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Angela Hartley
San Diego, California
March 20, 2007
The
Honorable Chairman Richard Neal
The
Honorable Ranking Member Phil English
Select
Revenue Measures Subcommittee
1102 Longworth House Office Building
Washington DC 20515
Dear Chairman Neal and Ranking Member English:
My name is Angela Hartley and I am writing regarding a huge AMT tax debt that I incurred on “phantom” gains
due to the application of the Alternative Minimum Tax to incentive stock
options (ISOs).
I would first like to thank
Congress and in particular the Members of the Ways and Means Committee and
Select Revenue Measures Subcommittee, for the ISO AMT Relief passed last year.
It is a first step toward ending a financial nightmare that I have been living
for nearly seven years. The return of the tax overpayment credits will at
least restore a fraction of what I have lost while struggling to pay taxes
incurred on phantom income.
I would respectfully ask for
your continued support for important issues that remain unresolved for many ISO
AMT victims, my family included. These issues are (i) ongoing ISO AMT
liability and associated interest and penalties, and (ii) the income phase-outs
that leave many families with limited or no relief. These are discussed in
more detail below, but first I would like to briefly tell my family’s story.
I am a single mom of a 13 year
old son. I incurred the AMT liability in 2000 after exercising incentive stock
options from the biotech company I worked for. I reported the exercise, have
tried to pay off the debt, have sought a compromise with the IRS, but with
little success. To pay the tax (and penalties and interest) of the phantom
gain, I have lost my home, liquidated my savings and retirement and have been
left with nothing. As opposed to the $40,000 I would owe under the regular tax
code, I have paid over $530,000 to date, still owe over $115,000 and cannot get
an offer-in-compromise from the IRS because it is a legitimate tax liability
unless Congress instructs the IRS otherwise.
My story was reported on the front page of the San Diego
Union Tribune two years ago and it has only gotten worse (http://www.signonsandiego.com/news/state/20050313-9999-1n13tax.html
).
Many ISO AMT liabilities were so
incredibly disproportional to actual gain, that thousands of families across
the country are still, six years after being trapped by ISO AMT, seeking offers
in compromise. I am hopeful that the IRS will see that Congress intended to
also provide relief to those that were so completely devastated by the
unintended consequences of the ISO AMT provisions that they have been unable to
pay, but so far they have indicated that they will do nothing unless Congress
instructs them to do so.
I would respectfully request your help in instructing the
IRS to fulfill Congress’s intent to provide relief to all ISO AMT
victims, and end the collection nightmare that has been unfairly plaguing
hard-working families trapped by ISO AMT. Families who have suffered for
almost seven years are in desperate need of having remaining ongoing liability,
interest and penalties abated, or they will continue to be caught in the
downward spiral in which they have been suffering for years due to the
unintended consequences of the ISO AMT provisions. I have made peace with
the fact that I will never be made whole again – I lost a low mortgage payment,
low interest payments, low property taxes, the gains I would have made on my 401(k),
my house and retirement and the things I could not provide my son during his
middle and high school years – those cannot be restored. I JUST want the
chance to start over without the huge undeserved albatross around my neck.
A significant change was made to the relief in HR3385 when
it was included in the Tax Relief and Health Care Act of 2006, in that an
income phase-out provision was added that leaves many American families with no
relief or only partial relief. This phase-out was not a part of the widely
supported Johnson/Neal HR3385. HR3385 recognized that families should pay
their fair share of tax on money actually received, regardless of income
level. Also, these income phase-outs unfairly targeting families in high
cost-of-living States and Districts such as San Diego, California (my home),
Massachusetts, New York, Connecticut and Virginia; those families are suffering
as much from unfairly disproportionate taxation as people with lower incomes in
other areas.
I am grateful to Congress for
all it has done and is doing to help families across the country suffering from
ISO AMT, but I hope they will tie up the loose ends that will actually provide
the relief they intended. Please do not hesitate to contact me at (858)
361-9475 if you have any questions.
Sincerely,
Angela L. Hartley
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