James R. Malone, Jr. is a Principal in the Firm’s Tax Controversy Practice, representing clients in disputes with federal, state, and local tax authorities in both administrative proceedings and in court. His clients include businesses, non-profits, individual taxpayers, accountants, and tax preparers.
In federal tax matters, Mr. Malone represents clients before the Internal Revenue Service and in the U.S. Tax Court, the U.S. Court of Federal Claims, or U.S. District Courts. For state and local tax matters, Mr. Malone represents clients before the Department of Revenue, before local administrative agencies and in the Pennsylvania courts. Mr. Malone focuses on securing the best possible outcome for clients, either through settlement or litigation. He combines litigation experience with extensive knowledge of federal, state, and local tax laws and procedures that allow him to represent clients through the full lifecycle of a tax controversy, including the following types of engagements:
- Audit defense
- Administrative appeals
- Deficiency and refund actions
- Collection cases
- Cases involving compliance deficiencies, such as unfiled or delinquent returns and voluntary disclosure matters
In addition to providing representation in active tax controversy matters, Mr. Malone provides compliance advice on federal, state, and local tax issues to clients across a broad array of industries, including health care, hospitality, retail, financial services, commercial construction, manufacturing, and professional services.
Mr. Malone is a member of the Tax Council of the Philadelphia Bar Association and of the State and Local Tax Committee of the Philadelphia Bar Association’s Tax Section. He is also active in the Tax Section of the American Bar Association, where he has contributed to policy comment projects as a member of the Administrative Practice Committee. He contributed to the ABA Tax Section’s September 2017 comment letter on the proposed regulations for the new partnership audit regime. Mr. Malone’s contributions focused on the regulations addressing the partnership representative’s role. Mr. Malone provides regular commentary on federal, state, and local tax matters on his blog, Tax Controversy Posts.
The Best Lawyers in America©, a peer-reviewed publication, selected Mr. Malone for inclusion in its most recent 2020 Edition in the categories of Litigation and Controversy - Tax and Commercial Litigation. In 2019, he was honored as a member of the Irish Legal 100. For information about this selection and an overview of common third-party publications, rankings, and lists methodologies, click here.
Mr. Malone also represents clients in Commercial Litigation matters and has extensive experience as an appellate advocate.
Prior to joining Post & Schell, Mr. Malone was the principal and founder of an independent law firm focused on tax controversies and related litigation.
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Representative Federal Tax Matters
- Recently concluded an audit reconsideration representation for a taxpayer who owed the IRS over $2.4 million for five tax years. The IRS agreed to audit adjustments that reduced that amount to zero. The client may actually receive a refund after being subjected to enforced collection for several years.
- Represented a taxpayer with multiple years of unfiled returns; the client was the subject of a $400,000 federal tax lien and on-going collection activity in the form of levies. Result: The taxpayer’s liability was reduced to zero.
- Represented a business owner in audit and before the Tax Court. Result: The case settled with a 30% reduction in tax due for one year and the elimination of accuracy-related penalties for all years at issue.
- Represented a client with long-standing payroll tax liabilities and unfiled personal returns. Result: The IRS agreed to compromise a substantial portion of the client’s payroll tax liability.
- Ongoing federal tax engagements include one audit reconsideration matter with over $1 million at issue.
Representative State & Local Tax Matters
- Represented the U.S. affiliate of a major multi-national corporation that was the subject of a local mercantile tax assessment of $250,000 with additional exposure for the current and future tax years. Prosecuted a challenge to the assessment under relevant state law and the dormant commerce clause. Result: Settled for $5,000.
- Represented the owner and manager of restaurant that had been sold. When the local tax authority sought collection from our clients, we named the purchasers as additional defendants and mounted a vigorous defense against the merits of the relevant tax assessment. Result: The municipality agreed to significantly reduce its overall tax claim, and we reached an agreement with the purchasers that limited our client’s overall responsibility to contribute to the settlement significantly.
- Represented a manufacturing company in an administrative appeal of a penalty assessment for failure to file a timely return. Result: Complete abatement of the penalty.
- Represented a local non-profit that was denied a sales and use tax exemption. Result: Overturned on administrative appeal.
- Represented a business that had failed to register with the local tax authority or pay business privilege taxes for a decade. Result: The municipality agreed to waive the tax claims for half of the period and to abate all of the interest and penalties.
- Ongoing state and local tax engagements including representation of a non-profit in an administrative appeal of the denial of a sales and use tax exemption and refund claims against the City of Philadelphia on behalf of residents who paid taxes in other jurisdictions in addition to City Wage Tax.