Editor’s Note: The following is a lightly edited and abridged version of the May 2018 Tax Bridge to Practice conversation between Kelley C. Miller, Reed Smith, Washington, DC, and Drita Tonuzi, Deputy Chief Counsel for Operations at the Internal Revenue Service.
Kelley C. Miller (KM): It’s a great pleasure to speak with Drita Tonuzi, Deputy Chief Counsel for Operations at the Internal Revenue Service, a person that many of us know very well from signing pleadings that we receive for the Service, business and litigation. Drita is one of those forces of nature. When I started my practice about a decade ago, Drita Tonuzi was everywhere. She was in court, she was at ABA meetings, she was speaking, she was from the government, and she became, for me, a role model of excellence in practice and commitment to service.
Drita Tonuzi (DT): It’s a real honor to be here. But before I get started, I just want to make a public announcement since we are talking about careers: the Chief Counsel is privileged to have some postings for positions across the Associate Chief Counsel in a variety of organizations, including Corporate and PSI. If you know anyone who wants to start a career in the government and wants to work on tax reform, this is the right time. We’re also fortunate to have some positions for field folks, for litigators, in Atlanta, Chicago, Newark, San Diego, San Francisco, Seattle. Cathy Fung of course is a representative of LB&I and will tell you, come to LB&I. I also want to acknowledge Emin Toro, our Tax Court nominee.
KM: Thank you so much, Drita. The tax “Conversations With” program is really about getting to know our interview subjects, so we start with some questions that are not often heard at ABA panels. Could you tell us a little about where you were born and where you grew up? I know that, for you, that’s a very interesting answer.
DT: It is. I grew up in Brooklyn, New York, but that is not where I was born. I was born on the outskirts of Paris in a tiny town called Sucy-en-Brie. My parents were escapees from communism in the country of Albania. That’s Emin Toro’s and my connection: he’s the only American-Albanian tax lawyer that I know, other than myself! I spent the formative years of my life in France. Every country has flaws, but France has an incredible education system. I got an incredible start in France. Apparently I was a smart, young French person, although I’m not a French national, so I accelerated and jumped a class. I had a great beginning in France. When I came to the United States, unfortunately, my immigrant parents, traveling with a large family across the Atlantic did not have any records to show that I had accelerated. I was placed in the proper age class. It was all for the good. My teacher, Mrs. Wolf, spoke fluent French. What a great pairing! I had a really great start.
KM: It was meant to be.
DT: It was meant to be. Then I spent that first summer in Buffalo, New York. So that is why you probably think I have a little bit of an accent, but I don’t have a thick Brooklyn accent because I learned English in Buffalo. That was my start in the U.S.
KM: At what point did you decide about law? In your growing-up years, when your parents came over, did you have exposure to lawyers or the tax system? Or was there anything in your early upbringing that influenced your decision to go to law school and then, eventually, into tax law?
DT: Absolutely none. I do remember a pivotal moment, again reminding you that the education system really taught me that there were no limits and that I could do whatever I wanted. I remember an aunt saying to me, “Oh Drita, you’re so great, you will make a terrific secretary or stewardess or nurse.” That was a pivotal moment. I said to her “Oh, actually I’d rather be an attorney, a doctor, or an engineer.” That was the moment in time where I said there are no barriers for me, as an immigrant, because I am an immigrant, naturalized, or for a woman. So I decided right then and there that I would be a lawyer. I have always fought for the underdog, whether it was in school or in my community. I was always the one who was defending the rights of the underdog. And I had a very strong sense of right and wrong from my family, notwithstanding that my family was not well educated. They had a very strong sense of fairness, equity, always doing the right thing. I think that’s really something that has carried through, and I’m very proud of that.
KM: How old were you when you had that conversation with your aunt?
DT: I was about nine years old. I decided I was going to be a lawyer at that age. Then I really set my mind to doing it. I was, in my family, the first college graduate. My parents couldn’t really afford to send me to school, so I applied to Brooklyn College which was free at the time; there was no tuition. Of course, as soon as I got there they imposed tuition. I remember participating in a protest opposing tuition. But it was de minimus: I forget the number, but it was around $600.
KM: We would gladly pay it today.
DT: We absolutely would gladly pay it today. I got a terrific education at Brooklyn College. Then, for the same reasons, I had to look for a law school that was within my ability to pay. That brought me to Brooklyn Law School: at the time, I think the tuition was $3200 a year. It’s not that long ago; I’m not that old. And once you started with a certain tuition, it carried through your entire three years. I don’t think it works that way anymore: I was able to get a full law school education for under $10,000. Then of course I went to NYU for the tax LLM program. One year at NYU—it was proximate in time to Brooklyn Law—cost me over $10,000. So that shows how different the cost was.
I remember the first orientation at Brooklyn Law School. I remember feeling totally out of sorts because I went alone whereas a lot of my student colleagues came with their parents who were judges and lawyers. I remember thinking, am I in the wrong place? Do I really belong here? I have to tell you that law school was the equalizer. Because at the end of the three years, I never felt that I was in the wrong place again. We were all graduating and we were all fairly equal. Now some of us had better opportunities for jobs than others, but it was never a barrier or an impediment for me.
KM: The bar is there for everyone to pass.
DT: I did pass, by the way, on the first shot, even though like many of us, I had that experience where you think you failed and you don’t know what you’re going to do if you’re not a lawyer.
KM: The world will end.
DT: The world will end. But it all worked out.
KM: What I love about your story is that you had this fundamental sense of fairness and what was right instilled by your great parents and carried that to law school. In law school—because you did your LLM in tax at NYU—what was that moment that brought you to tax law?
DT: It wasn’t just one moment but a combination of things. I had an amazing professor, Brian Comerford. He’s passed away since then. He made tax come to life. It wasn’t boring—we all think about tax law as very number-oriented, but obviously we all know it’s not; it’s very exciting for all of us. Brian Comerford made that subject come to life for me. So I said, I think I’m going on for my LLM in tax. I didn’t take the full complement of tax classes that Brooklyn Law School offered. I did eventually go back to Brooklyn Law School to teach as an adjunct, and so I created their tax practice and procedure class and taught it for ten years. I probably would have benefited from a class like that [when I attended law school]. I did initially think, because of my international background, that I might want to do international law, maybe work at The Hague or the UN. That never materialized. Tax law was the direction I went in.
I went to work for a small Wall Street firm by the name of Baden, Kramer, and Huffman, headed by former AUSAs civil and criminal in the southern district of New York. They were terrific guys. I don’t think that firm is in existence anymore. It existed for almost 30 years and it’s been disbanded, but it was a great start. The subject matters that we covered ranged broadly: personal injury litigation, co-op conversions. incorporations (I even admit that I created a corporation in the Netherlands Antilles: little did I know then why they were creating the corporation there), criminal law, domestic relations, but no tax.
I remember Professor Farrell would say, “get malpractice insurance because the opportunity for committing malpractice is great when you first get out of law school.” The varied subject matter that I was expected to master. I even created the Reptile Association. I don’t think it’s called this anymore, but one of our clients had their items seized at a department store, a high-end department store that had crocodile or alligator items, I forget which. There’s an agency that regulates that. The expectation was that these were from endangered species. I had to prove that it was not a skin from an endangered species, so we created the Reptile Association. So I did it all, and I finally realized there’s too much opportunity for missteps here. I really should go back to my original thought of going into tax law. Then I went to NYU for my LLM in tax. I did that full time.
KM: That’s really fascinating. Many of the tax lawyers in this room, I would suspect, have a similar story of a professor in tax who created our love of the area that we practice in. But then you were wise enough to expose yourself to everything else, and then focus on tax and the LLM. I wish I could say I was that wise myself. I wasn’t. I ended up repeating everything. Were there certain experiences at NYU or certain courses or areas of focus that you particularly found yourself gravitating to?
DT: I had a really terrific course with NYU Professor Michael Salzman, who has since passed away. He wrote the treatise, and it was just a terrific course. I also had Professor Eustice. I had some amazing professors there. I gravitated ultimately to procedure, which is why I spent my career in tax administration. But graduating from NYU, I really didn’t expect to be working for the government.
DT: No. I did on-campus interviewing. I don’t think it was based necessarily on merit. It was based on who signed up first and very random. So I ended up with an interview with Shell Oil Company. I had no notion that I would ever move to Texas or Houston, but I was mildly curious and went to the interview. It was the oddest interview I’d ever had. I really didn’t have a strong interest in Shell or in Houston. The interviewer said, “I’ve looked over your resume, looks great. Do you have any questions for me?” That was an odd start, so I said, “no.” We shook hands and I walked out. I was totally dumbfounded when I got a call back for a second interview in Houston. I said “Hmm, okay, let me be open minded about this.” I went to Houston and I did the whole barrage of interviewing with them. Eventually, I sat down and thought about it. Am I seriously going to move to Houston? And the answer was no. I called up and said thank you very much for the opportunity to get to know you better and to interview with you, but I don’t think this is viable. I did not go to Shell Oil.
I really didn’t expect to be at the IRS either. I had a good friend who had been an IRS revenue agent, with whom I went to law school, and then he returned back as a Chief Counsel employee at the IRS. I didn’t know how well things were going for him. After I graduated from NYU, I got married, had a couple of children and had a chance to spend some time with my children which was really important. Several years after my NYU graduation, I thought, “okay, my career is careening down the tubes because I’m not in the marketplace, I’m not really competing with my contemporaries.” But now I’m here to tell you that it did not make a difference.
KM: That’s an incredible lesson to just pause and take a moment there. When you graduated from NYU, you didn’t go immediately to the Service. You took time to be with family.
DT: Yes. And I have incredible children, and grandchildren now, to prove it. Because of the work-life issues and the need for flexibility with two young children, I eventually called my friend Barry, and Barry said it was just a really great place. He had been doing a lot of litigation, and that was really my passion. I wanted to do litigation. I applied through the Honors Program. I sent my application off to Washington, DC. And believe it or not, I never heard back from Washington, DC. I think it was roughly in the late summer that I sent in my application. Finally toward the end of the year I started getting a little anxious, like many people who apply for jobs. I called Barry, and I said “Barry, I have not heard from Washington. I am interested in the Manhattan office. What should I do?” He put me in contact with the folks in Manhattan, and I was hired and started in early February.
I never did hear back from Washington, and that has left an impression with me. I’ve always taken care to tell people that it is really important to get back to people, especially if you’re not going to give them a job. Because we don’t want people to have a false sense of hope that they’re going to get a job at the Service. We do have the Career Connector, USAJobs, that is how you apply for jobs with the government. We have an electronic messaging mechanism. But to me, that is not an acceptable form of communication. I always insist that we issue letters thanking people for their applications and acknowledging that they have terrific resumes, but that we haven’t selected them for an interview. Once we do interview them, we make sure to contact them again if they have not been selected. Whether or not you have a relationship with somebody depends on whether or not it will be a telephone call or a letter. This is really important to me, because after all we are dealing with people.
KM: I think even as much as a decade ago when I went through the process at Georgetown and just anecdotally hearing from my colleagues, that wasn’t the case. People would go into that interview for the Honors Program, or they would send their USAJobs application in, and it goes into an abyss. I think that’s really an important factor. Do you also encourage people to reach out to people that they know in the Service? I think your story is so interesting because your entry into the Service was through a dear friend. Do you recommend that, as well, for people who are looking?
DT: Absolutely. Because then it’s an informed decision. You get to know what’s really happening at the IRS and whether it’s a good fit for you. Sometimes it’s not a good fit. I’ve seen that where, for whatever reason, the candidates make a great impression during the interview, but then they run up against the governmental hierarchy, protocols, and layers of review. If that’s not the right thing for you, if you are more entrepreneurial and you want to do things on your own, then government is not the right place. Everything is scrutinized fairly closely.
KM: That’s a really excellent point. Tell us a little bit about what it was like when you came to the Office of Chief Counsel in Manhattan and started into this role with the government. When you started that February, I imagine it was a very busy office with a lot of different types of cases and work.
DT: Yes. Back then, in the mid to late ‘80s, there were a lot of individual tax shelter cases, big projects. One of the first cases is an interesting story. It was a case where we had lost four years in a criminal trial. It was litigated by Michael Chertoff [former Secretary of Homeland Security, Third Circuit Judge, and Assistant United States Attorney]. Nobody wanted that case because now we had to nail down the civil aspect of the case, including the civil fraud penalty. As the new kid in town, I was fortunate to get this case. I had no clue, so of course I eagerly took the case, developed it, and had quite a number of interactions with the Regional Counsel. First, it was Jules Ritholz [a co-founder of the Civil & Criminal Tax Penalties Committee] who was on the other side of the case. It was me against Jules Ritholtz. He wrote to Agatha Vorsanger (Regional Counsel for the Northeast Region) to complain about the fact that this new attorney was refusing to settle the case. I thought I had a good case because I had read the entire criminal record, including the trial transcript. I couldn’t really understand why we lost the case at the criminal level, and I developed my civil case well. So that was my first case!
KM: There is nothing like having a major case as your first case.
DT: Yes, one of my first cases. Agatha was very supportive. She swept that aside and said “keep doing your job.” Then we were on the eve of trial. I had really delved into the facts of the case, and my recollection was that it was a specific item case. There were 1099s, lots of them, that had not been reported. The last year, more were reported. In my mind, that offered a good way to settle the case: a three-year concession by the taxpayer and a one-year concession by the government. With my manager of course, in tow, we settled the case. Then I got a call from the Regional Counsel again, and I was thrilled because I thought she was going to compliment me for a job well done. I went into the Regional Counsel’s office. I don’t know if any of you knew Agatha Vorsanger. She was a formidable litigator, a person ahead of her time. She was very stoic and said to me, “You settled this case? It was criminally referred and you did not follow the CCDM procedures of coordinating it with the Regional Counsel.” I had mis-stepped. It was a good lesson to learn early on. I apologized, of course, and said I wasn’t aware. My manager sat silent because she should have been aware. It was a good lesson early on that you’ve got to familiarize yourself with the rules that apply to your specific arena, whether it be the Tax Court rules or the Chief Counsel Directive Manual. I didn’t take it personally. I didn’t wilt; I just went forward.
KM: In fact, you succeeded greatly. You have risen up the ranks through the Service. Could you talk about your progression as a career member of Office of Chief Counsel, and how that really works? For people that are interested, either they’re in Chief Counsel now or they’re interested in going into Chief Counsel, tell us something about your career there.
DT: My story is unique and not that unique. I never, ever expected to be in Washington DC. I was a New Yorker. I started off as a litigator and expected to be in Chief Counsel for four years, because back then we had a four-year commitment. We have since changed it to three years. All my friends in the office were making their way to the private sector after the obligatory four years. There was a pull. I felt I should be moving on, but I had such a good time with cases in litigation. I have to tell you, it was really hard to get the first case in court. I would prepare the cases, and they would concede. That just kept happening. I had colleagues who didn’t want to have a first trial, and they were settling everything. Finally I got the one case that went to trial for which I felt I was 90% prepared.
KM: It’s always that way, right?
DT: Yes, but I was prepared enough. You can never prepare 100% for Tax Court because things happen during the court proceeding that totally surprise you. I had a series of trials and really enjoyed the trial work and presenting the case in the Tax Court. I contrast that to the one case I had in private practice where I presented to a jury, and that was quite different. The judges were fantastic. I appeared before a number of great judges: Judge Clapp, Judge Gerber, Judge Halpern, and Judge Tannenwald. Judge Tannenwald was a giant. I remember, he was really tough. He was particularly tough on Counsel attorneys. He knew that he could push us to do better. He called me an idiot; he told me I didn’t know what I was doing; and then we won the case. It was equal opportunity. Trust me. It wasn’t particular to me.
KM: To both sides?
DT: No, mostly the government lawyers. I always took that as a good sign that I was winning. So I enjoyed continuing to litigate. At some point I recognized an opportunity for me to leave, and knew that if I didn’t leave then I would never leave. I did jump out and go to an accounting firm, Deloitte, around 2000. I should have been really paying attention during the interview because they asked how my marketing skills were. I said “well, I’m sure they’re good. I’ve never been asked to sell anything but I’m sure they’re good.” What I later learned is I was actually starting a tax controversy practice in New York by myself with a partner in Philadelphia.
KM: Coming from the government without clients to bring?
DT: Coming from the government, correct. I tend to be entrepreneurial so I embedded myself with the Financial Services Group, and the Banking and Financial Services group, with a great partner, John Rogers. I had interviewed with him. By the way, not only did I not have a book of business, I also had no office, no support person, really nothing. I walked in, went to orientation, and then went straight to John Rogers’ office, sat down and said “okay, what do I do? How do I figure out where I’m going to sit?” The TIRE group, which was the Tax Information Reporting group, was comprised of mostly former IRS people: they had permanent offices, but they sat on a different floor. My business was going to come from that Financial Services group, so I sat with them. It was great. I figured out how to navigate. I was on their directory.
One of the things that impressed me is that the directory, within the year that I was there, completely turned over, except for the partner level. I noticed that was a trend, that there was a lot of movement. People were coming and leaving as well. Then I was that statistic, too, because I ended up going back to the government. But I did things like make pitches to the group, went to speak wherever anybody would have me, formed a group of former IRS Counsel folks at accounting firms so that we could share information, went to speak at outside venues whenever I could. Then I wrote. The IRS would periodically publish Rev Procs and other publications. I saw another opportunity for me to get my name out there. I wrote a tax alert on the comprehensive case resolution Rev Proc. I went to my partner and told him I’d written an article. He didn’t know I was doing it, I just did. I said I’d like to have it published. He said sure, go get it published. I managed to get this national article, a tax alert, published. Then I got calls asking how I did this? What happened? Where’s our quality screening process? I guess they realized that they had to tighten those procedures a little bit. I remember having people from around the country calling me asking how I did that? You have to be entrepreneurial.
KM: So they want to encourage entrepreneurship, but at the same time it sounds like this big firm also has a bureaucracy.
DT: Protocol, right. From there I went back, and at a time when the IRS was changing. I left before Stand Up. For those of you who were around when RRA98 (The Internal Revenue Service Restructuring and Reform Act of 1998) was passed into law, the IRS changed dramatically. So the IRS stood up brand new divisions including LB&I (Large Business and International), SBSE (Small Business/Self-Employed). The structure that we know today stood up around the 2000 timeframe as a result of RRA98. I remember Chief Counsel followed the structure that the IRS put together. I was interacting with my former colleagues and they were telling me how exciting things were. They were forming a new organization, figuring out how to proceed in that context, connecting and having a strong relationship between Counsel in the field and the IRS. I thought that sounded exciting, and so I went back.
After that, things really snowballed for me in terms of my promotion opportunities. I became a Senior Counsel fairly quickly. I then did something that was unusual for the government. Senior counsels are the folks who are doing the work at a higher level. They get the better cases, but they are only accountable for their own cases. I decided I was going from Senior Counsel to a manager position, because I wanted to pay it forward. I wanted to make sure that I had a chance to help develop new attorneys. As the newest manager, I got the thankless task of being the intake person. When the IRS had a question, they would come through me and I would make sure I assigned the case. It was very informal. I would ask the other managers in the office: I’ve got this case, really important, do you have someone to take it? The answer was always no, so I’d assign it to my new attorneys. Some of my new attorneys were dealing with really huge cases. At some point people realized that my group had all the good work, so we created another system for allocating the work more equitably. But it was really important to me to develop my people. My former lawyers still come to me and say “thank you very much; it was just a really great start.” Some have moved on; some are still here. I have maintained great relationships with all of them.
KM: In your role today as Deputy Chief Counsel of Operations, what do you find most rewarding and exciting about what you do? And if you could change anything about the job or the tools or the resources or the circumstances of doing it, what would it be?
DT: What I find most rewarding is interacting with the folks. Because in the end it’s about people. I always appreciate helping to make our attorneys’ jobs easier, in small ways and in big ways. I’m all about efficiency, making sure that we are putting the right people on the right cases. One of the things I recently did is see that we’ve got great litigators in SB and we’ve got great litigators in LB&I. The LB&I folks are called Special Trial Attorneys, but in SBSE, we don’t have any Special Trial Attorneys. I wanted to create a Special Trial Attorney program. Of course, I had an ulterior motive. Not only did I want to elevate their standing, but I also wanted us to put some more discipline around the cases we bring forward in litigation—putting our best resources on the most significant cases.
The same thing happened on the whistleblower side. When the whistleblower law first got enacted, the belief was that it would be more in the nature of a contract action. We put that work in our General Legal Services group. These are labor lawyers. They had to learn a new area of litigation—Tax Court litigation. And Tax Court litigation is unique. You know, it has its set of procedures and rules. I think they did a fine job, but they were a much smaller group, so they didn’t have the capacity to expand as the work increased. The work started to increase in the whistleblower arena, so we shifted that work to SBSE and LB&I. These are the Tax Court litigators that we have in Chief Counsel. I’m looking for ways to improve how our attorneys can do their jobs in small and big ways.
KM: So, what frustrates you? If you had the ability to wave a magic wand and change something right now, what would it be?
DT: One of the questions that you haven’t asked is what was a pivotal moment early on. We had Bob Marino who told us to be proactive. The way he said it was “don’t be a glue butt.” That really resonated with me. It’s been at the base of everything that I’ve achieved and done. You’ve got to be very entrepreneurial, proactive, within the constraints and the rules of the road. So I’m frustrated when people think “I can’t do it. It can’t happen. It’s too difficult in this structure. There are too many layers of review.” If I had had that attitude, we would not have made any inroad in the tax shelter arena, in the promoter penalty arena. You just have to go, and you have to make it happen. That’s my approach: you make it happen. I really get frustrated when we give our client advice where they’ve asked the question and we say it can’t be done. Okay, fine, that may be right. That’s the right legal answer. But what can they do within the confines of the law? What options do they have? There’s always an option. It’s not like it can’t be done and that’s it; let’s move on. There are times when it can’t be done, but at least you have to explore every opportunity.
KM: I think it’s a real revelation to hear that. Do you find that’s a unique perspective that you have in government? Is it changing more?
DT: No, I think we have a lot of folks who are very open minded.
KM: Good, that’s great. Because you’ve had a great career and a lot of different experiences, what would be the best advice that you would give to someone right now who is looking to join the government, or, just in general, to a member of our bar?
DT: I’ve done a lot of interviewing for attorney positions and other positions. What I look for is folks who really want to be tax lawyers, number one, and in public service. It’s got to be genuine. Obviously, I appreciate that people want to come here and stay for a short time, and we do hire folks like that. But I want people who really want to do this. When you’re interviewing, make sure you really understand the organization and that you’ve done your due diligence. Expect the question, what have you done to prepare for this interview? Maybe talking to somebody in Chief Counsel who has been with the organization a while is helpful.
KM: There was that moment in your career where you were reminded of the protocols you needed to follow. What other piece of advice would you take and give to anyone on the bar?
DT: Whatever you do in life, you have to have fun doing it. I can tell you 100%, maybe not every day, but most days I have had fun doing my job. it’s presented the opportunity for me to make connections with the people that are around me. Because in the end, that’s what it’s abouDT: making connections with people, and making a difference in the law. Have fun and connect with your boss and your boss’s boss. Really enjoy what you’re doing. Once it stops being fun, then it’s time to move on.
KM: As a last question for you, if you could look into the crystal ball and project out for us what you think will be the greatest challenge or opportunity or incident that’s going to come into tax practice from the government, or in private practice in the next few years. What do you think we’re going to all be focused on?
DT: So instead of calling it a challenge, I’m going to call it an opportunity. I am so looking forward to getting past the implementation of tax reform, having the rules in place, and maybe starting down the litigation road in tax reform. I am also extremely excited about Chuck Rettig and Mike Desmond coming on board. I know them both. I think they are phenomenal. I hope that their confirmation process is quick and smooth, and they get on board. Because I think they have an opportunity right now to take this organization in a positive direction. I’m very hopeful and excited. We hopefully will have an opportunity to hire more people, not just at Counsel, but at the IRS. It is an ecosystem. The fewer agents that there are, the less work that is generated, the fewer enforcement dollars that are collected, the less work there is for us and the less work there is for the outside bar. So it is an ecosystem, and really it’s an important ecosystem.
KM: I want to thank you so much for not just your time but ending on that note of mentioning Chuck and Michael. These are wonderful and approachable people.
DT: One last point. Wherever you are, pay it forward. Help the folks who are behind you and alongside of you to move ahead.