Hello, my name is James Duffy and I am the Managing Director at Tax Client Services. I believe education and experience are two important criteria when it comes to choosing a tax professional, so allow me to share with you my education and experience.
My education background includes: (1) Bachelor of Economics (at UCSB), (2) Masters in Taxation and (3) Graduate Certificate Degree in International Taxation (at Golden Gate University). I also have a California Certified Public Account professional license.
I launched my career at PricewaterhouseCoopers (PwC) after finishing college at UCSB. At PwC, I developed excellent time and resource management skills. Maximizing client satisfaction by taking the initiative on various tax engagements, I discovered that I had an aptitude for finding tax planning techniques that significantly reduced a company’s or individual’s tax liability.
After fine tuning my skills at PwC, I was hired by Air Touch Communications (ATC). As one of the key tax professionals, I helped manage this company through the challenges of the expanding Telecom market. Throughout this time, I assisted with numerous tax planning strategies significantly reducing ATC’s worldwide tax liability.
After a successful decade of growth, Vodafone, acquired Air Touch. The resulting company, Vodafone Air Touch Plc, served 23 million customers worldwide and had a market value of over $110 billion. I was a key player on the team that assisted with the planning structure for this multi-billion-dollar merger and helped ATC grow from its initial $100 million market value to a market value of over $110 billion ten years later. After leaving this company I took time off to focus on raising my son who I had barely seen while working long hours at ATC.
A few Year later I was approached by United Commercial Bank (UCB) and asked to run the tax department. As the UCB Tax Director, I made changes that significantly reduced tax liabilities at this company. After many achievements, I left UCB to work at Tax Client Services (TCS). I took on a fresh approach at TCS, maximizing client service while eliminating all non-essential activities—which in turn generated additional tax revenue streams for all of my clients. I continue to do this today, always focusing on my clients and utilizing proven methods of productivity and time management to get the job done. When it comes to minimizing tax liabilities, I am very skilled. For example, when reviewing tax issues, I examine the tax statute, along with federal court cases. I review each issue carefully, looking at tax regulations, tax revenue rulings, tax announcements, etc. (to learn more about my techniques of tax research, see the Tax Research Links).
Click below or scroll down to learn more about my work experience.
As Managing Director here at TCS, I put my skills as a hands-on and seasoned tax professional to good use by working on federal, state and international projects. I minimize audit risk by working, when possible, directly with the appropriate tax authorities and not skimping on any aspects of tax planning (the devil is in the details). Some firms cut corners, which can cost their clients significant lost tax saving or worse enhance audit exposure with the IRS. With my approach, all clients receive thoroughly planned tax structures. Because I work closely with the tax authorities, the risk of having to record tax liabilities on a client’s financial statements or undergoing an IRS audit is greatly reduced. In-addition to helping individuals and small businesses with their tax needs, I have served as an advisory tax expert for many companies.
As the Tax Director at this multi-billion-dollar market capital company, I was responsible for the tax department’s planning, compliance, and tax reporting. I completed tasks such as preparing tax return support, reviewing the Controlled Foreign Corporation rules, preparing foreign, state and federal tax return adjustments or M-3’s (including detailed tax support memorandums), and preparing the company’s yearly 10-k, quarterly 10-Q’s and other financial documents. My work also included researching and writing memos on contingent tax liability requirements and other tax accounting pronouncements.
One of my accomplishments at UCB is when I successfully managed to save $12 million dollars on a foreign repatriation project. The U.S. holding company received 30 million in cash from its foreign subsidiary and I was able to restructure this transaction so that it was taxed at a very low rate. UCB was told by three outside tax and accounting firms that certain issues in the tax law made this lower tax rate not possible. These firms reviewed Section 965 and other tax provisions and failed to correctly analyze a legal method to bring back this cash at a low tax rate. I was able to restructure this cash repatriation allowing UCB to repatriate the cash from its foreign subsidiary at a very low tax rate. This was a challenging project as it was fact specific and dealt with old and new tax statutes requiring me to analyze ten years of data. I dedicated a great deal of my time, both in the office and outside of it, trying to figure how to meet all the foreign, federal and state tax requirements and still utilize this low tax rate. After many tireless hours, I was able to repatriate this cash from its foreign subsidiary at the very low federal tax rate avoiding the many tax pitfalls that the other firms had not been able to overcome.
I prepared comprehensive yearly Earnings & Profit (E&P) reports, which are equivalent to preparing annual “tax” financial statements. These E&P reports are required to help determine any federal and state tax liabilities when you bring cash back from a foreign subsidiary. This analysis was complicated, comprehensive and required years of historical E&P reports. I reviewed annual “Subpart F” and “Passive Foreign Investment Company” provisions which are “anti-deferral” tax penalty provisions. I reviewed the state foreign repatriation rules which required a new analysis to determine if this cash was taxable. My work was carefully reviewed by both PwC and D&T. I talked directly with the IRS and Franchise tax board getting their agreement that this transaction would be taxed at the low federal rate and would not be subject to any state taxes. Overall, it took a year to complete this project, which involved working with two of the world’s largest tax firms as well as one of the world’s largest legal firm. Everything was done by the books here—absolutely no cutting corners.
However, all of the work was well worth it, as this project saved UCB over $12 million dollars. I had correctly convinced both internal and external auditors that there was no tax liability required for this transaction. Basically, what this meant was this transaction was protected from any potential future audit. In addition to this cash repatriation transaction, I managed, coordinated and assisted with the California tax credit project. This included analyzing tax credits in the areas of NID, Hiring, Sales and Use. I amended many years of tax returns previously prepared by other outside tax firms. The tax refunds were in the millions, but they could not be booked until after the California Franchise Tax Board (FTB) reviewed the amended returns. With this approach, these returns were fully audited beforehand by the FTB, thereby eliminating the booking of a required financial statement liability. The overall savings from this alone was in excess of $5 million dollars.
One of my responsibilities at UCB was my involvement with the Sarbanes-Oxley rules. The Sarbanes-Oxley Act, also known as “Sarbox” or “SOX”, is a U.S. federal law that sets enhanced tax and accounting auditing standards for all public accounting firms. The law was enacted in response to the Enron and Worldcom financial scandals, as a means of protecting shareholders and the general public from accounting fraudulent practices.
While at UCB, I was in charge of implementing and following the tax department rules set by the SOX act. As with my other projects, I made sure that all of my tax planning strategies met all of the SOX legal requirements, that all of my tax strategies were reviewed and approved by both internal and external auditors.
After leaving PwC I was hired by Air Touch Communications (ATC). I embraced my role as the ATC’s Tax Director and helped manage the tax department through the challenges of the expanding Telecom market. I assisted with numerous acquisitions and planning strategies, helping Air Touch expand internationally while at the same time minimizing the Company worldwide tax liability.
I held numerous roles as Tax Director. I helped develop the company’s tax department into one of the best tax departments in all of California. As a department, we were all very dedicated and hardworking, and we utilized various savings and organization techniques to reduce taxes for the company. We were ahead of the game in reducing tax liabilities, and we made sure that we worked carefully with the appropriate tax authorities. Because of this careful and thorough approach, we were rarely subject to any tax audit adjustments.
While at ATC, I was for a time in charge of international and domestic tax audits, as well as preparing protest letters for the IRS, FTB and other state and international tax authorities. I assisted our company attorneys with tax audit cases and tax research. I reviewed the company’s effective tax rate and financial statement tax footnotes for the 10-K, 10Q and other SEC filings.
As Air Touch Communications grew, more tax professionals were hired for specific responsibilities, while I was in charge of any tax issues included in the company’s financial statements. One of my responsibilities consisted of performing business tax due diligence analysis of acquisitions, reviewing deal specific risks and opportunities.
One of my most significant projects at ATC involved assisting with the set-up of a legal hybrid entity, a debt/equity structure. This structure utilized the Dutch tax treaty provisions. This “cutting edge” tax project, which ATC’s acquirer “Vodafone”, when it bought ATC later modified, worked well for ATC. This structure saved ATC billions of otherwise lost tax revenue, cutting the German tax rate in half.
Despite working well, the U.K.-based company, Vodafone, after acquiring ATC, decided to change the ATC tax structure. This new structure was easier to maintain and operate as it required minimal employees, but it turned out that in the long run this compliance saving cost the company significantly in lost tax savings. This new structure ultimately resulted in Vodafone paying an additional $2 billion in taxes to the United Kingdom tax collection authorities (after undergoing an audit by the UK revenue tax authorities). Though the ATC tax structure was more complicated and difficult to maintain, we did not have any IRS or foreign audits and ended up saving ATC billions. The lesson is no matter what company you work for, it is well worth the additional resources to use a more complete tax structure with “genuine economic activities” over a simplified arrangement that risks audit exposure. In other words, there’s no room for taking the easy way out when it comes to the world of taxation. Otherwise, there’s no faster way to an audit (for more information see “Vodafone 2 v Revenue and Customs Commissioners (No 2),  STC 1480″).
At ATC I managed the company’s international tax compliance and accounting, including the Earnings and Profit analysis, and the complex Passive Foreign Investment Company rules. I was in charge of maintaining the effective tax rate in addition to handling numerous foreign tax credit projects. For the uninitiated, international tax law is a very complex area.
Another one of my significant projects during my time as Tax Director at ATC was working on a new worldwide legal entity structure so ATC could eventually merge with a company with minimal tax ramifications. This new structure was critical to any merger and setting this up proved to be a complicated and time-consuming project that ended up taking over two years to plan and implement. It involved dealing with the most complicated tax rules of the tax law at that time, the IRC Section 367 provisions. The reason behind these rules stems from the fact that the U.S. Treasury does not want American companies to be transferred outside of the U.S. without having them first pay a “transfer tax”. However, the Treasury at that time allowed companies to avoid this tax if certain rules and conditions were met. We carefully reviewed the Section 367 rules for applicability and exceptions in coordination with the GRA rules. A GRA agreement allows a company to be acquired or to merge if they agree not to sell any of these GRA companies for anywhere from 5 – 10 years and if they break this agreement they are taxed retroactive back to the date of the initial acquisition. That is why this is called a “Gain Recognition Agreement”. Abide by the rules or recognize the tax you previously avoided or that is, the previous tax with interest. There are also many strict legal requirements necessary to qualify for this special tax deferral provision.
The process of preparing the GRA first involves a background analysis of the entities at issue (including implementing numerous reorganization restructurings), a considerable amount of paperwork, and meeting many legal tax requirements. However, we set up a new worldwide legal entity structure that later spared ATC from having to pay billions of additional tax on the Vodafone merger. While we were at the cutting edge of this type of tax planning at the time, companies that are targets of possible future acquisitions now prepare beforehand for the possibility of an acquisition by implementing a tax planning structure similar to the type we used for the later Vodafone merger. One of the goals of the GRA provision is to help protect American jobs. The ways this works is, if an American company files a GRA to avoid current tax on a merger or acquisition and the new owner later sells this entity, the new owner is subject to a very large penalty tax plus interest. Thus, the GRA is an indirect incentive for foreign companies not to sell their recently acquired US company thereby protecting American jobs.
PricewaterhouseCoopers is the world’s largest professional service firm, offering industry-focused audit and assurance, consulting and tax services. Headquartered in London but operating on a global scale, “PwC” has more than 180,000 employees working in over 700 cities across 159 countries. As of 2015, PwC is the fifth largest privately-owned organization in the United States, with revenues exceeding $30 billion. It was here that I started my career, and developed the skills that I have used throughout my career to reduce companies and individuals taxes.
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