A New Take on Seizing Benefits

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Posted by Chris on April 13, 1999 at 19:03:39:

In Reply to: IRS tax deduction posted by LIWU95 (e-mailed in to IWA) on March 31, 1999 at 13:12:24:

A New Take on Seizing Benefits

The courts have long interpreted federal law to prohibit seizure of workers' compensation benefits to pay back taxes. But a federal judge in Texas has ruled differently, allowing the IRS to keep $10,000 seized from an elderly widow whose husband was murdered at work.

Federal District Judge Sim Lake in Houston ruled on Oct. 5 that Congress protected "only those workers' compensation benefits payable to the delinquent taxpayer, not workers' compensation benefits that have already been paid."

Glendon Adams, lawyer for the widow, Adeline Rudel Cathey, 69, asked, "What is the purpose of Congress passing a statute exempting a benefit from seizure by the IRS if the IRS can take it as soon as you get it?" He has filed an appeal.

The case began in March 1990 after James Rudel of Wallis, Texas, filled in for a sick friend at a convenience store and was murdered by a bandit. Rudel's own business, a flower shop, then failed, leaving $5,000 in unpaid taxes.

His widow received $172.58 a week in workers' compensation benefits until late 1994, when she remarried and received $17,110 in a lump sum to close her claim. Two months later the IRS tapped her bank account for $10,000 to cover the back taxes, penalties and interest.

-- David Cay Johnston
New York Times
November 15, 1998

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