Question - Tax Attorney Day in the Life

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Question - Tax Attorney Day in the Life

Postby Anonymous User » Tue Aug 01, 2017 3:18 pm

Could anyone working as or with experience as a Tax Attorney weigh in on what your day was like, market, compensation (as compared to litigation, M&A), job satisfaction, pros and cons of international/domestic tax law specializations and math skills required?

I am looking into specializing into Tax and wanted to get some input from those doing the job. My understanding, this is nerdy, is that Tax law is like Min/Maxing in games like D&d, e.g., given a set of rules/guidelines your job is to build the best outcome for a client to meet all/most of the goals they want to hit. For instance, using the Tax treaties and laws between two countries develop a plan that gives least amount of taxes on business, exports, etc. while providing the most profit, with the least amount of chance for being audited/illegal. Is that about right?

Damage Over Time

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Re: Question - Tax Attorney Day in the Life

Postby Damage Over Time » Tue Aug 01, 2017 4:28 pm

Tax attorneys' lives vary a lot between different practice settings (e.g. I work at a Big4 which is super different from working for IRS, etc). If you're interested in reading about what a Big 4 tax attorney does, I'd be happy to revisit the thread when I have some free time and share.

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Re: Question - Tax Attorney Day in the Life

Postby Anonymous User » Wed Aug 02, 2017 8:25 am

OP here, I am interested in learning about the life at Big4. Thank you, and I look forward to hearing what you have to say.

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nealric

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Re: Question - Tax Attorney Day in the Life

Postby nealric » Wed Aug 02, 2017 11:15 am

A "day in the life" type breakdown will vary dramatically based on the specific role.

A few general points about tax practice:

Tax practice is divided between planning and controversy. In the biglaw/Big4 world, there are quite a few more planners than controversy people. It's not unusual for people to do some of both during their careers. However, there's a pretty big wall between people who do audit/IRS appeals and those who spend their time in court. The latter tend to be more litigators than tax lawyers.

On the planning side, you are generally correct that the goal is to optimize a client's tax situation. However, avoiding "risk" of audit isn't really part of the game- tax planning should be designed to be legally correct such that it can survive audit. Many large companies are audited every year, or continuously audited (under the IRS CAP program), so there is no question whether an audit will occur.

Compensation: biglaw is the same lockstep as other practice areas for associates. Partners are all over the map, though there's probably fewer mega rainmakers on the tax side compared to M&A. Billing rates tend to be higher than tax, but tax practitioners tend to bill fewer hours and have more non-billable commitments. In house compensation tends to be a bit more on the generous side compared to most general legal department roles- but it's really all over the map based on the type of company and role. Government jobs work off the GS payscale and pay should be pretty comparable to any other federal government attorney role- although you may get a one-step bump for the LLM. Most government attorneys top out the pay scale relatively early in their careers, which puts them in the mid 100s. Overall, tax is a well-compensated practice area.

Job satisfaction: I recall reading a survey sometime back that tax attorneys have much higher job satisfaction than other practice areas. I agree from personal experience. There's less grunt work (although there is still diligence to do at the lower levels), and hours tend to be a bit more consistent. There's a focus on problem solving that a lot of people really enjoy (as compared to litigation where the mindset is often about creating problems). In law firms, tax departments tend to be very low leverage- sometimes with more partners than associates. By contrast, M&A or litigation will often have 3-5 times as many associates as partners.

Math skills: there's nothing in the tax code more complicated mathematically than Algebra I. You need good mental math skills, and you need to be comfortable working with numbers, but it's not nearly has math heavy as non-tax people assume. I spend a lot more time working in Word than Excel if that's any indication.

Sub-specialties: It can be hard to pick a sub-specialty- most people tend to fall into it based on the practice group they land in. In my experience, Big4 people tend to be a bit more specialized that lawyers at firms. No matter what your sub-specialty, you will need to know your way around the Code (unless you end up a state and local specialist).

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Re: Question - Tax Attorney Day in the Life

Postby Damage Over Time » Wed Aug 02, 2017 5:08 pm

Anonymous User wrote:OP here, I am interested in learning about the life at Big4. Thank you, and I look forward to hearing what you have to say.


might be better if you just PM me

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Re: Question - Tax Attorney Day in the Life

Postby hangtime813 » Wed Aug 02, 2017 7:40 pm

nealric wrote:A "day in the life" type breakdown will vary dramatically based on the specific role.

A few general points about tax practice:

Tax practice is divided between planning and controversy. In the biglaw/Big4 world, there are quite a few more planners than controversy people. It's not unusual for people to do some of both during their careers. However, there's a pretty big wall between people who do audit/IRS appeals and those who spend their time in court. The latter tend to be more litigators than tax lawyers.

On the planning side, you are generally correct that the goal is to optimize a client's tax situation. However, avoiding "risk" of audit isn't really part of the game- tax planning should be designed to be legally correct such that it can survive audit. Many large companies are audited every year, or continuously audited (under the IRS CAP program), so there is no question whether an audit will occur.

Compensation: biglaw is the same lockstep as other practice areas for associates. Partners are all over the map, though there's probably fewer mega rainmakers on the tax side compared to M&A. Billing rates tend to be higher than tax, but tax practitioners tend to bill fewer hours and have more non-billable commitments. In house compensation tends to be a bit more on the generous side compared to most general legal department roles- but it's really all over the map based on the type of company and role. Government jobs work off the GS payscale and pay should be pretty comparable to any other federal government attorney role- although you may get a one-step bump for the LLM. Most government attorneys top out the pay scale relatively early in their careers, which puts them in the mid 100s. Overall, tax is a well-compensated practice area.

Job satisfaction: I recall reading a survey sometime back that tax attorneys have much higher job satisfaction than other practice areas. I agree from personal experience. There's less grunt work (although there is still diligence to do at the lower levels), and hours tend to be a bit more consistent. There's a focus on problem solving that a lot of people really enjoy (as compared to litigation where the mindset is often about creating problems). In law firms, tax departments tend to be very low leverage- sometimes with more partners than associates. By contrast, M&A or litigation will often have 3-5 times as many associates as partners.

Math skills: there's nothing in the tax code more complicated mathematically than Algebra I. You need good mental math skills, and you need to be comfortable working with numbers, but it's not nearly has math heavy as non-tax people assume. I spend a lot more time working in Word than Excel if that's any indication.

Sub-specialties: It can be hard to pick a sub-specialty- most people tend to fall into it based on the practice group they land in. In my experience, Big4 people tend to be a bit more specialized that lawyers at firms. No matter what your sub-specialty, you will need to know your way around the Code (unless you end up a state and local specialist).


+1.

Just to add...some lawyers unfortunately get stuck doing compliance in big4, for better or for worse.

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Re: Question - Tax Attorney Day in the Life

Postby Pokemon » Thu Aug 03, 2017 8:47 pm

Ignoring my phone calls seems like part of a tax attorneys routine at my firm.

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Re: Question - Tax Attorney Day in the Life

Postby Anonymous User » Fri Aug 04, 2017 2:40 am

Biglaw midlevel. I would guess my overall breakdown is something like:

-20-30% reading/marking up documents (merger docs, partnership/JV agreements, capital market disclosures, fund PPMs, etc.)
-20-30% legal research
-10-20% on the phone with clients or opposing counsel
-15-25% writing (memos/emails/opinions)
-15-20% thinking things through (alone or with a partner)

I don't do any controversy and have done probably <100 hours of diligence-type work in my 3 years. Billed just above the minimum hours threshold every year.

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Re: Question - Tax Attorney Day in the Life

Postby Anonymous User » Fri Aug 04, 2017 7:53 am

can tax attorneys work overseas? is that a easy door to walk through? asking as someone interested in working overseas

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nealric

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Re: Question - Tax Attorney Day in the Life

Postby nealric » Fri Aug 04, 2017 8:26 am

Anonymous User wrote:can tax attorneys work overseas? is that a easy door to walk through? asking as someone interested in working overseas


They can, although I wouldn't say it's a typical arrangement. It's more common for those who specialize in true international (as opposed to U.S. International) taxation. I've not heard of it happening at the junior level.

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Re: Question - Tax Attorney Day in the Life

Postby Anonymous User » Fri Aug 04, 2017 8:41 am

nealric wrote:
Anonymous User wrote:can tax attorneys work overseas? is that a easy door to walk through? asking as someone interested in working overseas


They can, although I wouldn't say it's a typical arrangement. It's more common for those who specialize in true international (as opposed to U.S. International) taxation. I've not heard of it happening at the junior level.


can you elaborate a bit on true international vs US international? is US international dealing with taxes of US citizens overseas?

also, as someone interested in pursing a tax llm to get involved in overseas tax work, i noticed there are multiple variants of a tax llm, like general taxation and international taxation. does it matter which variant you have for going into certain practices?

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Re: Question - Tax Attorney Day in the Life

Postby gchatbrah » Fri Aug 04, 2017 11:17 am

nealric wrote:
Anonymous User wrote:can tax attorneys work overseas? is that a easy door to walk through? asking as someone interested in working overseas


They can, although I wouldn't say it's a typical arrangement. It's more common for those who specialize in true international (as opposed to U.S. International) taxation. I've not heard of it happening at the junior level.


The law firms that do a lot of sponsor-side PE work (read: STB, KE, and Debevoise) send U.S. tax lawyers to London to assist on the fund and M&A side of things for those clients (as they'll always have U.S. tax issues at the fund level). Some of the LP-heavy firms (Linklaters and Proskauer come to mind) likewise have some U.S. tax lawyers out there.

Most other firms that have an international presence but just source their U.S. tax work out of NY/California (depending on whether you're talking about Europe or Asia).

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Re: Question - Tax Attorney Day in the Life

Postby Anonymous User » Fri Aug 04, 2017 11:31 am

Anonymous User wrote:Biglaw midlevel. I would guess my overall breakdown is something like:

-20-30% reading/marking up documents (merger docs, partnership/JV agreements, capital market disclosures, fund PPMs, etc.)
-20-30% legal research
-10-20% on the phone with clients or opposing counsel
-15-25% writing (memos/emails/opinions)
-15-20% thinking things through (alone or with a partner)

I don't do any controversy and have done probably <100 hours of diligence-type work in my 3 years. Billed just above the minimum hours threshold every year.


+1 biglaw second year. Our rates are too high so Big4 usually does diligence, but we'll do it if the client is in a real time crunch because we're more responsive (hence the higher rate). I think 40-50% is accurate for time spent researching and/or just thinking, at least when you have less seniority. It seems like you transition into being on the phone more and relaying research/conclusions by juniors. But in my experience, even senior tax partners like getting their hands dirty doing the research, particularly if the issue is significant and/or unusual. That research results in memos, email summaries, and opinions, and just general guidance to the client.

Then the other part as noted is marking up deal docs. In that role you're part of the deal team to some extent but still a specialist that is consulted. You're generally working on more deals simultaneously than your corporate counterpart is. In theory you only need to review the tax-specific provisions in a partnership agreement or merger docs, but in practice you have to understand the entire deal.

Generally hours are lower but the hours are also "harder" than corp or lit in my opinion. More enjoyable though.

The biggest thing about tax in my opinion is that it changes constantly and there are *huge* changes regularly. Like, you've been doing something a certain way and now you will do it the exact opposite and that affects every other issue. The law in other areas seems to gradually slide but tax structures are based on rates and numerical conclusions so once another way becomes cheaper you start doing it that way every time.

An easy example is that, before 1986, you could liquidate a corporation tax-free i.e. no corporate-level income tax. So you wanted your transaction to qualify as a liquidation. After 1986, that was no longer tax free so you wanted to structure your transaction as a tax-free reorganization, and specifically not as a liquidation. But you still have all this old case law, IRS rulings, etc. from back when taxpayers wanted a liquidation. So the question is does it still apply, which facts were relevant, did the fact that one side was pro-taxpayer affect the conclusion, etc.

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Re: Question - Tax Attorney Day in the Life

Postby nealric » Fri Aug 04, 2017 1:53 pm

Anonymous User wrote:
nealric wrote:
Anonymous User wrote:can tax attorneys work overseas? is that a easy door to walk through? asking as someone interested in working overseas


They can, although I wouldn't say it's a typical arrangement. It's more common for those who specialize in true international (as opposed to U.S. International) taxation. I've not heard of it happening at the junior level.


can you elaborate a bit on true international vs US international? is US international dealing with taxes of US citizens overseas?

also, as someone interested in pursing a tax llm to get involved in overseas tax work, i noticed there are multiple variants of a tax llm, like general taxation and international taxation. does it matter which variant you have for going into certain practices?


U.S. International = Application of the U.S. tax code to international operations
True International = multi-jurisdictional international tax- bringing into account tax treaties and foreign tax laws

There's only one tax LLM at any of the programs worth attending, but you can get certificates in a sub-specialty.

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Re: Question - Tax Attorney Day in the Life

Postby nealric » Fri Aug 04, 2017 1:55 pm

Anonymous User wrote:
An easy example is that, before 1986, you could liquidate a corporation tax-free i.e. no corporate-level income tax. So you wanted your transaction to qualify as a liquidation. After 1986, that was no longer tax free so you wanted to structure your transaction as a tax-free reorganization, and specifically not as a liquidation. But you still have all this old case law, IRS rulings, etc. from back when taxpayers wanted a liquidation. So the question is does it still apply, which facts were relevant, did the fact that one side was pro-taxpayer affect the conclusion, etc.


Yeah, well pretty much everything changed after the '86 Code. A few years from now could be an interesting time to be a junior tax lawyer if tax reform does end up happening. You'd be learning the new Code along with everyone else.

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Re: Question - Tax Attorney Day in the Life

Postby Anonymous User » Fri Aug 04, 2017 2:17 pm

nealric wrote:
Anonymous User wrote:
An easy example is that, before 1986, you could liquidate a corporation tax-free i.e. no corporate-level income tax. So you wanted your transaction to qualify as a liquidation. After 1986, that was no longer tax free so you wanted to structure your transaction as a tax-free reorganization, and specifically not as a liquidation. But you still have all this old case law, IRS rulings, etc. from back when taxpayers wanted a liquidation. So the question is does it still apply, which facts were relevant, did the fact that one side was pro-taxpayer affect the conclusion, etc.


Yeah, well pretty much everything changed after the '86 Code. A few years from now could be an interesting time to be a junior tax lawyer if tax reform does end up happening. You'd be learning the new Code along with everyone else.


Yeah, that was an issue I'd been looking at recently but the '86 code changed everything, as you say. I was just trying to illustrate how one's preferred characterization flips completely when the law changes, which I think is at least somewhat unique to tax law, or maybe it's the fact that the laws change so frequently. Authorities rarely become stale because the law may flip back to the way it was when those authorities were controlling. Perhaps the better example is just the '86 Code itself.

Definitely, that would level the playing field a bit and create good opportunities for junior lawyers. I personally think that we're headed for some significant upheaval (one way or another) in the near-term but maybe it always feels like that.



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