Richard M. Goldstein is chairman of the Tax and Estate Planning group in Bilzin Sumberg Baena Price & Axelrod's Miami office and represents numerous family businesses, U.S. residents and nonresident aliens, multinational entities and both publicly and privately-held companies. Goldstein frequently handles complex tax planning and structuring involving corporate mergers and acquisitions, as well as matters involving partnerships and limited liability companies. He has lectured frequently throughout Florida on tax and estate planning with respect to closely-held businesses.
Goldstein was instrumental in advising local operating partners in connection with a joint venture with a Fortune 100 company for the acquisition and development of power generation plants. He recently handled the sales of two mid-market companies in the promotional products business and the money wire transfer industry to private equity firms, as well as the complex reorganization of several multinational entities.
Goldstein has also advised on the tax structuring involving a multibillion dollar cross-border privatization. His practice also involves audits, the structuring of business entities and the preparation and negotiation of partnership, shareholder, acquisition, employment and option agreements. Goldstein has been consistently recognized by legal publications including Chambers USA, The Best Lawyers in America and Florida Super Lawyers.
Q: What is the most interesting or challenging tax problem you've worked on to date?
A: One of the more interesting tax issues I deal with in my practice, as a result of representing a large number of clients involved in cross-border activities, is the issue of developing tax plans that utilize treaty jurisdictions. Most recently, I worked on matters helping a U.S. company that was a establishing a distribution and sales facility in South America create an ownership structure that allowed it to defer paying federal income tax and reduce the tax rate on funds that would need to be repatriated in the future. The tax rate was reduced to 20 percent, down from 35 percent.
Structuring the ownership required imposing a treaty jurisdiction that wasn’t subject to the common anti-treaty-shopping provisions, which limits tax treaty benefits for multinational firms based in third-party countries. Having practiced international tax law for decades, I knew Poland was one of the Eastern European countries that still applies an old treaty that allows foreign investors to repatriate profits at a reduced withholding rate. In this matter, I also worked closely with counsel in Poland. Our firm has a large number of Russian speaking corporate and tax lawyers, so we have great synergy with various counsel that we work with in Eastern European countries.
Q: Currently, what is a pressing tax concern for your clients, and how are you addressing it?
A: The biggest concern right now is amending estate plans before year end as a result of the recently increased tax rates for taxpayers with taxable income over $390,050, including an increase in tax rates on long-term capital gains and dividend income. So right now, I am working with many of my clients to identify ways to mitigate liability amid an environment of higher tax rates. As an example, I recently dealt with a client who expatriated to the Caribbean in order to reduce his tax exposure.
He was in the process of selling his multimillion dollar U.S. business and was facing nearly $50 million in exit taxes tied to giving up U.S. citizenship permanently. Part of the problem was he had to pay taxes on his company’s appreciated assets at a mark-to-market value. That would have generated a colossal tax bill, taking into account that my client had started the company from zero and grew it to nearly a $200 million operation. My team and I were able to develop a structuring device to mitigate that tax impact. It was very challenging to create that tool, but the effort paid off as we are using that formula to help other clients as well.
Q: What do you anticipate being the biggest regulatory challenge in your practice in the coming year and why?
A: With the federal income tax rate on the rise the challenge is to persuade wealthy individuals not to give up their citizenship to avoid paying the higher U.S. taxes. That truth is especially important among U.S. taxpayers living abroad, who are required to pay taxes on their worldwide income to the Internal Revenue Service in addition to paying taxes in their adopted country.
I have clients who initially thought expatriation was the only way to reduce their U.S. federal income tax liability, but that is not correct. My challenge is reaching out to people like them with an alternative, which entails becoming a “bona fide” resident of Puerto Rico. One of the requirements for that is residing in Puerto Rico for at least 183 days during the taxable year. This option allows wealthy individuals to keep their citizenship and eliminates federal income tax on income derived from Puerto Rican sources and avoid federal income tax on U.S.-source capital gains. This alternative has been particularly helpful to my high net worth clients with significant capital gains from stocks and securities.
Q: Outside of your own firm, who is an attorney in your practice area whom you admire, and what is the story of how s/he impressed you?
A: I admire Bill Rohrer, a shareholder with Carlton Fields in Miami. He is also an international tax attorney, and I respect his understanding and knowledge of several tax jurisdictions. I was fortunate to be co-counsel with him in several cases in the past five years. Our cases involved tax jurisdictions like Cypress and Israel. He is very professional and easy to work with. Spending time with him, gave me a great opportunity to expand my knowledge of tax law concerning other countries.
This article is reprinted with permission from Law360.