IRS horror stories…

23 years ago this month my wife and were sitting in a coffee shop in Rota, Spain reading the Stars and Stripes newspaper (I believe I was reading the comics, while Mary had the main section), we were joking around with a couple of friends about the similarities of one of our mates to a particular comic strip character. In the midst of that laughter my wife excitedly exclaimed, “Alan, your parents are in the newspaper!” Thinking this was a continuation of our conversation over the comics, I leaned over to take a look.

Nope. Not a comic.

It was a horror story.

This is what I saw in the upper left hand corner of the Stars and Stripes dated June 14th:  http://newspaperarchive.com/european-stars-and-stripes/1990-06-14/page-3

A federal judge said that he had been lied to and that my parents had been treated rudely and incompetently by agents of the IRS. He went on to say, in a 10 page ruling that the behavior of the IRS “demonstrates the IRS’ lack of organization and respect for the taxpayers.” What the heck happened? I had no idea what this was all about, but over the next few months I would find out.

Here is the gist of the story…

My grandmother died of cancer in 1987 and during the turmoil of that time, managing her estate and tying up loose ends, my parents turned some business books over to an accountant and he failed to pay diesel fuel tax between September of 1988 and May 1989. My family discovered the error when they took the books back over and being good citizens they called the IRS office in Atlanta, GA to let them know that they owed back taxes. The IRS assigned the case to Sherilyn Heyward of the IRS’ Savannah office and boy, did she run with it.

She initially informed my parents that their back taxes and penalties came to about $51K, then a couple of weeks later she said she made a mistake and they owed $7,000 more, then another $1,000, then, ooops, another $37,000. After mortgaging their store, cashing in insurance policies, and getting loans from banks they arraigned to pay off everything except $10K. They asked that they be allowed to pay off the rest in installments. No dice. Heyward put a lien against the business for unpaid taxes and went to a bank to seize money. In an example of the incompetence that the federal judge noted, Heyward got the address for the store wrong on the lien and the bank refused to hand over the cash.

Heyward went before judge Edenfield and lied to him, stating that my parents were moving bank accounts around in an attempt to hide money from the IRS. The judge, acting on this false testimony, issued a search warrant for my parents business and Heyward oversaw its execution with armed federal agents in tow. Some of that is covered in this article in Money Magazine: http://money.cnn.com/magazines/moneymag/moneymag_archive/1990/10/01/86126/index.htm

After all of this the IRS was ordered by the same judge to leave my parents alone and stop all collections against them. This order was ignored, in fact the IRS went door to door in my parents neighborhood asking their friends how many cars they owned, if they ever drove business vehicles for personal use, really sponsored little league baseball teams and in general ruined my parents reputation out of spite.

So, what happened to the incompetent Ms. Heyward? Well, she received a temporary appointment to oversee all collections in Savannah when last we had any dealings with her. There was never any discipline. In fact, when my mother was interviewed on the Today Show about all of this one of her fellow guests, a former IRS agent, said that agents are never disciplined for overly aggressive collections, but they are disciplined if they don’t collect. Nice, eh?

My parents spent a lot of time in the newspaper (http://archives.savannahnow.com/sav_pdf_archive/text/fr38/A_2301527.pdf

http://archives.savannahnow.com/sav_pdf_archive/text/fr38/A_2301555.pdf)

The Money Magazine article was picked up by Readers Digest as well and with all that publicity guess what happened?  Nothing. In the end my parents closed down two businesses in Georgia, moved to Florida and filed for bankruptcy. My dad had a massive coronary in 1991, surviving thank God, and began to rebuild their lives.

The IRS is raw, uncheck power and when they move on people they are capable of inflicting great harm.