Mr. Chairman:

My name is Kay M. Council. I live in High Point, North Carolina. I am 48 years old, and I am a widow. I came home one evening in June 1988 and found the lights on, the house empty and a note from my husband:

My dearest Kay --

I have taken my life in order to provide capital for you. The IRS and its liens which have been taken against our property illegally by a runaway agency of our government have dried up all sources of credit for us. So I have made the only decision I can. It's purely a business decision. I hope you can understand that.

I love you completely,
Alex

You will find my body on the lot on the north side of the house.

I don't remember many details from the rest of that night, but I will never get over what I lost that night -- what the IRS did to us, what it drove my husband to do. He was 49 years old.

Four months later, finally able to pay our attorneys with money from Alex's life insurance, I went to court and beat the IRS. The court entered a judgment barring the IRS from collecting $300,000 in tax, penalties and interest it claimed that we owed. The court ordered the IRS to cancel the tax lien that it had placed on our property, a lien that had ruined our personal finances and our business.

Alex had a development company that was building a residential development in Pfafftown, N.C., where we lived. When the IRS placed the lien on our property in may 1987, he was preparing to start another development. But no one wants to lend money to someone who has a tax lien. So the development fell through.

After the IRS acted illegally, our income from the business barely covered our living expenses. Our net worth was $15,000, and we owed $112,000 on a construction loan for our home but could not refinance it because of the lien. We faced losing our home when the loan came due.

People talk to me about being angry at Alex for what he did. I try to be but when I sit down and think this out, he was right. There was no other way, except to just give up. If we had given up, we would have lost our home and our business, and we still could not have paid the IRS all that they claimed we owed. We could not give up -- Alex could not give up -- because we knew the IRS was wrong.

The IRS was wrong from the day they sent us the first notice. They were wrong. We were innocent from day one, and the court decisions and court orders say that. But look at what was done to my life. People sit back and say, "Well, this is a terrible story but it's surely an exception to the rule, and this sort of thing could never happen to me."

They are wrong. This kind of thing should never have happened to me and Alex. We weren't criminals. We weren't trying to do anything wrong, and we didn't do anything wrong. We just got caught up in the middle of a big IRS screw-up, and we couldn't get out of it.

It began in 1979. We were living in a suburb of San Francisco, where Alex was a vice president of a mortgage insurance company that he had helped start. Alex received a bonus. We invested the money in real estate and in oil and gas leases. On the advice of our accountant and our financial consultant, we also bought rights to two paintings offered by an art company in New York. The idea was that we could sell lithographs of the paintings and use other marketing tools available to eventually recoup our investment and make a profit. It was to have been a little business for me to run. But it didn't work out, and we claimed a write-off of about $70,000 in our 1979 tax return.

The IRS audited the return and told us that our accountant was wrong, that it did not consider the art investment a legitimate tax write-off. We expected the IRS to deny the write-off and send a notice of deficiency that would give us 90 days to petition the Tax Court. We planned to fight the claim in Tax Court. If we had lost, we could have scraped together the money and paid the tax. But the IRS did not do that.

If we had received the notice, my husband would be alive. We could have fought the notice and paid the tax if we lost. There were other people who got such notices through the same process; they were fortunate enough that they got theirs and they were able to pay them. They lost money, but they didn't go through the hell that the IRS put us through.

We didn't hear from the IRS during the next couple of years. We lost money on our investments in California, and in 1983 we moved back home to North Carolina, where Alex started the housing development. Then the IRS sent us a bill for $183,021 -- tax of $115,895 plus penalties and interest. This was in September 1983, four months after the statute of limitations ran out. We were dumbstruck.

In an affidavit filed in federal court in November 1987, Alex described his attempts to find out what had happened.

"Prior to this bill, neither my accountant . . . nor I had received an audit report, a 30-day letter, a 90-day letter or any other notice of assessment. Since that time I have been attempting to determine why I never received these documents or any other notice, which foreclosed any administrative or Tax Court review of the proposed deficiency . . . which efforts were wholly unsuccessful until very recently. The only communication I had received from the IRS since 1983 indicated receipt of my letters requesting the above information, bills threatening collection procedures, and notices of intent to levy on my assets."

The IRS maintained that it had sent us a certified letter containing the required notice of deficiency three weeks before the statute of limitations ran out. We never received such notice and our accountant never received such notice, and we tried repeatedly to get the IRS to show us a copy of the notice and proof that it was mailed. It would not. We tried to get the IRS to give us the number of the certified letter so that we could go to the postal records ourselves and try to trace it. The IRS did not respond.

We tried again and again to get the IRS to check into it and resolve it. We had been doing that from the day we first received the tax bill. Their attitude was simply to ignore us. We would get in touch with the problems resolution officer, and he would ask for all of this information, which we would supply him with. They were supposed to get back to us, and then months would go by and we would hear nothing. We would try to get in contact with them. Every time, for some reason, the person we had been working with was no longer in that office, or somebody else was our new resolution officer. And then we would go through the same process again, sending all of this information in. We never got any satisfaction. We were totally ignored.

I think the IRS ignored us because they knew that they didn't have a case, that they were wrong. If they thought they had a case, then why didn't they come in and take our assets, as they did to so many other people? Why did they ignore us for so many years? I feel that they said to themselves that we'll just sit back and see what happens.

If they had gone to the postal records to find out what happened to the certified letter, the whole thing could have been avoided and my husband would be alive. But they would not. Alex is dead because of the IRS's arrogance and incompetence.

After two years, we finally received a copy of the notice of deficiency in 1985. In 1987, after a four year wait, the IRS sent us a copy of its only proof of mailing -- a certified mail list showing that the notice was mailed at a post office in San Francisco on April 15, 1983. But the IRS's mail list had our address wrong. We lived at 71 Corte Del Bayo in Larkspur, California. The address on the IRS list was 7+- Corte Del Bayo. To us, this seemed to explain why we never received the notice; the IRS had sent it to the wrong address.

The IRS argued in U.S. Middle District Court that the mistake on the mail list didn't mean that the letter was sent to the wrong address. But it had no proof; all it had was the mail list with the incorrect address. We argued in court that the IRS could have found out what happened to the notice by going to the post office and looking at its certified mail records. It did not do this, despite our repeated queries starting in October 1983. By the time the IRS bothered to check, the post office had destroyed the records.

The IRS also argued that we knew that an assessment was likely and implied that we should have taken action ourselves to get the IRS to act before the statute of limitations ran out. That was another totally ridiculous statement, and the judge agreed in his judgment against the IRS in December 1988. Federal law, he said, "does not place upon plaintiffs the burden of hounding the IRS for delivery of a possible notice of deficiency."

Some of my friends and relatives think that I should be happy, that I have accomplished what Alex wanted me to accomplish: I beat the IRS. They ask, "Why don't you get on with your life and be a happy woman?" It's not that simple. Right now I'm fighting for my financial life. I still have that $132,000 mortgage plus interest to pay off at the Millbrook development. My legal fees were close to $70,000, and I still owe my attorneys about $14,000 plus interest even though the court ordered in August 1989 the IRS to pay them $27,900. The IRS dropped the appeal of this order in December, and the check finally came last month.

Alex took his life so I would have money to keep fighting the IRS. He believed that our lawyers were not pushing our case because we didn't have any more money to pay them. I don't think I would have ever gotten into a courtroom if my attorneys hadn't known that I had $250,000 from Alex's life insurance.

What if Alex and I had not had the money to hire the attorneys to start with? If you're poor, what do you do? There's something wrong when the IRS can accuse you of something and assume you are guilty and destroy your life. Aren't you supposed to be innocent until proven guilty? They said, "You're guilty." And I had to fight to prove I was innocent, and, sure, I proved it. Why don't I feel good about it? I always felt that if I beat the IRS I would feel good, that I could say, "All right, Alex, your death wasn't for nothing; we proved we were innocent." Big deal. I keep winning all these victories; I lost the war, a long time ago.

After Alex's death, I was left running a business that I really did not have the knowledge to run. But I had no choice. I had to sell my home at Pfafftown for much less that it was worth in order to pay off the construction loan that was due on it. I could not get the house financed because of the tax lien.

When I bought my house in High Point, I had to use money from the insurance settlement and pay cash for it. I could not get financing because of the tax lien. When I had to buy a car, I had to pay cash for that. And it continues, even though the court made the IRS remove the lien. A few weeks ago I went to buy a vacuum cleaner. The salesman said that I could have 90 days to pay cash for it, but he went ahead and applied for financing on it. They turned me down because of the tax lien that is still on my credit report. I thought that, since the IRS puts these tax liens on your credit report, when the lien is released they would have it removed. But it doesn't work that way; it's my responsibility. The credit bureau said that there is no way I can get the lien off my credit report, that it stays on there for seven years. All I can do is attach a statement to the report explaining what happened. So I'm still feeling the effects of the IRS action against us, even though I beat the IRS in court. And I'm going to feel the effects of it, because it's on my credit record and every time I apply for credit I have to sit down and explain to people. I will have to do that for the next seven years.

IRS Commissioner Fred Goldberg was on "Good Morning America" the other day talking about an article in "Money" magazine which said that American citizens pay billions of dollars that they don't owe, simply because the IRS sends out inaccurate notices. Goldberg said "Sure, people pay money they may not owe. We make mistakes." He agreed that taxpayers should fight the IRS. "Grab us by the neck and tell us," he said.

How do you grab them by the neck? How do you get to anybody in the IRS? We tried for five years, and all we got was nothing. And he says, "Grab us by the neck." Who is the IRS? The only people I have ever seen that were IRS were people that I saw in the courtroom. Other than that, I have never been able to have any contact in any way with the IRS.

The IRS should not be in the position to say to the taxpayer, "You're guilty of this." And the taxpayer should not be put in the position of spending every dime that they have, to prove that they're innocent. Look what I went through to prove my innocence. You talk about winning battles; look at the battles I won. But I lost the war because my husband is dead.

I should feel some satisfaction that I beat the IRS, that I got a $27,900 check from them to pay a portion of my attorney's fees. I don't feel good about any of it. I feel cheated.

I was cheated of my rights as a citizen. I was cheated of growing old with the man I love. I lost my best friend. I now have to start a new life and a new career at the age where I should be able to enjoy my children and grandchildren. I worked for 20 years as a professional, but I have not been in the job market since 1982. Our children have no father, only the emotional devastation left in their life to try and deal with. Our grandchildren have no "pop," that's the name they use for the grandfather they loved dearly. Our granddaughter thinks her pop got sick and died. How do you explain the IRS and suicide to a five-year-old? It seems to me that somebody has to be held accountable for the destruction to me and my family.

Yet I am told I cannot sue the IRS for damages, economical or personal. How do you put a price tag on a life? I can't sue them for the illegal tax lien they put on us. I had no rights. The IRS has them all.

People ask me why I am doing this, because it just devastates me every time I have to go through this, every time I go back to the night when Alex died. All I can say is I thought that beating the IRS would give some meaning to Alex's death, but it hasn't. There has to be more.

There has to be something done to control the IRS, to keep it from destroying people's lives. And I really believe that if enough little people like me keep coming forward, there are going to have to be some changes.