Kostelanetz partners Karen Kelly and Bryan C. Skarlatos were quoted in a Forbes article titled “Tax Law Firms Are Busier Than Ever—Hiring Former Federal Employees Could Help.”
With the IRS facing a reduction in force, both taxpayers and tax practitioners expected to see a slowdown in IRS activity. However, tax law firms like Kostelanetz LLP are experiencing the complete opposite.
Bryan says in the article, “There have been no slowdowns.” He elaborates that the firm has been busier in the past six months than in the past two years with notable increases in payroll tax cases, crypto-related legal action, and Employee Retention Credit (ERC) litigation among other civil tax controversy matters.
Kostelanetz LLP recently welcomed Karen Kelly as a new partner following her tenure as head of the Department of Justice Tax Division. Having just supervised over 300 attorneys at the DOJ, Karen agreed that she’s likely to have her hands full as she builds her private sector practice focused on civil tax controversies, criminal tax and white-collar investigations, internal investigations, and other complex tax matters.
“Courts are busy, and that means there is a need for more attorneys,” Karen told Forbes of the increased demand tax law firms now face. With many key regulatory agencies shedding employees due to layoffs and resignations, these former federal employees offer firms a wealth of talent highly familiar with how these agencies operate.
Upticks in increasingly complex tax enforcement matters are keeping tax attorneys busy, particularly in the employment tax arena, Forbes noted. Unpaid payroll taxes may quickly transform civil tax penalties into criminal tax penalties. Legal action for pandemic-era fraud accusations is ramping up for ERC claimants too. A moratorium was placed on new ERC claims in late 2023 and the “One Big Beautiful Bill Act” disallows pending ERC claims submitted after January 31, 2024, for the third and fourth quarter of 2021. Many ERC claimants had their funds clawed back or never received funds in the first place, and are subsequently considering legal action.
In addition to employment tax and crypto-related matters, state and local tax (SALT) activities, voluntary disclosures, and potential status changes for tax exempt organization are also keeping courts and tax law firms busy.
You can learn more about the increase in tax law firm activity by reading the complete article here.
About Karen
The former head of the Justice Department’s Tax Division, Karen joined Kostelanetz after more than 30 years of federal and state trial practice, including prosecuting tax and white-collar crime. Her practice at Kostelanetz focuses on representing clients in state and federal civil tax controversies, defending clients in government investigations, including in criminal tax and white-collar matters, and against state and federal criminal charges. Her practice includes conducting internal investigations, representing legal and tax professionals and their firms in license and regulatory matters, and complex civil and criminal litigation.
About Bryan
For more than thirty-five years, Bryan C. Skarlatos has represented corporations and individuals in sensitive matters, many of which involve negotiation or litigation with government agencies. He is internationally recognized for his work on tax controversies, audits, appeals and litigation, criminal tax investigations, and white-collar criminal prosecutions. Bryan also has an active practice providing tax and estate planning advice.
