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. /p>
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.
KM: Really?
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.