"Look, this is the conversation that's probably happening right now behind closed doors"
What tax attorney Caroline Ciraolo learned at the DOJ
Super Lawyers online-exclusive
on October 15, 2018
Updated on February 8, 2021
When Caroline Ciraolo says there’s not a day since her 1994 clerkship at the U.S. Tax Court that she doesn’t wake up psyched to go to work, that’s not hyperbole. “I love what I do,” says Ciraolo, who works in civil tax controversy litigation and criminal tax investigations and prosecutions.
So when a peer who worked at the Department of Justice suggested to Ciraolo that she’d be a good fit for the tax division, Ciraolo demurred. “I was flattered, but I tend to plant roots—I thought I’d retire at Rosenberg Martin, where I was at the time, and just keep working my long, happy days at the firm,” she says.
But the friend continued to discuss the possibility with Ciraolo. “I understood that it would be a two-year position, because it was the end of President Obama’s administration,” she says. “Ultimately, I submitted my résumé in early 2014 and, after a series of conversations with the department, I was fortunate to be offered the position.”
She took her transition out of firm life into the 11th hour.
“Once I made the decision to leave, I worked very long days, seven days a week, to make sure that my practice and clients were in the best place they could be,” she says. “I signed off my firm computer at 11:59 the final night because I became a government employee at 12:01.”
AT DOJ, Ciraolo worked with attorneys throughout the division—appellate, civil, criminal—and and with colleagues at the IRS. On the appellate side, she discussed issues and strategies and occasionally attended moots for oral argument.
“Each day I would meet with attorneys and other professionals in the division and throughout the [DOJ] to discuss issues, review cases and make decisions regarding civil and criminal enforcement strategies,” she says. “It provided a unique perspective on how the government approaches various issues, and how hard the career attorneys work to get it right. I think there’s a perception of some government agencies that they don’t work long hours or aren’t committed, or they’re just doing enough to get by. That was not my experience.”
On Ciraolo’s watch, the historic Swiss Bank Program hit its stride.
The program, which provides a path for Swiss banks to resolve potential criminal liabilities in the U.S., began in August 2013, before Ciraolo came aboard. Swiss banks eligible to enter the program were required to advise the DOJ by December 31 of that year that they had reason to believe they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts.
“The entire division mobilized with the tremendous assistance of the Internal Revenue Service to address the number of Swiss financial institutions that came to the table wanting to participate,” Ciraolo says. “The expectation was that there may be three dozen banks that would come forward.” There was more than 100.
Of those, Ciraolo helped hammer out agreements with 80 banks. The DOJ collected almost $1.4 billion in penalties.
Another number Ciraolo drops: 6,000. That’s the amount of civil cases pending, at various stages, at any time. Add another 600 or so appeals, and a large number of criminal matters, too.
“There is a tremendous amount of work to be done,” she says.
Her last day on the job was January 19, 2017. “It was a busy and exciting two years, and I did my best to live each day to the fullest knowing that, at the end of the administration, I would be returning to private practice,” Ciraolo says.
Ciraolo now brings a unique perspective to her new firm, Kostelanetz & Fink; she co-founded the boutique’s D.C. office with former tax division prosecutor Jay Nanavati.
“Prior to joining the tax division, I worked really hard: studied a lot, read up a lot, and felt like I had a strong handle on controversy, issues and procedures. But my government experience really allowed me to understand how the other side approaches an issue and the various ways those issues can be resolved,” she says. “My experience puts me in a position to better assist, to step back and give perspective. I can talk about things from a defense perspective, but then say, ’Look, this is the conversation that’s probably happening right now behind closed doors.’”
While Ciraolo laments the IRS funding cut, she’s optimistic for the future of tax controversy practice.
“There has been a reduction in audits and the number of criminal investigations and prosecutions have declined over the last few years because of budget issues,” she notes. “But based on how busy we’ve been, the variety of work coming through the doors, and based on what we’re seeing the tax division and the IRS do with limited resources, they are really thinking outside the box—focusing on their primary mission and pursuing interesting cases. I anticipate a very busy future for tax controversy practices across the country.”