Dallo Law Group San Diego

A TEN-YEAR FOCUS ON TAX CONTROVERSY

by Dan Baldwin

While it is tempting to be a ‘one-stop shop,’ I purposely focused my practice on tax controversy matters. My highly skilled staff could easily provide bookkeeping, tax preparation, or entity incorporation services and leave it at that, but I did not want to distract from our core strengths. In doing so, we have set ourselves apart as true tax controversy experts,” says Michael Dallo, CPA, J.D., LL.M, founder, principal attorney, and CEO.

Founded 10 years ago, the firm’s typical clients are individuals and small businesses with complex or high-stakes tax issues or problems and companies impacted by COVID-19 government orders seeking significant tax refunds from the IRS under the CARES Act Employee Retention Credit Program.

Many of the firm’s attorneys are also licensed CPAs or have extensive tax and accounting backgrounds. In addition to being skilled and effective advocates, they have the technical knowledge needed for effective and robust tax representation.

This extensive tax controversy expertise paid off when the firm represented a young mother/entrepreneur who had a passion to prevent drowning and making swimming lessons accessible for all Californians. She formed a company to match up independent swim instructors with families for private lessons at the family home or other accessible pools. Her passion and commitment to her business resulted in expansion to many states outside of California and she had nearly 5000 potential swim instructors seeking opportunities to connect with potential clients through her. The EDD audited and assessed nearly $200,000 of back taxes and would have required her to put all instructors on her payroll—a tremendous burden that threatened to shut down her business. Dallo Law Group appealed the assessment and won a full reversal at the CUIAB level. The victory was of such a profound precedential impact that EDD appealed the ruling to the Board of Appeals. The firm won again at that level. Because of their advocacy, the attorneys protected this young woman from overly aggressive tax authorities and ensured she would be able to operate her business and provide for her family.

© Bauman Photographers

THE TRIPLE THREAT

Dallo earned two bachelor’s degrees from the University of San Diego—Bachelor of Accountancy and a Bachelor of Business Administration (Finance Emphasis)—and graduated magna cum laude in the top ten percent of his class. He attended law school and obtained his juris doctor from the University of San Diego where he graduated magna cum laude, order of the coif (top ten percent of his class). He then went on to obtain his Master of Laws in Taxation (LL.M.) from NYU Law— the most renowned tax program in the nation. He started his career as a CPA working in the tax department of a

LAW FIRM OF THE MONTH 2021 2022

Dallo Law Group Team Members: Joann Navarro (Legal Secretary), Brandon Burger (Tax Associate), Sally Reddy (Supervising Attorney), Michael Dallo (Principal & CEO), Cortney Dallo (Chief Marketing Officer), Kevin Waldron (Tax Associate), Faye Putrus (Tax Accountant), Joanmarie Ehman (Executive Assistant)

San Diego based multi-national Fortune 500 Company, where he was an integral part of the tax team. He has also worked at the Tax Division of the United States Department of Justice in Washington, D.C. He soon realized a passion for tax advocacy, which solidified his desire to become a professional advocate for people and organizations needing such specialized services. Seeing that there were few law firms dedicated to tax advocacy and controversy, he started his own firm immediately upon graduating from NYU Law.

A personal tragedy added impetus to his drive. While finishing his last year of law school, he unexpectedly lost his brother, Branden. “During the lowest and most difficult point of my life, my passion for tax and the law was my driving force in helping me not only finish school, but graduate at the top of my class. My brother always believed in me, and he was and continues to be a driving force in my conviction, passion, and hard work,” Dallo says.

The triple threat title applies to Dallo’s expertise as an aggressive and committed legal advocate, a CPA, and a tax professor teaching at the University of San Diego in the Business and Law School. These professional “hats” give Dallo a unique perspective on handling the often-complex cases handled by his office. He says, “most tax controversy firms focus on the past mistakes that are at issue with the current audit or collections matter without regard to the client’s future business operations. Our approach to resolving tax

© Bauman Photographers

Dallo Law Group Team Members: Kevin Waldron (Tax Associate), Michael Dallo (Principal & CEO), Sally Reddy (Supervising Attorney), Brandon Burger (Tax Associate)

controversies, while including strong advocacy, also involves counseling taxpayers to ensure continued tax compliance in the future. We strive to have no returning clients—once we solve a tax problem, our goal is to ensure the taxpayer will not have any issues in the future.”

SPEAKING THE LANGUAGE

Dallo speaks four languages fluently: English, Spanish, Arabic, and Chaldean-Aramaic. He has studied and worked in Paris, Barcelona, Hong Kong, Madrid, and Rio de Janeiro to understand the tax field in many different capacities. “Knowing and understanding diverse languages is a great asset because as a linguist you have to listen not only to what is said, but also how it is said and what is actually meant. It’s a very nuanced skill, but a very valuable one for an attorney,” Dallo says.

Accounting is also a language, he says. “We can’t stress enough the importance of having an attorney-CPA do this work. Having the administrative background in IRS procedure and the financial literacy to understand a tax return is invaluable. This combination provides the proper and necessary tools to advocate and defend our clients before the IRS and state taxing agencies. Accounting is the language of a tax return and law is the language of negotiation. Both are necessary in my practice.”

Being fluent in that language is a significant advantage for the firm’s expanding client list. Tax problems are scary for the individual person or organization involved, but also for attorneys not experienced in the multiple disciplines in play. Dallo Law Group’s attorneys understand small business owners. They have a policy to not judge their clients and to offer a safe place for clients to be open about their past mistakes. They understand the challenges of operating a business and keeping up with tax filing and payment compliance. Their goal is always to ensure a fair resolution of any tax problems resulting from past mistakes and to make future compliance easy.

“Our attorneys, while highly intelligent and skilled in tax law and advocacy, are also kind. Our approach to tax controversy cases is to provide a calm and safe place for individuals and business owners to resolve tax problems,” Dallo says.

For example, the firm represented a client who received a bill from the IRS for hundreds of thousands of dollars. Their small business had been audited without the firm’s knowledge and the IRS disallowed all deductions. This liability would have wiped out the company and ruined the family’s life. The taxpayers endured many life and business challenges during those years and were forced to close the business. Recreating the pieces needed to fight the IRS was a significant challenge. The attorneys used their CPA skills to substantiate the deductions despite a lack of accounting records, and then used their attorney skills to defend and advocate for their client. In the end, they convinced the IRS to abate all the tax, remove all penalties, and were able to get a refund back to the clients.

Dallo says, “The pillar of our firm is framed and finished by the skills, continued education, commitment, creativity and perseverance of our qualified attorneys and employees individually and collectively. This becomes the solid foundation on which our partnering clients build their trust and continue to honor us with their confidence.”

FINDING AND FILLING A VOID IN SERVICE

“I have challenged the firm to be revolutionary in the way we practice tax law and to not be afraid to work on cases that few are venturing to explore, thus filling a void in tax practice. Those voids mean not only opportunities for new business, but opportunities to help people and organizations with their legal and tax challenges,” Dallo says.

His concept is to broaden the firm’s tax services and client list within tax controversy through a willingness to explore new legal territory, which is a constant factor in the rapidly evolving arena of tax law.

Expanding a niche is not common for a tax law firm. While tax law is already a specialized field, the specialties within are even more niched. Rarely do boutique or midsized tax law firms venture into new areas of tax law and unchartered territories. For example, Dallo Law Group is a pioneer and one of the only tax law firms in Southern California that has a dedicated practice to assisting with the IRS Employee Retention Credit (ERC).

The ERC is a tax refund available to certain small business employers who were particularly impacted by the COVID-19 pandemic. It requires precise payroll analysis—a process which Dallo has streamlined with his accounting expertise. Some employers can demonstrate a sufficient revenue decline during the pandemic to automatically qualify for ERC. But for the many who cannot, eligibility often requires complex legal argumentation coupled with in-depth financial analysis. Being CPAs and attorneys, Dallo Law Group sets itself apart in its ability to handle such a matter. The firm patiently works with its clients to fully understand the pain they felt during the pandemic and then identifies where that pain translated to the clients’ bottom-line. Dallo Law Group advocates to the IRS that the small businesses that were forced to endure the economic shutdowns of 2020 and 2021 deserve to have some of their tax dollars paid back. The firm has assisted hundreds of small businesses claim more than $50 million dollars (and counting) in IRS refunds.

Pioneering is a necessity in tax law because there isn’t a roadmap of how to specifically deal with the nuances that new areas of tax law present. The ability to handle changes in tax controversy brought on by new laws, and the knowledge and experienced gained in that effort, adds a significant amount of value to their clients. “We didn’t know what to do, who to contact, or what to expect when we ultimately reached out to you after researching online. We came in very panicked due to owing $819,214.00 to the IRS but your cautious yet optimistic assurances helped calm us and left us with no doubts in hiring you. Along the entire process, everything went better than we could have ever expected with the limited physical resources on hand after the length of time that had passed. Your expertise and the support of your office personnel got us through a dreadfully scary episode of our lives, and we honestly feel very indebted to have this finally behind so we can officially proceed to move ahead with our lives.

We came in owing the IRS a large sum of money and ended our case with receiving a refund of $147.00 from the IRS!

Thank you again from our hearts.

The best to you, your family and your office!” In addition, Dallo Law Group has developed long-term, cooperative relationships with other law firms, attorneys, and CPAs requiring expertise in criminal tax representation. “We represent several clients who were duped by their previous attorneys who purported to be a ‘one-stop shop’

Cortney and Michael Dallo

© Bauman Photographers

and ended up getting them hooked up with illegal tax shelters among other problems. By spearheading a team of independent attorneys and CPAs, we ensure these clients are confident that they can trust the advice moving forward because of the built-in peer review,” Dallo says.

THE EVOLUTION OF A FIRM AND ITS FOUNDER

Dallo says his approach to the law and managing a law firm has evolved and matured during the decade he has been in business. Early on he says his style was micromanagement, something he no longer practices. At the time, however, it worked. He grew up working in his family’s grocery business. “Micromanaging is the name of the game in that business. And so, naturally I started the firm kind of on my own with my own methods. I was very much a micromanager.”

Shortly after forming Dallo Law Group, he realized that he couldn’t manage in that manner and grow the firm. “I stopped being so much of a micromanager and became more of a teacher and a mentor to my staff. I now focus on fostering an environment of commonality in our goals and objectives but let the attorneys define the best individualized path for success for our clients.”

He says the cases that really stand out as examples are those where the issues were difficult, and the taxpayers felt like they were at the mercy of big government agencies. “Fighting for cases like these reminds me of what my practice is all about and why I do this work,” he says.

One of those meaningful cases involved a small trucking business in an income tax examination. The IRS agent working on the case was extremely aggressive and during the course of five years, the examination expanded to over 15 different audits of the taxpayer, his family members, other businesses, and involved income, payroll, and international tax considerations and significant penalties. The client felt the weight of the government and knew that without help the IRS would drive him out of business. The IRS eventually determined that the taxpayer owed more than $10 million in taxes and penalties. Through zealous advocacy and going above and beyond the call of duty, the firm ultimately got the overall tax bill reduced to less than $500,000. Even though the cards were stacked against their client, Dallo was confident that they were in the right and fought hard to obtain that result in appeals and in tax court.

Dallo says, “When a client meets with me or meets with my staff, they are justifiably frightened of possible outcomes. No one wants to get a letter from the IRS; that’s always scary stuff. And they hire me because they’re worried about what could happen. I always try to give the client my game plan, because I’ve done this for a long time. I assure them that I’m going to take care of it. When they leave the office, there’s a sigh of relief, they tell me, ‘I feel much better already.’ And that’s very important to hear. Because my job is to give them peace of mind and confidence that we will zealously advocate to resolve their tax issues.”

Dallo is quick to note that key to his evolution as the founder of a law firm, and as a human being in business, is the inspiration and support of his wife, Cortney, and their children, Celeste, Sienna, and Michael, III. n

Contact Michael Dallo, CPA, J.D., LL.M. Dallo Law Group, APC 2150 Fourth Avenue San Diego, CA 92101 619-795-8000 www.dallolawgroup.com