Insights from a Transactional Tax Attorney on a Career In Tax Law

Episode Notes

Transcript

Montana Funk:

Listeners in this episode, I sit down to discuss tax law with Anthony DeRiso, Anthony practices in the area of tax controversies, tax Litigation, and criminal tax matters before the Department of Justice and the IRS. I hope you look forward to our conversation today. This is Young Lawyer Rising from the ABA Young Lawyers Division and Legal Talk Network. Welcome back listeners. I’m your host, Montana Funk. Anthony, welcome to the show.

Anthony DeRiso:

Thank you for having me.

Montana Funk:

I’m very excited to have you here today talk about honestly an area of law that I am not very familiar with and it’s a very daunting area of law to me that being tax. So before we get into the nuances and all the specific details about this, I want you to tell our listeners just briefly how you got into this area. To me it seems terrifying and numbers are scary, so I’m always intrigued.

Anthony DeRiso:

That’s a very good question because it’s not an area of law I always thought I would’ve ended up in. Definitely it has a perception of being kind of scary. For some reason people think there’s a lot of math involved, which is not really my case, but how I got here that you’d have to go back through undergrad, I had a very strong interest in economics, and so part of that is you have public policy and public policy of course entails tax because you can’t pay for all these fund policies without some sort of revenue. So that was my actual initial interest. I spoke with the professor and economics professor about that interest and he actually recommended to me tax law is something that I’d be interested in. Fast forward a few years, I ended up at law school and I figured it’d be something I’d just try out.

Probably not something I would master, but something I would at least dip my foot in. And I actually turned out to it quite a bit. I took as many classes as I could as a jd, but even beyond that, it wasn’t really something that I thought I’d be practicing. It was just more of an interest. And then fast forward a few more years now that I’ve graduated, I’ve started my job. I was lucky enough to be able to go to a firm that allowed me to kind of play around between the various practice groups. And so having taken a few tax classes, I thought tax might be one that I should at least get some experience in. I know that tax touches obviously everything, so I thought at the very least I have some good exposure. I haven’t really looked back since then. The subject matter I find very interesting.

I’m a person who I like puzzles. I like being able to solve problems, and if that’s sort of your personality, then tax is probably a good place for you because that’s really what it is. The tax code, the regulations is really just a bunch of roles that you get to look within and kind of find an answer. It’s a closed universe. It’s not really one of those areas of law where the answer isn’t out there, the answer is out there. You just kind of have to dig in through this finite universe and find it. And so that’s kind of my overarching story of how I got here. One thing I’m proud of in it is that it was an area of law that I was able to choose. If I was told more or less to do tax law, I’d probably be a teenager with their parents and probably wouldn’t like it very much. But because I got here on my own, it’s a choice that I’ve since felt validated in making.

Montana Funk:

No, absolutely. It kind of sounds like you were at a firm that gave you the ability to grow into an area that you actually felt passionate about.

Anthony DeRiso:

Exactly.

Montana Funk:

Yeah, though that’s awesome. And it’s something you said was tax touches everything. So something that I think maybe a lot of our listeners aren’t aware of is when you say that, when I think tax law or when I think some of our listeners think tax law, they probably just think transactional, right? You’re just, like you said, it’s not math, but people think that it’s just transactional. So can you explain to our listeners, are there other areas? Can you do it criminally? Can you do it civilly? Can you do Litigation? What exactly is tax law?

Anthony DeRiso:

Well, tax is huge. I mean, it’s an old saying and it’s cheesy, but two things in life, death and taxes. So yeah, there’s a transactional tax and you’re correct, and that’s what most people think of when they think of tax, and that’s an exciting area of the law in that if you’re a transactional tax attorney, you’re really kind of like a coach. You’re the one who knows the rules, the tax code and the regulations, and you kind of draw up a game plan for whatever the transaction is going to be based off of those roles. And all of the other attorneys out there who have different specialties kind of look to you to put together that game plan and then they go out almost onto the field to implement it. So that is sort of the role of a transactional tax attorney, and it’s very fun if that’s what you like to do, but it’s not by any means every role within the tax space.

So I’m in a field that’s known as tax controversy. It’s a fancy name for being a tax litigator. I don’t know how it got that name to be honest, but that covers both civil and criminal Litigation. On the civil side, you’re primarily dealing with the internal Revenue service. You’re dealing with audits and exams, and what that means in practice is that you’ll be sitting at your office and then you’ll receive an email or a phone call from a very stressed client who just received some sort of notice from the IRS and they’re looking for your guidance, your help. And so it’s not so much on the transactional side. You’re figuring out which corporation to use as a blocker and this and that. On the controversy side, there’s more of a human element to it. You’re trying to figure out these people have issues, they’re very stressed. How can we identify these issues, formulate a game plan, how are we going to explain what actually happened here to the IRS and go forward? So it’s sort of a different process. And then of course there is a criminal element to it. I’m sure you’ve all heard of tax evasion cases. There’s some very famous ones out there, obviously going back to the forties at the mafia even. So it’s a very broad field and it really does touch everything.

Montana Funk:

Something that I am curious about is, well, it’s kind of a two-part question I have, so I’ll say it and then we can kind of answer it in the parts. So it sounds like the way your firm was when you first started was very giving in the sense that we talked about before, let you explore these areas. And something I’m curious about is you had mentioned you get to help people doing some of the tax stuff that you’re doing when you’re doing tax controversies, actually helping people who are stressed, going through really important parts of their life. Did your firm paint it in a way or paint I guess your practice in a way that let you actually try these different areas of tax law or how did you realize, hey, there is this area that’s not just transactional, but that’s actually going to help people and help make you feel that you’re actually doing something for a certain person?

Anthony DeRiso:

Yes and no. It wasn’t as if they went out and advertised that, oh, you want to do tax? Well, here’s this other area within it, controversy and transactional tax kind of work hand in hand. They’re kind of different faces on the same coin. So when you’re a transactional attorney, you’re kind of at the beginning of the process, someone comes to you with an idea and they look to you to implement that idea, what’s the best way to go from A to B in the most tax efficient manner? Fast forward a few years, the IRS or the Department of Justice might come back and start looking at what that transaction was, and they may not always agree with the characterization that was done on the transactional side. And so here is where the controversy, the litigator comes into play, they are tasked with defending that same exact transaction which already took place.

So almost you’re a forensic investigator in a sense that you have to undo and undo the transaction that occurred and figure out why it occurred, because usually there’s not always tax reasons that dictate why a transaction plays out the way it does. So you have to figure out all these underlying reasons. Then you have to almost put together the story as to why it happened in a way that explains it to the IRS or to the DOJ and in a way that shows that you’ve done everything within the balance, the tax code, so you really are on the same different sides of the same coin. It’s the same facts. You’re just one’s at the beginning, the other’s at the end. It’s almost as if you’re looking at it through a life cycle. You begin with the tax transactional person and then you hopefully never get to the controversy side. But if you do, they’re there to help with any of those issues.

Montana Funk:

No, that’s super interesting. I want to take a quick break, but when I come back, I do want to kind of talk a little bit more about this. So before the break, we were talking about how it’s kind of two sides of the same coin. Having this, you start off transactional and then hopefully nothing happens. But if something does, then that’s where the person who’s litigator would kind of come pick that up. And like I said, I’m kind of naive to the whole tax realm. So explain to me in our listeners, are you the attorney that’s doing that starting point and then also ending the lifecycle, or is there separate attorneys that are jumping in at different points

Anthony DeRiso:

That is really fact specific? There are some people that only do transactional work. A lot of times people love the problem solving aspect of being a transactional attorney. They like being sort of the coach game planning what the transaction’s going to be, but they don’t necessarily want to get up in court if it comes to that. Then there’s the flip side of that where there are people who, they are the true litigators, they enjoy persuasive writing, but they don’t necessarily want to put together all of the structured charts. And then you find people who are in between who do both, who do everything. And so it really runs the gamut. Practically speaking though, the larger the transaction and these can get very, very complicated. There’s going to be a lot of people involved. So sometimes the same law firm will do it from start to finish. Sometimes they might not have the capacity or the resources to do everything. It’s really fact specific.

Montana Funk:

No, that’s really good to know. And the reason why I ask is because I think we’re going to have some listeners who are like, Hey, maybe this is going to interest me, or maybe law students who are like, wait, do I want to try this out? And just giving them guidance on how they would approach, whether it be a new job or their current firm and say, Hey, look, there’s this area. I’m really into the Litigation aspect of it. I want to be in a Courtroom. Or someone’s like, I don’t really want to do that, but I actually want to be behind the problem solving. So I think that that’s important the way you explained it for our listeners to be like, yeah, there are certain parts and it kind of depends on where you are, but knowing that there’s the option to be fully involved in it or separate, it’s kind of at least the way I’m interpreting it.

Anthony DeRiso:

Nope, that’s the correct way.

Montana Funk:

Okay. And even talking about tax law is confusing, but it’s really interesting, and I know that’s something else that people may not think about, but it’s the holiday season, so I kind of think about it more is charities and charitable organizations. So can you talk to our listeners about how your work influences and is intertwined with some charitable organizations?

Anthony DeRiso:

Yeah, no, I’d be happy to. So my clients kind of run the gamut. Not all of them are tax exempts. That’s the technical term for a nonprofit organization in the tax space. But naturally, in organically it just came to be that a good portion of them are, this runs the gamut from hospitals, charities, basically anything that you can think of, anything that you could donate to and take a deduction for. I have seen, and it’s a very fun area of the tax law. It’s very specific area of the tax law. But it’s interesting in that most areas of the tax law explain how and why you should tax someone. This is the one area of the tax law which sort of does the opposite of that. It’s when you should not tax somebody. And so naturally, if the government’s giving you the opportunity to not pay taxes, they’re going to put some strings attached. And so your role as a tax attorney in this exempt space is really to guide the client, the tax exempt organization through these roles. That way they don’t trip up and all of a sudden find themselves owing sometimes a very large tax bill, especially if you’ve been exempt for a number of years and all of a sudden you found that something hasn’t been reported correctly or the like, because that could end up with a very huge bill.

Montana Funk:

So is it possible for an organization to go from tax exempt to not tax exempt if they wanted to, even outside of mistakes? Is it possible for someone to be in a nonprofit and then switch over?

Anthony DeRiso:

So the answer is yes. One thing that’s interesting is that when you look at this part of the code that deals with tax exempt organizations, you can tell there’s a very, there’s an underlying philosophy to it, certain principles as to what should be taxed and what should not be taxed. And to not be taxed, you have to have constraints on how you use your money. You have to have constraints on what your funds can be spent on things like that. But outside of those constraints that a charitable organization and tax exempt and a non-tax exempt usually are very similar in nature. A common example would be a hospital. A hospital can be tax exempt or it could be not for-profit, but at the end of the day, a hospital is a hospital, they’re doing the same things. The big difference is usually their charter and what sort of constraints they place on how they use their funds. And so you can go back and forth, but it’s not common and it’s probably not easy, but as initial determination, if you are for-profit, you can make changes that would allow you to come into, I guess the spirit of the code and then eventually apply for a nonprofit status.

Montana Funk:

Okay. That’s also really interesting because like you were saying there, that the role of lawyers to kind of make sure that they’re following all the things they need to follow in order to remain nonprofit and kind of that line, I think too, something that I didn’t even realize is that it’s probably pretty easy to cross over that line if you miss one reporting requirement or something like that. So that’s also kind of really important. And I’d be interested to see, once again, going back to you talking about helping people, I’m sure it’s really rewarding for you to work with charitable organizations. And I guess what about your job do you find for our listeners who are like, okay, I want to make sure that I’m doing a job that I can actually see the direct impact that I’m having on my clients. What do you find about your job that allows you to do that?

Anthony DeRiso:

So I guess taking a step back, the tax controversy space is a very small bar. There aren’t very many people who practice in it. And so you’ll find yourself on a very small team most of the time. And so if you’re, the benefits of to that is you’ll probably have a lot of client engagement early on, especially if you’re a junior associate. And so you’ll be working hand in hand with a lot of these tax exempt organizations. And when you talk to them, inevitably you’ll see that they have a bigger, broader charitable mission. I mean, it could be conservancy, it could be a number of things. And they’re usually going to be very focused on that mission. And so a lot of times these organizations can be strapped for cash or they have to make determinations on where to spend their resources. And so they’ll want to spend as much as they can on their charitable purpose, but that means that they’ll need additional help with some of the less exciting things, which is usually tax.

And so you get to work hand in hand with a lot of people within these big charitable organizations, and they come to you as a counselor, as an advisor to help them navigate these really difficult roles to help them stay as a charitable organization. And these people are obviously always all very good people and they’re always very grateful. And it’s something that I like about the job. It’s sometimes you’ll have clients and not every client can be that’s always happy to engage with a lawyer. But my experience at least so far has been that charitable organizations understand how complex and sophisticated these roles are, and they relish the role of the counselor.

Montana Funk:

Absolutely. We’ll take one more quick break, then we’ll come back with some easier questions for you.

So before the break, we were kind of getting into what exactly your role is with a charitable organization and how you see your work play in to actually help people. And now kind of taking away from the clientele, I kind of want to focus more on you and the role of the actual attorney because obviously taxes, especially, I’m sure tax season can get crazy when you have those kind of ebbs and flows in the higher up seasons of practice. How are you actually managing your time, especially working in New York is I believe where you are, and I’m sure that there’s big firms there and there’s a lot to do and it’s busy and hustle and bustle. So how are you finding the time to actually decompress from your job?

Anthony DeRiso:

Yeah, decompress is the right word there. I mean, no matter where you are, no matter what you’re doing, law or not, jobs are stressful and it’s always important to find an outlet, a phrase that comes to mind, which again, I’m not a philosopher, so I couldn’t tell you what it actually means, but it’s an old phrase about the unexamined life is not worth living. If you’re just doing something and you don’t really know why you’re doing it, your life is going to be a lot more stressful than it probably needs to be. And that’s especially true if you’re a very pressure filled job where you could find yourself kind of in a little feedback loop where you’re just doing the same thing over and over and over again. So one way I try and decompress and take a step back is I like to calendar.

I’m a list person. And so I like to find, I guess just anything events in the area that are interesting, shows that are interesting. If I know it’s a specific time of the season, I’ll try and set aside time to do things that I like at the beach or at a park or anything like that. And it’s really just taking a step back, looking at your life, looking at what it is that you want to do, looking at why you’re doing the things you’re doing, and just making time for what’s important to you. And so I mean, if you are a person who does a hobby, then obviously you’re going to have to set aside time. Me, I was never really into hobbies, but I was into seeing shows, events, parades, things like that. It’s just finding the time. It usually requires a lot of forethought.

I usually look a month in advance to see what’s coming up that month, and I jot it down. And I know from that point that day, from 12 o’clock to three o’clock, I’m just going to set aside the time and that’s what I’m going to do. And really taking that time, making that effort on the beginning to just find some moments for myself that really helps me decompress and handle a lot of the stresses of life. And so yeah, if you’re not a big calendar, if you’re not big into making list, I would recommend it. I think it would go a long way in planning some de-stressing times in your life.

Montana Funk:

I’m a big list girl, so I support that. I love having my lists. For the listeners who sat through this and maybe now piqued their interest to get involved in this area, do you have any advice or recommendations on what they should do to either start researching, getting involved, or actually how they can be directly involved?

Anthony DeRiso:

Depends on where you are in your, I guess, your professional life. If you’re still in law school, I would definitely recommend that you at least take income tax or corporate tax. Obviously that’s going to be incredibly helpful no matter what you do, if you’ve graduated law school and have begun your actual legal career, just ask, fine, there’s going to be a tax person no matter where you go, because there has to be, because tax touches so many things, even if that’s not their official title, there’s inevitably somebody who’s designated as the tax person and just go and set up some time and talk to them and see what it is they do on a day to day. And from there, see if you can get involved, try out a few of their projects. It’s really just making the effort and making the attempt. You’ll never really know until you actually try.

If you’re in a bigger city. One thing I can’t recommend enough is the tax court travels right circuit throughout the country. So it’s in various cities at various locations. If you’re a barred attorney, they have, they’re called calendar calls in which a lot of pros, a taxpayers, so basically just normal people with tax problems are invited to show up to the tax court to resolve their issues. And they’re always looking, there’s usually the local borrow set up, some sort of event where attorneys can go and talk to these people about their tax issues and try and help them discuss these issues with the IRS and hopefully result in some sort of settlement or at least an understanding as to what needs to be done to fix whatever’s been, I guess, interfering with their compliance. And so getting involved in a program like that, I also can’t stress enough. And it is also a very good program because you’ll meet a lot of interesting people either in the tax bar, normal human beings, really across the board.

Montana Funk:

No, that’s awesome. I did not know that. So I think that that’s a super good resource for sure, and kind of a good way it sounds like, to dip your toes in and still help, but maybe not take that full dive in. So that’s awesome. And my last question for you, it’s the easiest one I have. I want you to, you’re like, oh no, that’s not going to be the easiest. Tell our listeners any last words of advice you have from them and then where they can find you.

Anthony DeRiso:

Sure. So words of advice, be particular about what it is you do and how it is you spend your time because you’ve got very limited time, especially once you start a job, no matter what job that is, you’re going to find that you don’t have all the time. You want to do all the things you want. So just be particular about how it is you spend your time, make time for things that interest you, and if there’s something that’s really just causing you stress and you don’t know why you’re doing it, see if you can cut that out of your life where you can find me. That’s a better question. So usually at the beach, but

Montana Funk:

Perfect. Well, Anthony, thank you so much for joining me today. I really appreciate it, and I wish you all the best, and hopefully you have a great holiday seasons.

Anthony DeRiso:

Thank you. No, I really appreciate you having me on.

Montana Funk:

Thanks, listeners. That’s our show for today. Thank you as always for tuning in and you know that if you like what you heard, recommend our show to a friend. We can be found anywhere that you listen to podcasts. Until next time, I’m Montana Funk and you’ve been listening to Young Lawyer Rising, brought to you by the ABA Young lawyers Division and the audio professionals at Legal Talk Network.