IRS Bills Whistle-Blower for Ex-Employer’s Tax Tab

The former controller of a computer company said he didn’t expect a parade for telling the Internal Revenue Service the firm wasn’t paying all its taxes, but he didn’t think he’d get stuck with the $69,000 tab.

The IRS said it was just following the law when it held S. Stewart Joslin responsible for taxes the company withheld from workers’ paychecks but never passed on to the government.

“I could wind up paying interest all my life and never get to this $69,000,” Joslin said last month. “The real problem is I don’t owe the cotton-picking money. And they’re not looking at anybody else. That really steams me.”

Joslin wouldn’t name the company he went to work for as a controller in early 1987. He said he didn’t realize until that fall the company wasn’t forwarding the tax money.

“I wasn’t aware of withholding tax problems until October, when I began signing paychecks on a regular basis,” he said. “The bookkeeper told me there was a problem. I started trying to get the owners to pass on their withholding.”

The owners finally agreed to do it, Joslin said.

“It was supposed to be done in May. It never happened. At that point, I notified the IRS and became their primary target with that notification,” Joslin said.

The owner told an IRS agent at a meeting with Joslin that Joslin wasn’t responsible for the decision not to pay up, Joslin said.

“The IRS didn’t take his word for it. I continue to be the primary target for repayment,” he said.

IRS spokeswoman Teresa Bailey said the agency is following the law in going after employees responsible for making sure that taxes were paid.

“The IRS tries to educate people. . . . And one of the things we tell them is that when you sign your name (on company tax forms) you are as responsible as you are for your own individual return,” she told the Times-Picayune last month.

Rep. Bob Livingston (R-La.) asked the IRS to review Joslin’s case; Sandra Freeland, chief of the agency’s New Orleans appeals office, concluded that Joslin is responsible for the unpaid taxes.

Joslin isn’t alone.

“You don’t get any gold stars for bringing a problem to the attention of IRS,” said Frederick Daily, a tax lawyer in San Francisco.

He said he represents a personnel manager held responsible for $600,000 in unpaid taxes after his San Francisco firm declared bankruptcy and its owners went to England.

Syndicated columnist Jack Anderson recently wrote about a woman billed for $120,000 in withholding taxes even though she quit her company in Austin, Tex., and told the IRS her former bosses weren’t turning over the money.

A congressional subcommittee is considering an investigation into whether it is fair to go after mid-level managers.

Joslin said the tax bill amounted to $120,000 when he first got it in November, 1988, from the IRS.

“I responded, saying, ‘I don’t accept this. This is a bunch of baloney. I would like to appeal this. . . . In February, I’m notified there’s been a lien placed on my home.”

He said he called the IRS and was told his request for an appeal was rejected because he hadn’t cited the appropriate regulations.

“When the company I was with was sold out . . . I went to work for the new company. As did the ownership of the old company,” Joslin said. “Some of the monies from the acquisition were supposed to go and pay the IRS. I found out that they didn’t do that. That’s when I got my attorney.”

Over a year, Joslin said the company paid about $35,000 in back taxes. In May, he said the IRS agreed that Joslin wasn’t responsible for taxes due before he joined the firm and knocked $16,000 off the bill.

“I asked one agent, ‘Why are you harassing me?’ “Joslin said. “They said, ‘Well, you’re the only one that returns my phone calls.’ ”