St. Mary's nurse challenges findings of IRS audit, and wins
Thursday, February 11, 2010
It is hardly unusual for Americans to disagree with the Internal Revenue Service. What sets Lori Singleton-Clarke apart is that she challenged the formidable agency in court and won.
Singleton-Clarke, a registered nurse from Bryantown, represented herself in U.S. Tax Court during her December 2008 trial. A year later, the judge issued an opinion affirming her right to deduct almost $15,000 in educational expenses related to a master of business administration degree she received from the University of Phoenix, an online college.
Her dispute with the government began with an IRS audit of her 2005 tax return. She conceded most of the challenges to the deduction but held firm on her MBA deduction because it conformed to her understanding of the law, according to the opinion issued in December 2009.
At issue were Singleton-Clarke's intentions in pursuing the graduate degree. According to a provision of the labyrinthine U.S. Tax Code, educational expenses are deductible only if the degree does not let the recipient pursue a new career.
Singleton-Clarke insisted the degree would help her in the type of management positions she already held in the health-care industry. The IRS, she said, did not believe her.
IRS spokesman Jim Dupree said that privacy laws preclude the agency from commenting on individual cases.
At St. Mary's Hospital in Leonardtown, Singleton-Clarke was the performance improvement coordinator, making it her job, at times, to tell doctors what they were doing wrong. But she found doctors did not always feel they had to obey a nurse, so she sought to better speak their language: money.
"As a PI coordinator you have to be able to convey regulatory information to physicians in a quick manner. For physicians, particularly surgeons, their time is money," Singleton-Clarke said. "Sometimes they're biased of, 'You're just a nurse.' They don't value, sometimes, the advice a nurse can give because they view us as someone that works underneath them. I wanted the degree so I could talk the talk with the physicians because physicians listen to financial stuff."
The outcome, issued in a five-page summary opinion by Judge Stanley Goldberg, attracted a great deal of attention, including an article in The Wall Street Journal. But at the time, Singleton-Clarke had no idea what she was getting into, she said.
She did not realize that going to trial was unusual until she showed up and found herself the only case on the docket. As it began, she found a small army managing and observing on the IRS' side, "and on my side it was me," she said. She was alone because she did not have the money to hire a lawyer.
"I couldn't afford it; that was the bottom line. Never did I imagine that my experience was -- I don't want to say a big deal -- would get so much attention," she said. "It was personal. I just kept saying to myself, 'When will this end?' I'm not trying to cheat the government. I just felt this was something I was entitled to."
When the opinion emerged more than a year after the trial, she struggled to understand what it meant.
"On the last page, that is when I realized he had ruled in my favor. I was just so excited. Did I think it was me against big government? Not at the time, necessarily. I thought it was something the IRS didn't understand and it's upon me to convince them why I felt I was entitled to claim the education deduction," she said.
Singleton-Clarke also held management-level positions at Children's National Medical Center in Washington, D.C., and Civista Medical Center in La Plata between 2004 and 2008. She now works part time for the Charles County Department of Health administering swine flu vaccine because, she said, she needed "a break" and wanted to spend more time with her teenage children.
Bob W. Askey, managing partner at the Leonardtown-based accounting firm, Askey, Askey & Associates, said he was very impressed with Singleton-Clarke but advised others not to go toe-to-toe with the IRS alone.
"This is an exceptional individual who did something very exceptional in representing herself," Askey said. "It's not something that I would suggest to most people to ever consider. I wouldn't want to do it for myself even though I've been doing this for 30 years. It's a dollars and cents thing -- she made the decision on her own and it saved her. She definitely deserves the kudos she's getting from it."