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U.S. Taxpayers Detail Wrongs at Hands of IRS
By Tabassum Zakari
WASHINGTON (Reuter) - Taxpayers told a Senate committee Wednesday how they filed for divorce and bankruptcy, paid thousands of dollars they did not really owe and floundered for years in a bureaucratic maze to correct wrongs by the Internal Revenue Service.
One woman tearfully told how her husband filed for divorce and she filed for bankruptcy in an attempt to prevent the IRS from seizing their property.
Another woman said she and her husband paid $11,000 they did not owe to the IRS to put an end to the agency's enforcement actions, which could have closed her optometrist husband's practice.
The issue was over an identification number the IRS had given them, a duplicate of someone else's.
"Only after you have experienced what my husband and I endured would you consider paying an IRS bill that you don't owe," Nancy Jacobs of California said on the second day of the Senate Finance Committee hearings on IRS practices.
The owner of a small construction company said he let the IRS keep $50,000 of a seized government payment check to settle a case because it would have cost far more to fight the IRS and would have jeopardized his business.
The case stemmed from the IRS holding Tom Savage, 69, of Delaware responsible for a subcontractor's tax problems.
Savage said he was pursued despite a newly revealed Justice Department letter to an IRS attorney dated November 1993 which said "we believe that the levy in question was wrongful.
A retired Roman Catholic priest said he fought the IRS for months over money it said it was owed after he failed to fill out the correct form related to a charitable trust set up by his late mother.
"For eight months I lived in constant worry, if not fear, that the trust that my dear mother had established to help the poor would be penalized because of what I can only call the unprofessional, callused, and indifferent behavior of IRS employees who are devious enough never to sign their names to any notices that they send out," Lawrence Ballweg said.
For Katherine Lund Hicks of California, it began when she got divorced and found she was saddled with the tax bill for the last joint return for tax year 1983. In an out of court settlement the IRS agreed to reduce tax owed to about $3,500.
Hicks said she tried to pay the IRS, wanting a clean slate when she remarried. The agency did not take the money because of its record-keeping discrepancies and told her she owed no tax.
It then filed a tax lien against Hicks.
She said an IRS officer told her she did not owe anything for 1983 taxes, but the only way to get rid of the tax lien was to pay the assessment, which had since risen to $8,000.
"You don't eat, you don't sleep, you're afraid to talk too much to each other for fear you'll take it out on your spouse," Hicks said in tears. "If you do talk, it's about the IRS. We were newlyweds. I cannot describe the guilt, knowing that I had brought my new husband into this.
When her new husband's salary was levied by the IRS, he set up a separate residence and filed for divorce because in California that action means the salary is separate property.
Hicks said she filed for bankruptcy to buy time to figure out what to do so the IRS would not go after her husband's retirement fund, which was considered community property.
"Our lives are now forever altered. Joint tenancy, joint bank accounts, joint tax returns are no longer a part of our life," she said. "My credit is completely destroyed and my husband's credit is seriously damaged. We will suffer the effects of this IRS collection for the rest of our lives."
Frank Keith, spokesman for the IRS, said: "I think the testimony this morning spoke for itself. Clearly we've had evidence of taxpayers who testified about situations in which they were not properly served, and situations where IRS failures disrupted their lives."
"Clearly in those kinds of situations the IRS would absolutely apologize, situations in which we simply did not serve the taxpayer properly," he added.
REUTER
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