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Statement of Leroy Lacy
First I would like to thank the members of Congress for
their efforts during the closing stages of the 109th congress. As
one who was intently interested in a particular issue (the tax on phantom income
from incentive stock options), I followed the activities during the final days
of congress closely.
I am very appreciative that both houses saw fit to recognize
the inequities posed by the AMT tax on options and made a gesture towards
resolving the tax burdens associated with that tax. However, I must come back
and ask for additional relief in the 110th congress to follow on
from your efforts in the 109th. Those of us who have acquired monstrous
penalties and extremely large internist payments are still under water and
there appears to still be now way out.
In 2000, when I was presented with the $1.6million tax
assessment, it really didn't register with me. I deluded myself with the
thought that the government can't proceed with collecting this tax; they'll fix
this issue. I felt (and still do feel) that there was so much dishonest and
fraudulent activity associated with establishing value of these meaningless
stock options that congress will step in and put and end to all this
foolishness. Well that never happened and at the end of the year, I was most
taken aback when I received the letter telling me that I had penalties of over
a quarter of a million dollars. This was when the magnitude of the issue
really hit home. I received a penalty for not paying taxes on stock from stock
options of more than twice my annual salary (when I had an annual salary) and
there were internist assessments every month that would have made a nice
income if I had one.
At the end of the year, the collection arm of the IRS swept
down like a giant vacuum cleaner and swept away all my assets as I attempted
stop this juggernaut. I'm at the end of my career and like most of the workers
of my generation, I have not saved sufficiently for retirement. With this job
at Exodus Communications, I had a chance to get well. I had a financial
planner who was supposed to be diversifying my portfolio. I had purchased
three houses and had significant equity in those properties and it looked like
I would have sufficient resources to get me though retirement without being a
burden on my kids or the community. As the IRS swept though all my holdings,
it made no dent in the penalties or internist. I still really didn't feel I
owed this unfair tax and there had to be a way out. I invested many thousands
of dollars (borrowed from family and friends) on tax attorneys, enrolled
agents, and bankruptcy firms. I'm sure I invested foolishly in some of these
attempts to stop the IRS and its collection before I lost my last real and most
important asset, my house. I attempted offer in compromise, tax court and
bankruptcy and as I entered each venue, it seems that I got there as they
turned away from the tax payer. My final round with the offer in compromise
issue it was ridiculously oriented so that I had to make a down payment that
was so large that I had to sell the house just to make the down payment.
So at the end of 2006, I was most tired. I had been dealing
with the collection arm of the IRS who treat me as a criminal and living on the
financial edge trying to keep at least some equity in my home on which to live
in my retirement. For six years I had to deal with an IRS that seemed to enjoy
staging raids on my finances unannounced and levying my wages so that I get a
surprise when the paycheck comes well below what was expected.
At the end of 2006, I finally saw some light at the end of
the tunnel in form of the tax relief act extensions. I wrote letters, hoped,
followed the proceedings and finally it passed. I was so happy. I didn't
quite understand how the law would work, but everyone else was happy and I was
sure that there would be some relief for my problems that would come from this
act. However, January 2007 came and nothing seems to have changed. Days after
new years the collection agent was back in my face telling me that I had to
sell my house in Ben Lomond or he would seize it. So I put it on the market
and it sold and the money's gone and it has made no change in what I owe the
IRS. No one seems to have told the IRS that there was relief for these AMT tax
issues voted in Congress; they just keep coming.
So I moved my family to Kremmling Colorado to the home I had
hoped would be my retirement home (no one in Silicon Valley would rent to a
family that consisted of husband, wife, two dogs, three cats, 14 Chinchillas,
and two rabbits). Now to keep the collection agent happy, I have to put that
house on the market which I'm in the process of doing. When that's sold, I'm
not sure what I'll do, but I can assure you that it won't involve getting rid
of the non human members of my family. I've discovered another shocking fact
in the form of my inability to find lodgings in Silicon Valley. It seems that
the fact that I've never missed a payment to anyone in my 45 years as a worker
and home owner means nothing when compared to the fact that there have been 4
tax liens against my houses. I'm living in a residence hotel near work because
I can't find a landlord that will rent me a small apartment.
So in conclusion, here I am back with my hat in my hand
asking for additional considerations by your Committee to help me with problems
of penalties, internist, and collections. I have been fighting for the past
six years attempting to save my most precious possessions in my homes. I can
see them slipping away, but I continue to hope that some resolution can be
found before my home in Colorado is sold.
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