Adam S. Fayne

Partner

Adam S. Fayne

Office

161 North Clark
Suite 4200
Chicago, IL 60601

P: 312.876.7883

F: 312.876.6249

vCard

LinkedIn

Connect

About

Adam S. Fayne is a partner in the firm’s tax, corporate, and white collar criminal practice groups in the Chicago office.

Mr. Fayne’s tax practice focuses in the areas of tax controversy, tax planning, corporate advisory, and white collar criminal matters. As a tax attorney, he frequently represents businesses and individuals before the Internal Revenue Service, and he also advises individuals and businesses as to tax planning matters, both domestically and internationally. As part of his tax practice, he has also handled a variety of white collar criminal matters, both federal and state; including tax evasion, money laundering, offshore tax compliance, and all other areas of civil and criminal tax fraud. Mr. Fayne is a former Special Assistant United States Attorney with the Department of Treasury Internal Revenue Service, where he gained extensive knowledge in all areas of tax law.

Mr. Fayne also acts as a trusted advisor to many companies and individuals, nationally and internationally. In this role, he frequently acts as a defacto general counselor to management or in-house general counsel. Mr. Fayne advises these clients on a wide range of legal matters including mergers and acquisitions, employment, compliance, litigation, personal injury, vendor contract review and negotiations, employment benefits, financing, real estate, and all other matters related to the day-to-day activities of the corporate client.

Achievements

  • Recognized as a 2016 Rising Star by Law360, one of five tax attorneys in the nation
  • Recognized as a 2015 Emerging Lawyer by the publication, Leading Lawyers. This distinction has been earned by fewer than 2% of all lawyers licensed to practice law in Illinois.
  • Recognized as a 2011 and 2012 Rising Star by the publication, Super Lawyers. Super Lawyers awards this distinction to the top 2.5% of lawyers under the age of 40.
  • Chicago Bar Association
  • American Bar Association
  • Jewish Federations of North America National Young Leadership Cabinet

Notable Cases

During 2016, Mr. Fayne successfully represented the buyer in the acquisition of a healthcare consulting company. Mr. Fayne negotiated the multi-party purchase agreement, several employment agreements, and counseled the client in risk management. 

During 2016, Mr. Fayne worked with several international clients in their estate planning and tax compliance needs. This included asset protection planning, immigration planning, corporate restructuring both internationally and domestically to maximize tax efficiencies, and working with teams of international service providers to best integrate these clients’ international holdings and domestic holdings.

During 2016, Mr. Fayne successfully litigated several cases in the United States Tax Court. Some of the issues litigated and settled involved valuation matters, substantiation issues, employee vs. independent contractor matters, tax shelter enforcement, and collection cases through the Collection Due Process Hearing procedures. Mr. Fayne also successfully represented several clients litigate and appeal penalties related to non-compliance with foreign assets holdings, including FBARs.

During 2016, Mr. Fayne helped clients create private placement memorandums and corresponding offering documents in an effort to raise money for start-up businesses and ancillary businesses located throughout the United States.

In 2016, on behalf of a national private equity company, Mr. Fayne provided advice and expertise to his client in acquiring a large manufacturing and distribution company. This transaction was the private equity company’s first transaction of this kind in such a highly regulated environment and relied on Mr. Fayne’s expertise in navigating the complexities of the transaction itself and the intricacies of the state regulators.

In 2015, on behalf of a large corporate client, Mr. Fayne successfully litigated a proposed multi-million dollar IRS adjustment in the United States Tax Court. During the IRS examination stage, the IRS asserted that the client’s treatment of transactional costs incurred in a private equity sale was inappropriate – that certain transactional costs should be capitalized and not expensed at the time. Mr. Fayne filed a Tax Court petition on behalf of this client and successfully resolved this case with the Internal Revenue Service.

Beard v. Commissioner, 132 S.Ct. 2099 (U.S. Apr 30, 2012). Mr. Fayne successfully litigated this multi-million dollar proposed tax deficiency. The Internal Revenue Service asserted that the six (6) year extended statute of limitations period applied to the taxpayer’s alleged overstatement of basis in his partnership interest. Mr. Fayne filed a Motion for Summary Judgment arguing that the extended statute of limitations period did not apply based on an earlier Supreme Court case. The Internal Revenue Service alleged that an inflated basis of stock was the same as an omission of gross income. The Tax Court agreed with Mr. Fayne that an overstatement of basis in partnership stock is not the same as an omission of gross income and issued summary judgment in favor of his client and against the Internal Revenue Service. The Seventh Circuit Court of Appeals reversed the Tax Court holding, but Mr. Fayne appealed this case to the United States Supreme Court where it was reversed in favor of the taxpayer.

Bohannon v. Commissioner, T.C. Memo. 2013-122 (2013). Mr. Fayne successfully litigated this fraud case before the United States Tax Court. The Internal Revenue Service alleged that the taxpayers committed fraud and should be assessed fraud penalties and liabilities for very old tax years. The Internal Revenue Service would have been precluded from assessing any additional tax in these older tax years but for its assertion that the taxpayers committed fraud. After a lengthy trial, the United States Tax Court held that there was no evidence of fraud and therefore the Internal Revenue Service was time barred from assessing any tax or penalties.

IRS Off-Shore Compliance. Mr. Fayne is currently advising clients from across the nation, and internationally, regarding the IRS Voluntary Disclosure Initiative. Mr. Fayne has a broad range of experience that allows him to successfully advise clients who have a beneficial ownership interest in off-shore bank accounts; including participation in the IRS Voluntary Disclosure Initiative and “Opt-Outs.”

Audits, Offers In Compromise, Payment Arrangements. Mr. Fayne counsels individuals and entities under audit with the Internal Revenue Service (IRS) and state taxing authorities. Mr. Fayne also works with clients in obtaining favorable payment arrangements through offers in compromise and installment agreements. Mr. Fayne has a substantial amount of experience before the audit/exam divisions of taxing authorities, the administrative appellate divisions of various taxing authorities, and the United States Tax Court and other federal and administrative tribunals.

Foreign Tax Matters. Mr. Fayne advises U.S. and foreign companies and individuals with respect to foreign tax and compliance matters; including the Foreign Account Tax Compliance Act (FATCA), controlled foreign corporations, and passive foreign investment companies.

Mr. Fayne has successfully litigated and obtained state sales tax exemptions for several not-for-profit organizations. In addition to obtaining 501(c)(3) status with the Internal Revenue Service for exempt organizations, Mr. Fayne also specializes in obtaining sales tax exemptions for such organizations.

Mr. Fayne successfully litigated a $61 million IRS adjustment which led to a full concession by the Internal Revenue Service. The dispute centered around the client’s residency status during certain tax years, where the client claimed residency in the Commonwealth of Northern Mariana Islands (CNMI), but the Internal Revenue Service failed to recognize the legitimacy of that residency. Mr. Fayne litigated the client’s position through the United States Tax Court and under provisions for United States Competent Authority. After litigating, and working in conjunction with the CNMI government, the client’s ultimate result was that no taxes were due to the United States, and the Internal Revenue Service conceded its tax court case in full, which led to a $61 million reduction that was originally alleged to be due from the client.

Speaking

  • “Medical Marijuana: Business and Tax Issues for Growers, Processors, and Dispensaries,” Philadelphia Bar Association (2017)
  • “Dousing Civil Tax Fraud Flames,” American Society of Tax Problem Solvers” (2016)
  • “Rescuing Taxpayers from Impending Danger,” American Society of Tax Problem Solvers (2016)
  • “Fixing Missed Deadlines,” IRS Tax Forum (2016)
  • “Physicians’ Guide to Medical Cannabis in Illinois,” webinar sponsored by leading medical cannabis cultivator Cresco Labs (March 2016)
  • Spidell Webinar Tax Series (Spidell, 2015)
  • Ethics in Tax Practice (Illinois CPA Society, 2015)
  • Cannabis And The IRS – Understanding The Tax Implications Associated With Various Investment Options (Investing in Medical Cannabis Summit, New York – Princeton Club, 2015)
  • Guiding Clients Through Legal Matters While They’re Abroad (Lorman, 2015)
  • Internal Revenue Code Section 280E (Marijuana Investor Summit, 2015)
  • IRC Section 183 Hobby Loss Rules (Lorman, 2014)
  • Post IRS Voluntary Disclosure Initiative and Your Client’s Foreign Bank Account (Chicago Bar Association, 2012)
  • Understanding Personal Liability for Business Taxes (Chicago Bar Association, 2012)

Publications

  • “For Caterpillar, Federal Raid May Mean More Than Tax Trouble,” Law360 (March 2017)
  • “Gifts From United States Taxpayers to Non-Resident Alien Spouses Are Not Income,” CPA Magazine (2017)
  • “Long Awaited Partnership Audit Regs No Longer So Welcome,” Law360 (January 2017)
  • “4 Things To Consider When Amending Partnership Pacts,” Law360 (April 2016)
  • “Rising Star: Arnstein & Lehr’s Adam Fayne,” Law360 (April 2016)
  • The 8 Biggest Tax Mistakes,” Men’s Journal (March 2016)
  • “Medical Cannabis: What Doctors Need to Know,” TheChicagoDoctor.com (February/March 2016)
  • “Will You Owe More In Taxes Next Year,” TheStreet.com (2015)
  • “5 Things to Do If You Get a Letter From the IRS,” Chicago Tribune and Huffington Post (2015)
  • “Pot’s legal. How to finance it?” Crain’s Chicago Business (2015)
  • “The Marijuana Industry and Internal Revenue Code Section 280E,” CPA Magazine (2015)
  • “Representing the Audited Taxpayer Before the IRS,” Thomson West (contributing author 2006-2015)
  • “Representation Before the United States Tax Court,” Thomson West (contributing author 2006-2015)
  • “Representation Before the Collection Division of the IRS,” Thomson West (contributing author 2006-2015)
  • “Justices Tank $1B In Severance Pay Tax Refunds,” Law360 (2014)
  • “When they were rich: Madoff’s ’04 Tax Return,” USA Today (2013)
  • “Current Environment of the Offshore Voluntary Disclosure Initiative (OVDI) Opt-Out and Civil Exam Cases,” CCH Journal of Tax Practice and Procedure (2013)
  • “Court Ruling Buoys IRS’s Hard Line on Deferred Compensation (409A Enforcement),” Compliance Weekly (2013)
  • “IRS FBAR Disclosure Program Misses Opportunities,” Forbes (2010)
  • “How to make a Voluntary Disclosure to the Internal Revenue Service” (June, 2009)
  • “Taxation of Lawsuit Recoveries,” CCH Journal of Tax Practice and Procedure (April-May 2008)
  • “Are you a real estate professional? Does the IRS Agree?” (March 2007)

Education

Chicago-Kent College of Law (J.D. with honors, 2003)
University of Arizona (B.A., 1999)

Bar Admissions

State of Illinois
State of Florida
U.S. District Court, Northern District of Illinois
U.S. Tax Court