Recyclers Claim IRS Stuck Them With $22M In Other Co.'s Taxes

Shahzad Malik, chair of Stradling’s Tax Practice group, was quoted in a January 13, 2017 Law360 article regarding a group of California recycling companies who are suing the U.S. government over a $22 million federal tax liability, claiming that the Internal Revenue Service is falsely accusing them of being alter egos of the company responsible for the bill. Malik, the lawyer for one of the recycling companies, told Law360 that the IRS has given the companies no evidence to support its claim that they are alter egos of Dalton West Coast Inc., a defunct document destruction company that allegedly accrued $22 million in as-yet-unpaid tax liability in 2006. “This is a simple case of government overreaching," Malik said. "We sought to resolve this through multiple administrative efforts. We went to great lengths to engage with the government to avoid this litigation. We were provided with no meaningful response from the government to justify their actions. We had no choice but to file suit to defend our clients' business."