Subject: A Mother's Story - Personally crushed having to liquidate my own retirement to try and save my Son from the IRS and my Son's now broken Family due to AMT on Incentive Stock Options Comment: Here is an update to my own personal situation and that of my Son's since my testimony given to the Ways & Means Oversight sub-Committee June 2004. Since my testimony at the Tax Simplification Hearing, my son has been affected by this hideous burden of tax debt to the extent that it has cost him his marriage and the privilege of raising his baby daughter within the confines of that marriage. As I stated in my original testimony,(please see below) I took loans to pay the IRS for him with the understanding that he would make the monthly payments on those loans. His financial struggle has been overwhelming and he is no longer able to keep-up with the monthly payments. Consequently, because the loans are in my name, I am responsible for repayment and must now cash-out my 401k to repay what amounts to only one-third of the total obligation to creditors. Because I am 57 years old, there will be no chance for me to ever make-up for the loss of my retirement account that I have spent years accumulating. The monthly payments remaining to satisfy what I borrowed to hand to the US Government will eat-up my paycheck for the remaining years of my "work life". These were the years when my paycheck was to be put-away for retirement. This is just devastating. I have totally lost faith in the US Government. It is very hard for me to believe that this will ever be resolved. The obviously insidious impact on so many does not seem to move the very powerful few to make this right. How can they sleep at night? We sure can't!! Please see my original testimony below. Statement from Linda L. Lacy To House Ways and Means Committee, Subcommittee on Oversight Washington, D.C. June 2004 After struggling with the words that might make my testimonial a significant statement in favor of reforming the AMT, I keep returning to the reality of the personal toll that the AMT has taken on my son . . . and so, I offer the following intimate account: Approximately three weeks ago, I managed to arrange a signature loan and three credit card loans totaling $50,000, walked into our local IRS office and proceeded to hand the clerk a personal check approximating 95% of the "debt" my son "created" by exercising a portion of the stock options given him by a dot.com firm he was working for in California in 2000. After watching him struggle the past three years trying to figure out a way to support his wife and children and still pay the IRS for a phantom gain on those remaining stock options, I decided to utilize MY borrowing power and deliver him from the specter that is the IRS. I could ill-afford to do this for him, yet I must confess that I did it partially for selfish reasons . . . I was tired of the fear that kept me awake at night wondering if the "new, friendlier IRS" would put a lien on his bank account or encumber his employer by laying claim to his wages in order to satisfy the most insidious IRS tax regulation that exists. What a ridiculously complicated system of taxation we live under! This young man has been sentenced to years of trying to climb out from under oppressive and illegitimate taxation debt. I'm appalled by what is being allowed to obscure the dreams of so many. Now, somehow, my son must come-up with enough money every month to keep the loans out of default. However, after considering the power the IRS wields, we determined it was better to owe almost anyone but the IRS (in fact, the official IRS WEB site encourages that "it would be more advantageous to take out a bank loan than subject oneself to the penalties and interest assessed by the IRS" . . . very helpful information). We have no reason to believe that retiring this huge debt will happen quickly . . . quite the contrary. As I am nearing retirement and need to direct my financial life toward that phase, I am placed in a rather precarious position . . . one of helping my son or helping myself (what would most parents do????). My children were raised with a respect for the United States government and all it represents. I led them on several occasions through the buildings and monuments of Washington D.C. and extolled the virtues of living in such a privileged country. My husband and I managed to provide all three of our children with college educations and will gladly and appreciatively spend the rest of our lives repaying the loans that provided them with the excellent learning experiences they received. But, at least there are solid educations in exchange for those loans! My son received two engineering degrees in four years at Duke University and we were certain that the culmination of his hard work would be financial reward compensatory to the effort he expended. That reward must now take a back-seat to the IRS to satisfy this caustic injustice. Please give all of us a break . . . reform this tortuous tax and designate it retroactive to the 2000 Tax Year when so very many ambitious, spirited, and intelligent young people were caught completely off-guard and are now paying dearly for their naiveté (some in amounts reaching hundreds of thousands of dollars). In addition to those already mired in this mess, so many of us in the middle class without accountants and lawyers to warn us of impending danger are indeed poised to be ensnarled also. To close, I must add that those affected by the AMT extend beyond those whose social security numbers appear on the IRS debt ledgers . . . Thank you for reading a mother's testimonial. Linda L. Lacy Mogadore, Ohio |