Jennifer:
Let’s start with the basics. Who are you?
Jamie:
My name is Jamie Zug, I’m a state and local tax controversy attorney based in New Jersey, and I work with clients across all states.
Jennifer:
Tell me what “tax controversy” means. I’m sure that term can mean different things to different people, so walk me through the breadth of what falls under that title.
Jamie:
A tax controversy is any dispute with a taxing authority. That could be the IRS, a state, Washington D.C., or sometimes a local jurisdiction. These disputes can take many forms.
Most of the work tax controversy professionals do is administrative, but even that varies widely depending on where a taxpayer is in the taxing authority’s process; whether that’s examination, assessment, collection, or even litigation.
The bread and butter of tax controversy work is penalty abatement. A taxpayer receives a notice with penalties assessed and wants to request relief from the taxing authority. Another frequent situation is when someone starts working with a new CPA and suddenly discovers there’s been noncompliance for several years, possibly across multiple jurisdictions. That often leads to cleanup work.
Then there are situations where a taxing authority is auditing someone for various reasons. There are a lot of different ways these matters come up.
Jennifer:
When you say penalty abatements, is that usually because someone didn’t pay on time, or because they didn’t pay at all and weren’t aware?
Jamie:
It could be either. It depends on the type of penalty. It might be a failure-to-file penalty because someone never filed a return they were required to file, or a failure-to-pay penalty.
Sometimes it’s a self-reported tax where the taxpayer reported the liability but didn’t pay it. Other times, it’s an additional assessment made by the taxing authority, and penalties are imposed on the amount they claim should have been paid but wasn’t.
Jennifer:
Firstly, I’m so glad people like you exist. Secondly, this area of running a business feels especially overwhelming.
What’s the simplest way, if there even is one, for new business owners to know what they don’t know? I’m not asking you to give away all your tips and tricks, because if everyone did everything perfectly, no one would need you, but staying compliant as a small business owner feels really hard.
Jamie:
You’re absolutely right. It is very difficult. I have a lot of empathy for taxpayers. Honestly, I would love to live in a world where I’m not needed, because the situations I help people with can be truly devastating. They can hit businesses hard, and they can hit individuals harder.
Some of the toughest cases involve individuals being held personally liable for a business’s tax liability. Sales tax, for example, is often a tax on gross revenue. If everything you sell is subject to sales tax, that burden can be enormous. Unlike income tax, it’s not offset by deductions. In certain circumstances, that liability can then be collected directly from an individual.
So yes, I’d happily retire in a world where everyone knew what they needed to know. But realistically, it’s about working with the right people upfront. And that’s not just your CPA who prepares your income tax return. Many CPAs don’t handle sales tax, or other transaction-based or industry-specific taxes.
It’s about having more robust support early on, your tax preparer, your bookkeeper, and/or your CFO, someone who’s thinking holistically about compliance. That might be someone with broad, cross-industry experience or someone who specializes in your industry and understands the states where you’re doing business.
Jennifer:
That’s one of the most frustrating parts; you don’t know what you don’t know. And the rules seem to change rapidly, often without notice. Even as a small business owner myself, I’ll get notices saying I didn’t file a zero return, and I’m thinking, I’m sorry, I need to tell you I didn’t have any activity last quarter.
My advice is always to talk to experts and pay the money upfront. And when I say experts, I mean people like you, because it’s incredibly nuanced. It can come down to state, city, and even local municipality differences.
Other than calling you and saying, “Hey, I sell Flergenbergens, am I going to owe tax on this?” What’s a good way for business owners to stay on top of changes? They don’t need to be experts, but it often feels like the system is built to just try to catch people and collect more money.
Jamie:
I won’t speculate about the motivations of state taxing authorities.
Jennifer:
Oh, you’re so PC.
Jamie:
Well, here’s the reality: taxing authorities are really our partners in bringing matters to resolution. I’m always pushing for the best possible outcome for the taxpayer, and I’m zealously advocating for my clients. At the same time, I’m very aware that we’re working with the taxing authority to resolve these matters.
Treating them as a partner is often how we get the best outcomes for everyone involved, including the taxpayer.
That said, when it comes to staying up to date, it really comes back to having an ongoing relationship with professionals who can keep you informed. This can’t be a one-and-done conversation because things evolve rapidly, especially in emerging areas of taxation.
States may experiment with applying a tax in new ways, or you’ll see a trend move through multiple states over several years as legislatures adopt similar approaches. In some cases, if you’re in an emerging industry, you may end up with industry-specific taxes, either because the industry isn’t viewed favorably or because it’s seen as a revenue-raising opportunity.
Staying connected to advisors who are actively tracking these developments is key. There are generic, one-size-fits-all solutions out there that claim to cover every jurisdiction, but they often lack nuance. When people rely on those tools or on generic Google answers, it’s often those taxpayers who fall through the cracks, and the consequences can be severe.
Jennifer:
Yes, and not to harp on it, but I remember coming into a company as a new finance executive about ten years ago and discovering they were either in the middle of a sales and use tax audit. I had never been through one before and I hope to never go through one again.
What I learned, especially in New York City, was that they could go back as far as they wanted if the business hadn’t registered properly at the time. I preach good recordkeeping because of what I do, but if there’s ever a moment where it really matters, it’s during an audit. If you can’t come up with a receipt or justification—yikes.
And to your point, the relationship matters. That auditor was in our office a lot, and how you handle that relationship really impacts the process. They do have some discretion in the outcome, right?
Jamie:
Oh, yes.
Jennifer:
Okay, so relationships do matter. I’d love your take on something else, and I’m sure I’m going to mess up how I ask this, so feel free to rephrase it.
If you buy something and you were supposed to pay tax on it, but the vendor didn’t charge you, the responsibility is yours, not the vendors, correct?
Jamie:
Not exactly. The responsibility actually extends to multiple parties.
With some hesitation, and a little fear and trembling, I’ll say that sales tax is generally the consumer’s tax. It’s a tax on the transaction, and the consumer is the one who owes it. The seller collects it, holds it in trust, and remits it to the state. That’s what makes it a trust fund tax.
Sales tax isn’t the only trust fund tax. Income tax withholding is another. There are also industry-specific trust fund taxes, like certain motor fuel taxes or other transaction-based taxes.
In the case of sales tax, the consumer is liable in the first instance. The business is liable in its role as the entity holding those funds in trust. And then individuals, owners, officers, or employees, may also be held personally liable as responsible persons.
Jennifer:
That is wild. As a consumer, you’re used to knowing that when you buy something for $10, it’s never really $10; it’s $10 plus tax.
So if you go somewhere that doesn’t charge tax and you’re not really paying attention, it’s mind-blowing to think the state’s theory is that I, as the consumer, should go home and write a check to the state saying, “Hey, I bought something, they didn’t collect tax, but I know I owe you, here it is.”
When I share that story, because my first exposure to this world was that audit ten years ago, people are always shocked. I was completely blown away by what the auditor explained to me.
Jamie:
That surprise is actually a common pitfall for businesses that get audited for sales and use tax. A business might be able to show that it collected sales tax on taxable transactions and properly remitted it to the state. That covers the sales tax side of the audit.
But then the auditor turns to the use tax side and looks at the business’s purchases. They’ll ask, “Did you pay sales tax on these purchases?” And if the answer is no, the state will assess use tax instead. You still owed the tax, you just didn’t pay it as sales tax, so now you owe it as use tax.
It’s not just about proving your sales. You also have to prove your purchases.
Jennifer:
And just to be clear, I’m not trying to scare the average person. They’re not going to come knocking on your door asking you to prove you paid tax on everything you’ve ever bought.
It’s just that when I learned this, I was so taken aback. The way you framed it really clicked for me. You called it, what was it?
Jamie:
A trust fund tax.
Jennifer:
Yes. Just like payroll taxes. There’s a middleman who’s responsible for collecting and remitting it. When you think about sales tax that way, it makes sense, but it still completely blew my mind.
So those are kind of the bread-and-butter issues you deal with. Do people only come to you once something has already gone wrong? I mean, “controversy” is literally in your name. Or do people ever come to you proactively, and should they?
Jamie:
Occasionally people do come to me proactively, and they’re absolutely welcome to, but I often end up referring that work out. For whatever reason, I really focus on the controversy side of things. That’s where I like to be.
That said, there are situations where I’ll get involved. For example, if a business is expanding into multiple new jurisdictions and wants a sales tax analysis in a gray area, say, fifteen different states, I’ve done jurisdiction-by-jurisdiction analyses in cases like that. So, I do occasionally get involved at that level when the question is narrow and specific.
For more comprehensive proactive planning, though, I usually refer that out and focus on what I like to call the dumpster fires.
Jennifer:
In general, it’s almost always more cost-effective to have a preemptive conversation.
If you’ve just hired someone in a new state, having the conversation upfront about compliance is so much better than finding out later that you were supposed to be collecting something like FMLA or that an employee needed to complete harassment training within the first six months and you missed it. I don’t want to get dinged for that down the line. So, to your point, having those conversations ahead of time, including with someone like you when a business is expanding or doing something new, is always the better approach.
Jamie:
Right. Chances are I’ll refer it out, but I would much rather someone come to me than not think about it at all. Taking preventative steps is always best. I’m always happy to field those calls, point people in the right direction, or help if it’s something I can handle. The goal is to avoid as many of these situations as possible.
But I do want to come back to something you mentioned earlier about filing zero returns, because it’s such a common pitfall, and people often aren’t aware of it.
When you have an obligation to file a return, even a zero return, and you don’t, you’re creating exposure in multiple ways. First, you failed to do something you were required to do, which creates liability on its own. But beyond that, you may be subject to an arbitrary assessment, where the jurisdiction essentially makes up a number.
And to another point you raised earlier, the statute of limitations never starts running if you never file the return. Zero returns are often required, but even when they aren’t strictly required, filing a zero return can still be beneficial because it starts the clock on the statute of limitations. Without a filing, they can just keep going back and back and back.
Jennifer:
And once you’ve gone through something like that, I don’t want to say it scars you for life, but you definitely don’t make that mistake again.
The nuances of how all of this works can feel overwhelming. So, before we wrap up, is there anything I didn’t ask about tax controversy that would be helpful for people to know? Or, if you can share, what’s the weirdest, wildest, or most unique thing you’ve worked on?
Jamie:
I’m glad you asked, because I’d say my subspecialty is weird tax controversy matters. The weirder it is, the more appealing it is to me.
I’m hesitant to share too many details because the situations are so specific that I want to protect confidentiality. But I can say that over the past year or so, I’ve been involved in two very old matters, one dating back to the 1980s and another dating back to the 1990s.
Jennifer:
If that’s not enough to scare you, I don’t know what is.
Jamie:
Right. One involved identity theft in the 1980s that created an enormous tax liability. The other is an IRS matter from the 1990s, which is extremely unusual, both because of its age and because it’s rare to still be able to do anything about something that old.
These cases are all about procedure and knowing which channels to use for which issues. The question becomes: is there any path to relief for this sticky, odd situation? Often it takes careful and creative thinking to find one.
And sometimes, there isn’t a solution. Sometimes you have to tell someone, “You’re out of time. The taxing authority did what it was supposed to do. You could have appealed, but that window has passed.”
But there are also those strange situations where a creative or unconventional path does exist, and you can get someone to the right result.
That’s really why I’m drawn to the weird ones. It’s incredibly gratifying to help someone find relief in a situation that feels almost impossible to overcome.
Jennifer :
I think the fact that the crazier, hairier, messier situations are what really rev your engine is probably what makes you so successful. We joke all the time that we love a really dirty set of books.
Nobody ever comes to us with perfectly pristine records and says, “Thanks, bye.” If they’re coming to us, something went wrong somewhere. But I’m genuinely grateful for people like you who are willing to take on those challenges, because, as you said, there can be creative solutions.
And in my experience, most of the time when someone is dealing with an issue like this, it’s out of naivete, not reckless abandon. It’s not usually, “I knew I had to pay this and chose not to.” At least, I hope not.
The best advice I’d give is be proactive, and don’t ignore a notice if you get one.
Jamie :
Yes! Don’t ignore a notice. So many of these matters have very tight response windows, and it can truly be all or nothing. If you miss that window, you can be completely out of luck.
Jennifer:
And you’d also encourage people, even if they can’t address it immediately, to at least acknowledge receipt or take some kind of action, rather than sweeping it under the rug?
Jamie:
I think it’s important to respond in the way you’re supposed to respond. And if it’s not clear how to do that, that’s when you need to reach out for help and figure it out. Responding the wrong way can be the same as not responding at all.
It’s not always our instinct to be proactive when something feels scary or intimidating. But with tax matters, the amount of grief you can save yourself is significant. Make the phone call. Call your accountant. Figure out the next steps. At the very least, get clarity on timing.
That first step can be a real gift to yourself.
Another important piece here is that once an assessment is made, the burden is on the taxpayer to disprove it. You’re already starting from a disadvantage. You then have to clear a fairly high proof threshold to undo it.
So doing whatever you can to provide information early or address the issue as soon as possible only helps. As a matter moves through the taxing authority’s administrative process, it almost always becomes harder to resolve over time.
Jennifer:
That’s such an important point for people to remember.
I’ve dealt with enough government agencies, especially local ones, around payroll and similar issues to know how hard that can be. Sometimes something gets credited to the wrong account, and untangling it is exhausting.
I’ve definitely had moments where I’ve weighed how much my time is worth against my patience level. Like, “This is a $25 fee, but I cannot talk to another person about this.” And my husband will hear me and say, “I’ll pay it, just please get me off the phone.”
Jamie:
That’s one of the saddest realities. A lot of assessments are large enough to be meaningful and painful to a business or an individual, but not large enough to justify paying a professional to help resolve them.
There’s a huge group of people stuck in that middle ground where it’s a lot of money to them, but they can’t affordably get help to address it.
Jennifer:
I spent two and a half hours before the end of the year on the phone with a state unemployment tax agency. Thankfully, the woman I spoke with was lovely, but it took that long because a prior payroll provider used the wrong EIN.
Everything I paid was credited somewhere, but not to the right place, so I started getting hit with a $500 per quarter penalty plus interest, and it just kept growing. If I hadn’t been able to resolve it on that call, you would have definitely been getting a call next.
But you’re right; the onus was on me, even though the payroll provider made the mistake. At the end of the day, the responsibility falls on the business owner. You can’t ignore it, because penalties and interest will absolutely eat you alive.
Jamie:
Payroll issues are especially hard to deal with. Often, multiple jurisdictions are involved because something was misdirected. You might have to correct things in more than one place.
If you’re in a state with local income taxes, that adds another layer of complexity. And then, on top of that, you have the personnel side of it, which brings its own challenges.
Jennifer:
Which is a whole other thing entirely. So, before we wrap, anything we didn’t cover that you want people to know?
Jamie:
Nothing specific comes to mind about my tax controversy practice. That really is my business, that’s what I do.
Jennifer:
You are a multi-hyphenate, though.
Jamie:
Yes. I’ve been thinking about how to expand because I was getting busy, but I didn’t want to expand the tax side of my practice. I like the weird stuff too much, and my approach is pretty idiosyncratic. That makes it hard to scale in a traditional way.
So, I started looking at how I could serve professionals in the administrative aspects of their lives, and that led me down the path of creating a whole new venture that I’m really excited about.
Jennifer:
I understand the expansion, but why administrative? What stood out to you that made you want to focus there?
Jamie:
It comes from the relief I’ve experienced in my own life from having excellent administrative support, especially in my personal life.
I have my executive assistant help me not just with business matters, but with personal matters as well. I don’t deduct those payments as business expenses; they’re personal payments for personal support, but the relief I get from that support is just as valuable as the relief I get on the business side.
So few people have good administrative support in any area of their lives, but especially when it comes to personal admin. Very few people have any support there at all, even though it can be incredibly time-consuming.
My goal was to make that level of support, and that kind of relief, more broadly accessible. We’re also on the verge of making our offering more focused. We’ve been dancing around it a bit because we genuinely believe what we’re doing can help anyone, but we’re shifting to focus more intentionally on neurodiverse professionals.
That group has always been top of mind for us, but neurodiverse professionals, in particular, have the most to gain from administrative relief, and from the freedom that kind of support creates. It allows them to really focus on their purpose and use their time in the way that works best for them.
Jennifer:
So let’s talk about the name of your new venture.
Jamie:
It’s called Dispatch Tailor.
Jennifer:
And before we deep dive into the name, what differentiates Dispatch Tailor from a traditional VA? Is it the focus on personal tasks, the focus on neurodivergent professionals, what’s the special sauce?
Jamie:
It’s both of those things, but it’s also the level of support.
We focus on both business and personal tasks, and we focus specifically on neurodiverse professionals. But the centerpiece of what we offer is the dispatcher. A dispatcher is an administrative professional with a higher level of skill than a traditional VA.
These are accomplished professionals in their own right who, for a variety of reasons, are looking for flexible opportunities. There are so many people like that in the U.S., highly skilled, executive-functioning superstars, but there’s a real shortage of flexible roles that fairly compensate accomplished professionals.
We match those individuals, as dispatchers, with neurodiverse professionals who struggle with executive-functioning challenges. That dispatcher becomes the central coordinator for whatever support that person needs. That might include a VA, an offshore VA, or other resources, but having a highly skilled, U.S.-based coordinator at the center is what makes the service especially effective.
My own executive assistant is the inspiration for all of this. She helps manage things related to my kids’ schools, making sure lunches are paid for, figuring out which forms need to go to the nurse so my son can participate in activities, all of that.
She also coordinates between the many doctors my family sees and the pharmacy. For example, one prescription comes in two different dosages that have to be combined. Every month, she makes sure both prescriptions get filled correctly.
Because she’s U.S.-based, she’s deeply familiar with these systems. She’s persistent, organized, and savvy enough to track everything. She’s the central coordinator for my life, and that’s the value.
Jennifer:
So she may not necessarily be doing every single thing herself, but she knows how to get you to the right people. Is that your point?
Jamie:
No — she is doing it.
And that’s a key differentiator of what we’re building. We’re not trying to help people improve their systems or do things more efficiently. We’re offering the ability to fully deputize entire administrative functions to someone else in a sustainable way.
We’re building what we call a “pattern book”, documentation that gives the people working with us the how-to instructions for someone’s life. I have access to information about how my prescriptions get filled, but I’m not managing that process at all.
Someone else has taken full ownership of it. If something related to that comes across my plate, I immediately hand it off to the person responsible.
That’s the difference. We’re fully deputizing administrative aspects of someone’s life or business. A traditional VA is usually executing on tasks I’ve already defined. This is different; it’s someone skilled enough to take ownership from the start.
Jennifer:
Interesting. So let’s talk a little more about the name. What’s the genesis? How did you come up with it? I love a good word, and I love the origin story behind this business, but the name itself is really interesting.
Jamie:
The name combines two ideas.
“Dispatch” is about execution, getting things out the door, getting things done, and it also implies coordination.
“Tailor” evokes something custom and bespoke. It’s about really honing in on the individual and what they specifically need. Together, the name reflects executing and delivering results but doing it in a way that’s driven by empathy and openness.
“Tailor” also conveys professionalism. I think about the emerging business class in the U.S. a century ago, when you might have had a tailor in your business district who understood the unspoken norms of your industry. You could trust that tailor not only to know your measurements, but to understand how to present you professionally, sometimes better than you could yourself.
In a strange way, they were experts in your industry because they understood how to help you show up in the world.
Those ancillary administrative services are often what make or break whether a small business can actually function smoothly. Having a dispatcher who can either execute those tasks themselves or bring in the right subject-matter expert is what creates a seamless experience, instead of something piecemeal, stop-and-start, and overwhelming.
Jennifer:
So this is your second business. Was launching a second business it easier this time around?
Jamie:
No. No. No. No. Not at all.
Jennifer:
Ha! Do you want to think about it?
Jamie:
Law firms are strange businesses, very particular in what it takes to run them. Starting a law firm is, in many ways, straightforward: you throw up a shingle, and you start representing clients. Obviously, it’s more complicated than that, but that’s the essence.
This venture is very different. It’s personnel-heavy, and my efforts have been focused on building a team, a team I am incredibly proud of. The enthusiasm, sincerity, and value alignment of the people I’m working with, their genuine care for others, is the common thread. I didn’t have to cultivate that when I started my law firm. So, it’s a completely different experience, but very rewarding.
Jennifer:
I love that. I think that’s such an important distinction. Your first business is primarily you. Sure, you might use support staff, paralegals, or research assistants, but it’s largely on your shoulders. Managing a people-based business, especially in professional services, is a whole different endeavor.
Humans aren’t always consistent. You can have the best intentions, but everyone has off days. Running a business that offers a repeatable service, like we do, requires consistency over time, and managing a people business is definitely not for the faint of heart.
Jamie:
Right, my law firm exists largely because of me. It’s dependent on my actions.
This venture, Dispatch Tailor, is different. It exists independently of me. I’m building a business that functions through other people, not me personally, which is a big distinction. Nobody would want me to do this for them personally anyway; the structure and team-based approach is essential.
Jennifer:
I tell clients the same thing when they ask if I’ll personally do their books. I say: I can review and guide, but my team is the one executing, and that’s exactly what you need.
So, in closing, is there anything you want people to know about you or either of your businesses that we haven’t covered?
Jamie:
On the state and local tax side, the biggest message is preventative care: get good advice upfront, build a strong financial support team, and trust that it will pay off. Avoiding issues before they arise is critical.
For Dispatch Tailor, my hope is that we can help people work differently. We want to remove arbitrary expectations for what a work life should look like and provide a level of support and relief that allows people to genuinely flourish.
This isn’t about making do or downplaying challenges; it’s about creating significant relief from administrative stressors, so people can actually feel it in their daily lives.
Jennifer:
Absolutely. Admin work, neurodivergent or not, is huge. It doesn’t matter what business you’re in; it can consume enormous amounts of mental space.
I was able to handle a particularly challenging state call because my VA had already taken care of a lot of other tasks for me. That admin support creates the bandwidth to handle things that only you can do.
Two and a half hours on a call doesn’t just equal two and a half hours, clearing that mental space allows you to reset and think strategically. Admin work takes a toll, and the impact is often underestimated.
I really appreciate you taking the time to share all of this.
Jamie:
I’m so glad you reached out. I always love an excuse to talk with you; this was a lot of fun. Thank you.
