IRS ‘Made Me Widow,’ Witness Tells Senators : Taxes: A husband’s suicide is among horror stories the panel hears. It is reviewing a law to protect the public from abuses by the revenue agency.

The Internal Revenue Service “made me a widow,” a North Carolina woman tearfully told a Senate subcommittee Friday, contending that a long-running tax fight with the IRS drove her husband to commit suicide.

Kay M. Council of High Point, N. C., testified that she and her husband, Alex, a 49-year-old real-estate developer, became “caught up in the middle of a big IRS screw-up” that led her husband to kill himself.

Nine years after the Councils got into trouble with the IRS by writing off a $70,000 tax-shelter loss, Kay Council returned home one night in June, 1988, to find a note from her 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 . . . . You will find my body on the lot on the north side of the house.”

Council, 48, said she eventually won a federal court ruling that she and her husband owed the IRS nothing, not the $300,000 in taxes, interest and penalties the IRS claimed. But Council said her credit remains marred, her former home is lost forever and she is still deep in debt to lawyers.

“I feel cheated of my rights as a citizen. I feel cheated of growing old with the man I love. I lost my best friend,” Council said, her voice cracking. She paused, bowed her head, and daubed at tears with a tissue.

“I had no rights,” she said. “The IRS had them all.”

IRS Commissioner Fred T. Goldberg Jr., whose testimony preceded Council’s, was not asked about her case. Council has refused to sign a waiver of her privacy rights, barring the IRS from discussing the matter.

Goldberg acknowledged that many of the agency’s 120,000 employees sometimes “stray too far” in collecting taxes, partly in response to pressures to help reduce the federal deficit. He called on Congress to simplify the nation’s tax code.

“The public does not mind paying taxes,” Goldberg said. “What the American public resents is complexity, uncertainty . . . hassles with the IRS that take month after month after month to resolve.”

Council’s story riveted a Senate Finance Committee subcommittee hearing into the effectiveness of the Taxpayer Bill of Rights, a 1988 law designed to protect taxpayers in disputes with the agency.

The measure forbids quotas based on asset seizures to measure performance of agents, allows citizens under investigation to tape interviews or send attorneys in their place and establishes greater powers for IRS internal ombudsmen to halt the collection process.

The law also grants taxpayers limited rights to sue the IRS if the agency behaves recklessly.

But the law’s sponsor, Sen. David Pryor (D-Ark.), said the measure was “not perfect” and represents “only a first step” toward curbing IRS abuses. He directed the General Accounting Office to review the tax agency’s observance of the law.

“The public will not be protected by merely codifying a list of safeguards and having the IRS issue regulations,” said Pryor, the subcommittee’s chairman. “What the public needs is a change of attitude within the agency.”

Pryor read an account from a California man who told of a 1989 meeting among small businessmen in which an IRS agent suggested that those who turned in a cheating competitor--by reporting to an IRS coordinator for “snitch leads”--could receive a lower tax bill.

Pryor also cited reports that IRS agents have conducted unannounced “intimidation” visits on small businesses.

Goldberg, although denying the charges, conceded: “We as an agency need to learn to sit and stand in the other guy’s shoes.”

Later, a Philadelphia IRS agent testified that the 1988 law contains one reform--a 58-point checklist used to rate agents’ respect for proper procedure--that is “actually being used to the ultimate harm of both the IRS collection personnel and the American public.” He said the form “amounts to a quota system.”