Subject: Youskauskas - 3/17/05 - Maryland - ISO/AMT Comment: President’s Advisory Panel for AMT Reform Submitted by: Heather L. Youskauskas John D. Youskauskas 1325 Lisbon Drive Eldersburg, MD 21784 (410) 552-4718 jh71396@adelphia.net March 17, 2005 September 16, 2002 To Whom It May Concern: The spirit of Naziism, Socialism, and Communism has found a protective incubator in the IRS. In other words, the IRS has become a police state, an entity so independent that it rules, as does no other area of our government, with utter disregard, indifference and hostility toward the populace. It is astounding that those words, thoughts, and feelings of contempt would be vocalized by me. The issue of injustice concerns a young couple in their early 30's, Heather and John, parents of a 10 year old boy and a one-month-old baby girl. They are Middle Americans, both hard working. Heather’s company went public one year ago in July and was the largest IPO to hit Wall Street raising capital in excess of $400 million. On the day she was hired with the company, she was given Incentive Stock Options (ISO’s), which was the norm at that time warranting lower salaries and possibly attracting more experienced employees. At the time of the gift, the value of the stock was $1.15 a share. They were told that the stock could not be sold, traded, disposed of in any lucrative way for six months (with additional lockup periods each quarter due to her being considered an “insider.”) she was forced to sign a Lockup Agreement. Then, during this period of no-sale, two things happened. The value of the stock went from $114 to $25, and another tax year was entered. Also, even though they were prohibited from selling, the IRS valued the stock as though it was income, which it was not and subsequently levied the tax along with penalties and interest, as they could not afford to pay. She was not allowed to cash in this “gift”, and so received nothing from it. However, on paper, the stock was highly valued, as were so many of those high-tech companies. Consequently, the IRS, seeing dollars on paper, declared that Heather and John owed approximately $83,000 in taxes (due to the Alternative Minimum Tax Laws or AMT); however, after interest and penalties over a six month period, they now owe $96,000 and have been forced to hire a tax attorney to assist them in dealing with the IRS. Shocking, as their net worth or income nowhere approach this number and have greatly decreased due to the downward market trends. I do understand tax levied on real income. I do not understand how tax can be levied on phantom income from anyone whether white collar, blue collar or destitute. Not only have they not received a penny from the stock, but real money will be paid to satisfy this levied burden - monies which have already been taxed once because that is how the IRS tax laws are written. In addition, they will literally be loaning the IRS money interest free, but will have to take approximately 28 years to get it back through tax credits as you may only claim a certain amount each year. Thus, shattering any hopes of putting money away for their children’s education, not to mention possibly being forced to file for bankruptcy to alleviate paying other debts in order to pay the tax bill. Is this really what the “Land of the Free” is all about? Please tell me that I have misunderstood and there is some way to rescue them?? The young folks tried explaining their situation to the IRS officials. The “kinder” IRS folks retaliated by telling them to sell their home of two years, their cars, turn over their savings account and all their monies in their IRA’s. The “kinder” IRS was indifferent to the fact that the couple never received any distribution from the stock. The “kinder” IRS was indifferent that the young mother was placed on disability because of pregnancy complications and then subsequently laid off from the company, whose stock has now plummeted to $.70 a share. The “kinder” IRS was indifferent to the mother’s concern over the baby’s heart murmur and breathing problems. The “kinder” IRS told her to find a job soon so that she could begin to pay these taxes. Obviously the “kinder” IRS honors money ahead of motherhood and family values. The “kinder” IRS would not take into consideration that it would cost more than $700 per month for child care for the baby, and that this amount would not cover any before and after school care for the 10 year old son if she went back to work. The “kinder” IRS would not listen to the mother’s physical needs, which are recovering from the Caesarian section, leaving her a bladder with no sensation. The “kinder” IRS does not understand kindness. The “kinder” IRS is unable to quantify a situation. The “kinder” IRS can only see numbers on a paper and is indifferent to the honest situation surrounding those numbers. As I said in the beginning, the “kinder” IRS is its own Gestapo State. This problem is perceived by U.S. Congress as being inappropriate, but measures to correct it in the House were defeated by reasons unknown. However, my understanding is that while these measures were defeated, Government respectfully asked that the IRS not go after victims of this nature. Maybe this is the government’s way of taxing the rich and protecting the lower and middle-income citizens; however, this type of situation has hurt many middle Americans and will continue to do so unless something is changed and fast. Taxpayers should not be forced to pay tax on income that never materializes in order for the IRS to protect their interests up front from any massive overall gain. How the Government can standby and watch this happen to so many, I will never understand. Especially in a time when things are so tough financially. In closing, I would like to say that I have always loved the simple fact that I am an American. Nothing filled me with more pride that being from a country that fought so hard for its freedom and protecting its’ own other than watching my children smile and reach for their dreams. Living the “American Dream” is all I ever wanted. However, it has been a long cold year and I fear that my pride is turning to hate and utter contempt for my country for the simple fact that we can run to protect so many other countries, forgive foreign debts beyond comprehension, and pardon those who honestly do not deserve it, but when given the chance to truly help our own, we refuse or reply, “I’m sorry, but that is just the way it is.” Please tell me that this is not the way it is and that we can rest knowing that this will be taken care of because it is truly not right? Please tell me that I do not have to explain to my children why we could not put away money for their education and other things and pray they do not develop mere hate and contempt as well, but rejoice and give thanks that we live in a land where people are truly merciful?? Bitterly, John & Heather Youskauskas March 17, 2005 In continuation of this letter written in 2002, we have been through many trials and tribulations in order to free ourselves of this battle with the “phantom” AMT and finally have been successful. While it took the assistance of a seasoned tax attorney, and of course money, nothing can compare to being relieved of this issue. We originally owed the IRS in excess of $120,000 after all of the penalties and interest had accrued and with the help of our attorney we realized that we should not have owed the tax to begin with as our situation was unique based on the IRS laws and regulations. We wonder how many others have suffered as we have for over 2-3 years trying to bring resolution to their cases and been unsuccessful. We still await our tax credits and only in increments of $3,000 each year, but we guess that is a small price to pay compared to what we were originally told that we owed. Please don’t misunderstand, we may have solved our issue; however, we strongly feel that the way tax laws are currently written that many people have suffered and will continue to suffer unjustly until the AMT is reformed to bring balance to American taxpayers. No one should be forced to pay taxes on phantom money or money that may never be realized. This is nothing but a benefit to the IRS in collecting money up front when possible losses are at stake. Not to mention, the corporations have no liability in these matters when they reward employees with stock options and refuse to educate them as well. Thank you for the opportunity to share our story. We look forward to the “new” reformed AMT. |