Counsel’s Office in 2005, D. Sean McMahon opened the doors of McMahon Tax Law in Boston. Today, the firm has half a dozen other lawyers specializing in federal and state tax problems, representing individuals, estates and businesses with federal and state tax audits, appeals and litigation, as well as handling foreign asset reporting, voluntary disclosure and defense.
Q: What practice areas do you see as having the most potential for growth in 2018, and why?
A: International asset and transaction enforcement will continue to see growth due to an increase in communication between international financial entities and the IRS. This area has been on the radar since 2009 and we’ve been doing a lot of voluntary disclosures over the last few years. Now we’re seeing the IRS go after the people who haven’t come in voluntarily as they have finally started to receive information from other countries for the first time. Another area is captive insurance tax structures. This transaction has been on the IRS’s “Dirty Dozen” list for several years but just this past August, the U.S. Tax Court confirmed the IRS’s position that many of these structures are tax shelters. With that decision, I see increased enforcement and scrutiny of these arrangements.
Q: What do you see as the biggest challenge the legal profession will face over the next five years?
A: A shift in tax policy and tax reform. We are seeing a shrinking number of federal employees and a related drop in the aggressive pursuit to collect unpaid taxes. Instead, we’re seeing a move to privatize and outsource the federal collection of taxes. The new dump of international information will also have an impact on the practice, as will whatever ends up happening with tax reform. Even when there isn’t a major overhaul of the tax code, there are still small changes. We need to stay on top of that and how it will impact our clients.