Key takeaways
PwC described the proposed tax strategy as “very aggressive” and expected the IRS to challenge it.
The firm nevertheless advised that, if the strategy failed, the resulting tax liability would be corporate rather than Michael Tricarichi’s personal liability.
PwC was not found liable for its original advice because the main claim was brought too late.
PwC has won what may be the final round of litigation arising from tax advice it gave more than two decades ago.
On 18 June 2026, the Ohio Court of Appeals affirmed summary judgment against Michael Tricarichi, the former owner of West Side Cellular. His fraudulent-inducement claim against PwC was barred by res judicata: the dispute had already been litigated in Nevada and could not be pursued again under a different legal theory.
The Ohio ruling did not examine whether PwC’s original advice was sound. Claims directed at that advice were dismissed in Nevada because they were filed too late.
The court record shows what PwC knew before the transaction went ahead.
The firm described the buyer’s proposed tax strategy as “very aggressive tax-motivated”, expected the Internal Revenue Service to challenge it and did not say that the strategy was more likely than not to succeed. According to the US Tax Court’s account of an internal PwC memorandum, the firm advised that failure of the strategy was not Tricarichi’s concern because the resulting liability would belong to his company.
PwC did not devise the arrangement, and no court has found the firm negligent or fraudulent. Tricarichi was also a sophisticated businessman represented by lawyers and other advisers.
PwC had nevertheless identified the risk. It continued advising on how that risk might be contained.
Source note
The original PwC memorandum does not appear to be publicly available. The quotations in this article come from the Tax Court’s description of the document, reproduced in Appendix E to Tricarichi’s later petition to the US Supreme Court.
The Tax Court said the memorandum went through several drafts and that PwC discussed its conclusions orally with Tricarichi. It also recorded that PwC did not provide him with formal written advice.
What PwC advised
West Side Cellular had received approximately $65 million from the settlement of an antitrust dispute. Tricarichi, its sole shareholder, faced a substantial tax charge if the money was extracted from the company through conventional means.
His brother, James Tricarichi, introduced him to Fortrend, a specialist promoter proposing a transaction intended to reduce that liability. PwC was retained to examine the deal and advise on its tax implications. It did not negotiate the price paid for Tricarichi’s shares.
Tax professionals from several PwC offices worked on the internal memorandum. They considered how the buyer intended to eliminate West Side’s tax liability and whether the transaction had to be reported to the IRS.
PwC concluded that “a position can be taken” that the transaction was not reportable.
The Tax Court treated this as a notably weak formulation. It observed that virtually any position could be taken and contrasted PwC’s wording with the recognised standards used to express confidence that a tax position would survive scrutiny.
The memorandum also considered the buyer’s proposed method of removing West Side’s tax bill. PwC described it as a “very aggressive tax-motivated” strategy and expected the IRS to challenge the deduction on which it depended.
PwC did not indicate that it considered the strategy “more likely than not” to succeed.
The firm had identified a strategy close to the limits of what it believed could be defended under tax law. Its memorandum nevertheless said “this is not … [Tricarichi’s] concern” because any tax resulting from the failure of the strategy would be owed by West Side rather than by Tricarichi personally.
The quoted passages appear in the Tax Court opinion reproduced at Appendix E, page 43a, of the Supreme Court filing.
PwC was not assuring Tricarichi that the tax strategy would work. It was advising that the consequences of failure should remain with West Side after he had sold his shares.
That reasoning depended on treating Tricarichi and the company as separate. He would receive the value held inside West Side. The purchaser would take control of the company and its tax affairs.
If the strategy failed, however, West Side would still owe the tax but would no longer have sufficient assets to pay it.
The courts looked through the sale
The Tax Court and the Ninth Circuit focused on the economic result rather than the formal steps recorded in the sale documents.
The Ninth Circuit upheld the finding that West Side’s cash had effectively been transferred to Tricarichi. It agreed that the transaction “lacked a non-tax business purpose or any economic substance other than the creation of tax benefits.”
Tricarichi had received approximately $35.2 million. The tax, penalties and interest for which he was ultimately held liable totalled approximately $35.1 million.
The corporate liability that PwC believed would remain with West Side followed the company’s value to its former shareholder.
The Tax Court was also highly critical of Tricarichi and his advisers. It found that they had encountered significant warning signs but failed to investigate Fortrend’s plans adequately.
PwC had declined to provide more-likely-than-not assurance. Tricarichi’s lawyers had also tried to include a provision preventing West Side from entering a listed tax transaction after the sale, but Fortrend refused to accept it.
The court concluded that Tricarichi and his advisers had engaged in wilful blindness. When asked about Fortrend’s plan for eliminating the company’s tax liability, Tricarichi said “that was their business”. The passage appears at Appendix E, page 77a, of the Supreme Court filing.
Those findings place substantial responsibility on Tricarichi. He understood that the transaction offered an unusual tax benefit and proceeded despite warnings about the buyer’s plans.
PwC’s contribution was narrower. It did not promote the arrangement or negotiate its commercial terms. It assessed whether the transaction had to be reported, considered the strength of the buyer’s strategy and advised on whether a failed tax liability could reach its client.
For Tricarichi, PwC’s assessment may have supplied the reassurance needed to proceed. A client considering a transaction at the margins of the law may not need a Big Four firm to invent it. The firm’s value lies in assessing whether the arrangement can be defended and whether the risks can be contained.
Why PwC was not held liable
Tricarichi sued PwC in Nevada in 2016, alleging that the firm had negligently advised him to proceed with the 2003 transaction.
The claims directed at PwC’s original advice were dismissed because the Nevada courts found that they had been filed outside the applicable limitation period. There was no trial examining whether the firm’s 2003 work met the required professional standard.
Tricarichi also brought claims based on PwC’s alleged conduct from 2008 onwards. Those claims did proceed to trial. The court found that he had failed to establish duty, breach, causation or damages, and the Nevada Supreme Court upheld the material rulings in 2025.
The Ohio proceedings represented another attempt to pursue the dispute. Tricarichi alleged fraudulent inducement, including claims that PwC had failed to disclose evidence concerning its treatment of similar transactions.
The Ohio Court of Appeals held that he could not reopen matters arising from the same transaction after the Nevada litigation. It affirmed summary judgment for PwC on the basis of res judicata.
PwC has therefore prevailed throughout the litigation. The later claims failed following a trial, while the claim attacking the original advice was dismissed as time-barred.
The courts established that Tricarichi could no longer recover from PwC. They did not decide that the firm was right to continue advising around a transaction after describing its central strategy as very aggressive and likely to be challenged.
The UK debate over aggressive tax advice
The same tension between legal supportability and professional responsibility emerged in the UK a decade later.
In January 2013, the heads of tax at PwC, Deloitte, EY and KPMG appeared before the House of Commons Public Accounts Committee to answer questions about their firms’ role in tax avoidance.
Austin Mitchell MP challenged the emphasis placed on whether tax advice was legally supportable.
“Advice is legal until it is struck down by a court,” he said. “Many of the schemes you are selling are potentially illegal because they could be struck down.”
Kevin Nicholson, then PwC UK’s head of tax, replied that the firm operated under a code of conduct and that its advice had to be “supportable in law”.
Committee chair Margaret Hodge then said someone working at PwC had told her the firm would approve a tax product where there was a “25% chance—a one-in-four chance—of it being upheld.”
Nicholson rejected the claim.
“I don’t recognise that statement,” he said. He also denied that PwC produced, promoted or mass-marketed tax products.
Nicholson said the firm’s advice had to be supportable in law, fully disclosed and based on the client’s individual circumstances. PwC also had to explain the tax, commercial and reputational risks.
The 25% figure was an allegation attributed to an unnamed PwC employee. It was not an admitted policy or a finding by the committee, and there is no evidence that PwC applied a comparable percentage to the Tricarichi transaction.
The hearing exposed a basic disagreement. PwC defined its responsibilities largely through legal supportability, disclosure and an explanation of risk. Members of the committee questioned whether that standard allowed firms to facilitate arrangements that might comply with a technical reading of the rules while defeating their intended purpose.
Beyond legal supportability
Tax advisers routinely help clients claim legitimate reliefs, arrange genuine commercial activities efficiently and challenge doubtful interpretations advanced by tax authorities. A disputed position is not necessarily an improper one.
PwC’s own description placed the Tricarichi transaction in a different category. The firm expected the central strategy to be challenged, labelled it very aggressive and declined to say that it was more likely than not to work.
It continued advising because it believed the resulting tax liability would remain with West Side.
There is no suggestion that PwC regarded the transaction as criminal. In tax practice, “very aggressive” generally describes a position near the limits of what an adviser believes can still be defended.
PwC did not recommend stepping away from the transaction. It focused on whether the tax bill could be kept separate from the client who would receive the company’s value.
That may have satisfied the firm’s test of whether a legal position could be supported. The courts later held Tricarichi liable as a transferee for West Side’s unpaid tax liability.
Tricarichi can no longer recover from PwC through these proceedings. The Tax Court’s account still shows a firm advising around a strategy it expected the IRS to challenge because it believed the resulting tax bill would remain with the company.
The courts later held that the liability followed the company’s value to Tricarichi.
This article is part of the Big4News Investigations & Analysis series, which examines the structural forces shaping Deloitte, PwC, EY and KPMG, drawing on documented evidence, regulatory records and case studies to analyse audit quality, governance, incentives, culture and accountability.
About Claudine Cassar
I’m a corporate anthropologist and former Deloitte equity partner. I sold my technology business to Deloitte in 2016 and led the Malta Consulting team for five years. I am the founder and editor of Big4News, which provides independent, clear analysis of PwC, Deloitte, EY, and KPMG — free from corporate spin.
Find me on LinkedIn, X, Instagram, or my author website.
Feel free to reply to this newsletter — I read every reply.