Just one block:

-- get list of taskorders with their respective fundingtotals as of
specified date
SELECT TO1.TaskOrderID,
FROM TaskOrder TO1
WHERE (@BillingContractID IS NULL OR TO1.BillingContractID =
@BillingContractID)
AND (@Filter IS NULL OR TO1.Retired <> @Filter)

Note this last line. If @Filter is NULL, the entire block is ALWAYS
true so "TO1.Retired <> @Filter" doesn't matter. If @filter is not
null, "TO1.Retired <> @Filter" is the part that matters.