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Ely, Iowa
April 5, 2007
The
Honorable Chairman Richard Neal
The
Honorable Ranking Member Phil English
Select
Revenue Measures Subcommittee
1102 Longworth House Office Building
Washington DC 20515
Dear Chairman Neal and Ranking Member English:
My name is Ron Speltz and I am
writing on behalf of myself and my wife June and four children (Alison, Sydney,
Angela and Sawyer), regarding a huge AMT tax debt that we incurred on “phantom”
gains due to the application of the Alternative Minimum Tax to incentive stock
options (ISOs).
We would first like to thank
Congress and in particular the Members of the Ways and Means Committee and
Select Revenue Measures Subcommittee, for the ISO AMT Relief passed last year.
This relief brings a ray of hope and the beginning of the end to a financial
nightmare that my family and I have been living for nearly seven years.
My family and I would
respectfully ask for your continued support for important issues that remain
unresolved for many ISO AMT victims, my family included. These issues are (i)
ongoing ISO AMT liability and associated interest and penalties, and (ii) the
income phase-outs that leave many families with limited or no relief. These
are discussed in more detail below, but first I would like to briefly tell my
family’s story.
The IRS is continuing to pursue
collection on amounts we have been unable to pay, even though – through
incurring massive personal debt – we have to date already paid more than
$160,000 in ISO AMT prepayment tax. The full federal ISO AMT tax of over
$205,000 was imposed on stock that we bought for around $30,000 and sold for
$1,600 dollars.
The stress continues year after
year with liens on our home; the fear of wage garnishment; ongoing debts
incurred as we tried to pay as much of the ISO AMT liability as possible; and
the depressing thought that with mounting interest and penalties we may never
get to the point where we are free from this unfair burden.
Addressing Ongoing Liability, Interest and Penalties.
Many ISO AMT liabilities were so incredibly disproportional to actual gain,
that thousands of families across the country are still, six years after being
trapped by ISO AMT, embroiled in offers in compromise. I am hopeful that the
IRS will see that Congress did not intend to provide relief to people who were
significantly harmed (but were somehow able to pay), but deny relief to those
that were so completely devastated by the unintended consequences of the ISO
AMT provisions that they have been unable to pay. In addition, many families
had no choice but to enter into devastating offers in compromise that are
subjecting them to crushing ongoing monthly payments that are preventing them
from properly caring for their families.
I would respectfully request your help in instructing the
IRS to fulfill Congress’s intent to provide relief to all ISO AMT
victims, and end the collection nightmare that has been unfairly plaguing
hard-working families trapped by ISO AMT. Families who have suffered for
almost seven years are in desperate need of having remaining ongoing liability,
interest and penalties abated, or they will continue to be caught in the
downward spiral in which they have been suffering for years due to the
unintended consequences of the ISO AMT provisions.
Removing Relief Phase-out for American Families. A
significant change was made to the relief in HR3385 when it was included in the
Tax Relief and Health Care Act of 2006, in that an income phase-out provision
was added that leaves many American families with no relief or only partial
relief. This phase-out was not a part of the widely supported Johnson/Neal
HR3385. HR3385 recognized that families should pay their fair share of tax on
money actually received, regardless of income level. Also, these income
phase-outs unfairly targeting families in high cost-of-living States and
Districts such as Silicon Valley, Massachusetts, New York, Connecticut and
Virginia; those families are suffering as much from unfairly disproportionate
taxation as people with lower incomes in other areas.
The phase-outs themselves have
serious unintended consequences by forcing affected employees to quit work or
lower productivity in order to recover their credits, thereby robbing companies
and the economy of the services of high value employees, and robbing the
Treasury of tax revenue that would otherwise be collected from these people if
they were fully productive.
We personally know people who
have worked hard for years and invested thousands of dollars of their personal
money to bring about change in the ISO AMT law, and who will now be left off
the relief even though they, like us, need the relief to get back to a position
of financial health. This situation is totally puzzling to us. We cannot see
any policy justification for people to be treated unfairly and ruined
financially with hugely disproportional tax burdens because they make more than
a specified amount of money.
I want to once again express my
gratitude to Congress for all it has done and is doing to help families across
the country suffering from ISO AMT. Please do not hesitate to contact me at
the number below if you have any questions.
Sincerely,
Ron Speltz, June, Alison, Sydney,
Angela and Sawyer
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