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NEW YORK TIMES ARTICLE 1999 October 31, 1999 A Gift or an Estate? That Is the Multimillion-Dollar Question By DAVID CAY JOHNSTON NY Times All that stands between Paula Kennedy and the man she loves is a $12 million tax lien from the Internal Revenue Service. She inherited $150,000 and one undeveloped lot on Lake Winnipesaukee, N.H., from her mother, who died 13 years ago, but the IRS says she and her brothers owe millions in gift and estate taxes. Elizabeth and Donald Boyer, pictured below in 1958 with their children Paula, left, Tom and Bill, once ran Camp DeWitt in New Hampshire. That land is now the subject of a prolonged tax battle that has kept Paula from marrying Joseph S. Kennedy. |
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Until the case is settled, she fears that if she marries Joseph S. Kennedy, his assets will be drawn into the case. To keep up appearances, because they live together in Scotch Plains, N.J., she has legally changed her name. Ms. Kennedy, 43, has good reason to be afraid. Even though she and her brothers, Bill and Tom Boyer, 54 and 50, have cooperated with the IRS, the agency has turned their lives into a nightmare, going after them with a powerful tool Congress created for dealing with major tax criminals. Without notice, the agency seized their bank accounts, their paychecks and Ms. Kennedy's $7,500 bonus three years ago, using a cudgel known as a jeopardy assessment. And while the IRS has vowed lately to treat taxpayers as customers, the Boyers remain trapped in a case left over from the old culture, in which all taxpayers were viewed with suspicion and getting a case closed could take years. Ms. Kennedy and her brothers may well be in the wrong, and may be victims of bad legal advice -- a review of court filings shows that the rights and wrongs are anything but clear-cut. But they have no money to pay any taxes, especially after incurring more than $1 million in legal fees fighting the IRS. Yet the IRS will not let them go because they have one potentially valuable asset: a malpractice claim against the lawyers who originally handled the estate. In effect, the IRS has become a speculative investor, hoping to profit from that litigation -- and has refused all settlement offers. The agency, as its resources shrink, pursues fewer and fewer cases, but when it does take on a case it rarely lets go. The story of the IRS versus the Estate of Elizabeth Boyer raises questions about how carefully it picks those targets, considering that by pursuing this case, it has inevitably been forced to pass up numerous more lucrative ones. The case also raises questions about the competence of government lawyers, who twice had the opportunity to collect all or most of the taxes the IRS claims are due, but let both chances slip away. Tax litigators across the country, in interviews, were uniformly critical of the IRS for using the jeopardy assessment in this case, and most said the case illustrates how the IRS fails to close cases that no longer have much chance of generating money.
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