Patience Is Taxed to the Limit in IRS Horror Story

Saundra Williams says she will never forget last Jan. 17, the day a somber IRS agent knocked on her front door, questioned her frightened teen-agers about their mother’s whereabouts and then waited outside in a car for Williams to come home from work.

Williams, a single mother, had run errands after work--the sort of stuff that busy parents are always having to do--and missed the caller, instead finding a curt note telling her to appear before the IRS at 8 a.m. the next day for questioning.

“When I went into the office, they told me I owed thousands of dollars in back taxes, plus a 25% penalty for being negligent, and that I was guilty unless I could prove I was innocent,” Williams said. “Can you imagine that in America?”

Saundra Faith Williams, mind you, is a well-educated 38-year-old who supports two children on her $25,000 salary, drives a Plymouth Reliant and lives a law-abiding life in a small apartment in Los Angeles near the Inglewood line. But to the IRS, she has been an object of relentless suspicion.

The IRS visit in January was for her the final straw in a six-year avalanche of wrongful accusations, including that she lied about being a head of household and her marital status and failed to report income. Since 1983, the IRS has ordered her to repay thousands of dollars, threatened to garnish her wages, interrogated co-workers about her and called her as late as 10 p.m. with questions. Ultimately, the IRS placed a tax lien against her, causing her to be denied credit for years, “a humiliation that I just cannot tell you.”

The clincher to this tale is that Williams is utterly innocent.

The IRS says it has gotten to the bottom of the six-year “misunderstanding.” On May 9 it issued Williams a letter of apology, formally lifted the federal tax lien against her and cleared her of all back taxes it once said she owed.

“We again apologize for any inconvenience our actions have caused you . . .” read the letter.

Williams estimates she has spent thousands of hours, including one entire vacation, going over tax returns, sifting through documents and cooling her heels in IRS waiting rooms to prove she has done nothing wrong.

“Answering letters, replying to questions, returning calls or forms, waiting in offices, calling them back again and again--it’s been constant, constant stress!” Williams cried to a visitor at her home last week, pounding the floral-covered sofa with her fist.

A respected employee of IBM’s international parts distribution center in Los Angeles, Williams has lost many days from work, where she processes millions of dollars in billings and accounts as a customer service representative.

According to Shirley Nakagawa, an IRS spokeswoman, the explanation for most of Williams’ troubles is actually quite simple.

Problems Traced to Ex-Husband

The problems appear to stem from Williams’ ex-husband, who apparently signed her name to a joint 1979 tax return--unbeknown to her--after they had separated, Nakagawa said. That year, after her husband moved away, Williams and her children struggled by on her $10,000 teaching salary, and she filed her return as a single head of household.

But within the IRS, someone concluded that Williams had been naughty. To the IRS, it appeared that in 1979 Williams had purposely filed tax returns in both the joint category and in the single head of household category, receiving tax breaks for both filings.

For the next six years, none of the modest tax refunds that Williams received from the government managed to sail through without setting off alarms, even though the IRS contends that each year’s return is judged on its own merits, not on past problems.

The IRS concedes that it did not physically examine the 1979 joint return filed by Williams’ ex-husband until a reporter for The Times began asking questions about it this spring. If IRS investigators had read that joint return six years ago, they would have noticed that Williams’ signature was not her own. And she would not have gone through 75 months of what she calls “IRS hell.”

Wrote to President Reagan

“They had my children thinking I was going to jail,” Williams said. “After years, I mean years of this, I finally wrote to President Reagan. I even called (disc jockey) Rick Dees. When they push you so far, you start thinking in crazy ways.”

One day, Williams said, a repossessor showed up to tow away her new car. It had been purchased over a weekend, but by Monday the salesman had received a report showing a tax lien against her.

“I begged him in the driveway, I showed him my boxes of IRS letters,” Williams said. In one of her few victories, she said, the repossessor cursed the IRS and drove off.

The mystery began to unravel after Nakagawa, a public relations specialist for the IRS, looked into Williams’ case at the request of The Times.

According to Nakagawa, this is what happened:

“You are not allowed to have two tax returns, so the information from her single return and joint return were put together into one document by the IRS. When Saundra began calling us asking about her problems and giving us her own Social Security number, we did not show any separate return for her. She didn’t know it, but it had been filed under her husband’s number, because husbands are used as the primary number.”

IRS Became More Suspicious

When Williams was unable to produce a copy of her 1979 tax return, the IRS became even more suspicious of her tale that she had properly filed one separately from her husband.

Finally this spring, Nakagawa said, the IRS “found it by locating the joint return based on the Social Security number of her husband, which she provided us.”

Nakagawa now insists that Williams’ days of sparring with the IRS are over. The IRS says it is instead looking into Williams’ ex-husband’s taxes. But Williams, who has received other apologies from the IRS regarding the same mess, simply does not believe them.

The IRS wrote her an apology in 1986, flatly stating that no federal tax lien existed against her. Williams was given permission to show the letter to creditors. But the lien kept cropping up, and the letter did nothing to persuade bank credit officers otherwise.

As if to prove Williams’ deep doubts that she is truly free, on May 12 the state Franchise Tax Board wrote to her, three days after she was cleared by the IRS.

‘Oh Pul-eeeze!’

Said the state: “Based on information from the IRS,” she had been found negligent of ducking taxes and owed them $221.75 in taxes and penalties. Not surprisingly, they are disputing her 1985 claim that she is the head of a household.

“Oh pul-eeeze!” Williams hollered up at the ceiling of her tidy apartment.

Nakagawa said Wednesday that Williams should send her various clearance letters from the IRS to the state. She said it is not the IRS’ responsibility to clear up Williams’ troubles there.

In fact, Williams has already showered the state with her IRS clearance letters, to no avail.

Now, as Williams stares at two file boxes and a notebook jammed with her IRS correspondence, she says she can’t shake a nauseous feeling that the saga will never end. She is moving out of state and will remarry this month, and fears the IRS will soon follow.

“It’s down to this,” she said, now quiet and calm. “I’m not paying them one dime. They treated me like somebody’s criminal. Let’s talk about what they owe to me.”