Family’s Ordeal Fuels IRS Reforms

At 8 o’clock one August night, Bruce Barron left his father’s birthday party at a nursing home, saying that he had to finish some work at his office.

There, he opened a bank foreclosure notice on his home in Derry and a Cape Cod vacation home in Chatham, Mass. The Internal Revenue Service had placed liens on both.

He called his wife, Shirley, to say that he was working late, then drove 100 miles to Chatham, parked his car in the garage and left the motor running.

His mother and his sister found the body of the 47-year-old attorney the next morning when they arrived for a visit.

He left a brief handwritten note blaming the bank, which he said “needs to clear its books,” and the IRS, which “sits, does nothing and watches you die.”

He said he hoped that his life insurance would satisfy the debts.

“Killing myself is much harder than I thought it would be,” he wrote. “Carrie [his daughter] will need everyone’s love. I wish I could stay and see her continue to grow. There is no good solution. I’m sorry for hurting everyone by doing this.”

Shirley Barron said that her husband was put through hell by the IRS for three years, but that she had no clue he was thinking about suicide that night in 1996.

“No. No. No,” she said. “We wanted the IRS problem to go away, and we worked with them to make that happen, but it just didn’t happen soon enough.”

It finally happened last May, more than 18 months after Bruce Barron’s suicide, when the IRS agreed to an out-of-court settlement of a $1-million wrongful-death lawsuit.

The IRS forgave more than $400,000 in tax debt, lifted all of its liens, including one on $200,000 in life insurance money, and paid Shirley Barron’s legal fees of $44,000, she said.

Steve Pyrek, an IRS spokesman in Washington, declined comment, saying that the agency is prohibited from publicly discussing any taxpayer’s situation.

But in a letter dated May 12, 1997, from the IRS to the Barrons’ lawyers denying a claim for civil damages, the agency said, “There is no evidence or reason to find that any of the Internal Revenue Service employees named acted recklessly or with intentional disregard” of the tax code.

“At no time did any of the named employees undertake a course of action to intentionally embarrass, harass or humiliate” the Barrons.

Shirley Barron said the settlement “got them off my back.”

She added, “I couldn’t have won [in court], but I knew that entering. . . . And all I really wanted was for them to leave me alone.”

She said the lawsuit, filed on June 30, 1997, was well timed. “It was when the IRS was being investigated for other abuses. When I settled, it corresponded to when they began to reform the IRS. They wanted to get people like me squared away. It didn’t help their cause to have someone like me talking about their atrocities.”

Congress last June passed a reform law designed to make the IRS a more service-oriented agency, one that might have helped the Barrons.

Among other things, it expands taxpayer rights when the IRS seeks to collect past-due taxes. The agency now has the burden of proving taxpayer liability. The law includes a taxpayers’ bill of rights that took effect Jan. 19, designed to ensure due process when the IRS takes action to collect tax debts.

Taxpayers have the right to request an appeal hearing when IRS officials seek to place a lien on property or actually take the property to pay tax debt. No action can be taken until a finding is made.

The taxpayer also has 30 days to decide whether to challenge the administrative ruling in U.S. Tax Court or in U.S. District Court. Again, the IRS cannot seize a taxpayer’s property while the case is in court.

The IRS now must consider all other payment possibilities before claiming a taxpayer’s principal home or business assets. A court order is required if the agency moves to seize the principal home.

Taxpayers now can seek civil damages of up to $100,000 if IRS agents negligently disregard the tax code or collection regulations.

“Safeguarding taxpayer rights is something we take seriously,” new IRS Commissioner Charles O. Rossotti said in unveiling the taxpayers’ bill of rights.

Amid the horror stories of past IRS excesses, Shirley Barron’s stands out.

“They came after me in a full fury” even after her husband’s death, she said. “They took Bruce’s life insurance money after they killed him, basically.”

She said that her case helped turn the tide for IRS reform and brought attention to the power wielded by some agents. “I think it created some awareness because we went public.”

One agent, who she said was discrediting her husband before he died, has since left the IRS.

“You have to remember he was a lawyer in the small town we both grew up in. This agent was going from courthouse to courthouse getting client lists, talking to opposing counsels, saying, ‘If you settle this, I want the money.’ Going to his clients directly. ‘I want you to pay me what you owe Bruce Barron.’ The only thing a lawyer has is his reputation. He’s not the hardware store selling knives and screwdrivers.”

The agent, she said, “was systematically destroying him.”

The IRS said in its May 12, 1997, letter that “contacts made with third parties in this matter were made to assist in determining the collectibility of delinquent federal taxes. . . .”

The Barrons have lived in a seven-room classic Cape farmhouse on about five acres of land for 20 years. Ordering an appraisal after one had already been completed, the agent--a “real rogue with no supervision”--wanted to carry it out personally and “walked through each and every room, including my bedroom and my daughter’s room,” Shirley Barron said.

According to her attorney, William E. Brennan, the agent harassed the family: Shirley Barron’s IRA was temporarily seized; her wages from the town of Londonderry, where she worked as a librarian, were attached; even $300 from their daughter’s savings account was claimed. And the agent demanded to see six months of grocery receipts, Brennan said.

Another agent, Shirley Barron said, showed up at her backdoor in February 1997 and attempted to serve her with a subpoena. She refused.

“I opened up the top of the Dutch door, and he flashed a badge and an ID in my face,” she recalled. “And he was a very large man. And I said to him, ‘I cannot believe you are standing here in front of me now when you killed my husband, and you’re coming after me now. You’re trying to kill me now.’ ”

Bruce Barron’s suicide left her alone to rear their 16-year-old daughter, Carrie Elizabeth, a junior in high school. Carrie was close to her father, often joining him for skiing and biking, sometimes accompanying him to his office.

The family used to go to their Cape Cod home almost every weekend, and spent Thanksgiving there every other year.

“Bruce was the cook,” Shirley Barron recalled. “He’d be the one that would get up at 5 in the morning and stuff the bird. He was just the life of the party.”

The bank foreclosed on that vacation home, a seven-room contemporary Cape, and auctioned it off. With more time, Shirley Barron believes, she could have sold it for tens of thousands more.

The only income she had was $530 a week from the Londonderry library and a part-time job at a college library.

She went to Washington in September 1997, just after the one-year anniversary of Bruce Barron’s suicide, and met with the chief investigator for the Senate Finance Committee. “My life has been destroyed by the IRS’ abuses,” she told him.

Those were terrible times. Sleepless nights. Headaches. A nervous stomach. Weight she gained from the emotional stress, and, correspondingly, weight her daughter lost, so much that she looked like a skeleton.

Carrie Elizabeth’s grades dropped and she failed Algebra II after receiving A’s in Algebra I.

Shirley Barron is using part of the insurance money to send her daughter, now 19, to Champlain College in Burlington, Vt., where she is a freshman. She also paid off part of the mortgage on her Derry home.

She believes that the IRS reforms will protect others from some of the horrors that she and her family went through. Particularly important, she said, was reforming the agency’s use of penalties, which grew and grew as the Barrons’ case dragged on.

“By the time they notified us of what we owed, it was far too great,” Shirley Barron said. At the time of her husband’s death, the couple’s tax debt, with interest and penalties, was more than $300,000.

The dispute arose after they lost $80,000 in a mid-1980s recycling-plant investment, a loss they deducted from their taxes on advice of their accountant. Six years later, the IRS audited the Barrons and disallowed the deduction. The agency then assessed them tax liabilities of more than $225,000, including interest, for the years 1986, 1988, 1989, 1991 and 1992, Brennan said.

Because of real estate and business losses during the early 1990s’ economic slump, the Barrons were unable to pay the staggering tax liability, he said.

One of the January IRS reforms is to suspend interest and most penalties for individual taxpayers if the IRS fails to provide a tax liability notice within 18 months after a return is filed in a timely manner.

The Barrons offered a compromise settlement of $30,500, Brennan said, but an agent rejected it in 1995 and resumed collection efforts, which the IRS defended at the time as legal. In an internal memo, the agent said the offer would have been accepted if increased by just $2,610, but the Barrons were not told this.

Shirley Barron said the IRS settlement was a vindication--and a relief.

“I didn’t enjoy suing the federal government,” she said. “It certainly dominated my life.”