On a sweltering day in mid August, Anna Marques stood in the middle of her kitchen trying to decide what to do next.
She'd been packing all night long, ever since she'd learned the Internal Revenue Service was taking her home. She'd called friends to help her empty the house, and watched her possessions disappear out her beveled-glass front door, piece by piece.
A neighbor had taken her spare bedroom set. A couple from down the street strained under the weight of her navy love seat and an Eiffel Tower lamp. A friend called to say he would take her faux suede couch.
Anna, 43, started to pull out a picture nail from the wall and realized the futility of this. She was going to fix the walls for the IRS?
She stood there bleary-eyed. She'd cried the night before but now she just felt … nothing. She still loved this house. They'd paid it off. It was a block from the white sand of Clearwater Beach. She could see a slice of the blue water from her back porch.
But she was weary from warring over it. "I've gotten to the point where emotionally all the joy of living here is gone," she said, "and it's just stuff at this point."
In the next room, she could hear William "Bill" O'Callaghan, 63, questioning their lawyer. He was still talking about the battle plan.
He'd been fighting with the IRS for 25 years. They weren't together, back when it started. But when she moved in with him, his dispute with the IRS had become her problem, too.
She had come to believe that the IRS was powerful, arrogant and incompetent. She'd come to believe that the IRS never goes away. She'd come to believe that the IRS churns you up. But how could they take her home?
Anna met Bill at a friend's office party in New York City in 1989. She was in her early 20s and worked at her dad's engineering company. He was an investment banker in his early 40s and worked on Wall Street.
They began dating, and she found him incredibly interesting. He knew so much more about everything than she did, and his voice softened when he talked to her. He reminded her of the leading men in the old black and white movies. Strong but gentle.
In 1994, Bill mentioned he had a decade-old problem with the IRS. It was a mistake. He'd clear it up.
That same year, Anna and Bill visited Tampa. It reminded her of Greece, where she'd grown up. They found a $187,000 home in Clearwater Beach.
A year later, an IRS agent showed up at their door. That's when she realized this was more than a small problem. The agent told them there was a $2 million lien on their home.
Anna remembers being shocked. But Bill was optimistic. Again, he told her he would take care of it.
He told her the story in more detail: It had all started in 1981, when his sister was sick. She had a brain disease called moyamoya, and she was estranged from her husband. So Bill moved her and her three small boys into a home in New Jersey and tried to adopt his nephews.
But he didn't pay his 1981 taxes of $55,000 or his 1982 taxes of $4,200. His finances got even worse in 1983, when he reported a loss on his returns of $112,000.
In December 1987, he filed for bankruptcy. By the time the bankruptcy case was over in 1993, the judge had wiped out his IRS debts, and he thought he was clear of them.
Now here the IRS was — again. Only now they were saying he owed $2 million.
• • •
Anna felt the IRS was being unreasonable. But she learned the IRS has the right to put a lien on property — even if the debt is discharged in a bankruptcy.
So in 1997, she and Bill pulled together what money they had, and she borrowed from her family.
They offered the IRS $113,500 to cover Bill's tax debt. The IRS kept the check for a year, she said, and then returned it.
Anna grew indignant. Why was the IRS unwilling to meet them halfway? It wasn't like they had $2 million sitting around. Their lawyer said Bill should file for bankruptcy again, so in 1999, he did.
Bill accumulated more debt with the IRS for 1999, 2000 and 2001 — another $70,000 — while he was in bankruptcy. He says he paid off the original debt, but there was a dispute over that bill and penalties mounted there also.
Chief bankruptcy court Judge Paul Glenn dismissed the original debt, the second bankruptcy judge to do so. In his ruling, he noted that Bill was not trying to evade the taxes, as the IRS maintained.
"Instead," Glenn wrote, Bill "hired professionals and utilized the procedures established by the IRS itself to defend and challenge the tax claim."
Anna felt vindicated. Someone could finally see Bill wasn't a tax cheat. Over the years, he's loaned friends thousands of dollars to pay the mortgage, to buy a car or just because times were tough. Sometimes he didn't get the money back. He was trying to do the right thing with the IRS.
But their victory was short-lived. The IRS would not remove the lien from their property. They notified Bill and Anna they still intended to pursue it.
It was like a never-ending game of Whac-A-Mole. No matter what they did, they couldn't shake the IRS.
• • •
The battle was starting to take its toll on the couple. People who learned of the lien stopped investing with Bill. He couldn't keep a bank account because every time he put money in it, the IRS seized it. The company he worked for had to make the payments on his mortgage and his bills. His legal fees topped $600,000. Again, Anna borrowed money from her family to help pay it.
It was humiliating, too.
IRS agents called their neighbors and business associates, asking questions about their finances. They asked his 80-something aunt in Pennsylvania how much money he'd given her. They wanted to know how much he was spending to send his adopted sons to college.
"It's a tremendously unfair playing field," Bill said. "The government has plenty of time, plenty of money."
Though Bill and Anna have never married, in part because he wanted to shield her from the IRS, they have learned it may have protected the home more if they had been married. Still, from the beginning, Anna and Bill made decisions together when dealing with the IRS.
But they viewed it differently. Anna, who works as an executive assistant for a digital media company, could see a life without the house, without the battle.
Bill was more focused on justice. He believed what was happening was wrong, and he couldn't move beyond that. He couldn't stop fighting it.
Neither, apparently, could the IRS.
• • •
Attorneys used to dealing with the IRS say it is rare for the IRS to take someone's residence.
Surely it should be easier to negotiate a settlement, thought Bill's attorney, Dennis Creed.
"I was kind of shocked at the use of government resources to pursue someone for 25 years," he said.
In 2009, five months after Bill and Anna paid off their home, the IRS filed to foreclose on it.
Bill's attorneys tried to understand the basis of the $2 million. The only tax return the IRS could produce was a copy from 1981. Bill noted that his tax preparer had put an incorrect Social Security number on it. He wondered if this had caused a problem.
The IRS finally produced the agent who had audited Bill in the 1980s. Her name was Evelyn Tavares, and she'd been on the job just two months when she audited Bill's returns in 1986. Later, tax experts would be perplexed by the way she had handled the audit.
• Tavares' notes reflect that she tried unsuccessfully to get in touch with Bill, but she did not try to contact his tax preparer.
• She apparently didn't know he filed for bankruptcy.
• Perhaps most significantly, Tavares removed all his deductions, including claims for his nephews as dependents, contributions to his church and all the costs of his stock transactions. This meant that instead of being taxed on the profit he made selling the stock, Bill was taxed on the full value of the shares.
Finally, Bill's attorneys understood why his tax debt had ballooned from about $60,000 for all three years to more than $400,000.
In 1989, Tavares said she sent a notice of deficiency to Bill. When he didn't respond, it became an assessment. This meant he lost his opportunity to fight it in tax court.
Bill said he never received a phone call from Tavares and he never got the notice of deficiency. For years he had no idea he was being audited.
With all the new information from Tavares, earlier this year Bill's lawyers hired Jose I. Marrero, a former IRS deputy director who spent 25 years in criminal investigation. Marrero reviewed Tavares' notes and Bill's official record with the IRS.
The IRS, Marrero said, had "misapplied" its own laws and procedures. The 1989 assessment, he said, was "illegal" and "invalid" since it occurred during the bankruptcy.
Marrero felt the IRS should have given Bill an opportunity to fight his tax bill. He said he could not find in the official record provided by the IRS any evidence that it had actually sent out an official notice of deficiency to Bill. He questioned why the IRS insisted on clobbering the man with a $2 million debt, which is what the $400,000 had grown to with interest and penalties.
"I can't prove it, but I believe someone didn't want to let go," Marrero said. "It's become personal rather than practical."
The IRS and the Department of Justice, which is arguing the case on behalf of the IRS, declined to comment.
In April of this year, U.S. Magistrate Judge Thomas G. Wilson ruled in favor of the IRS. The judge felt that Bill knew he owed the tax debt back in the 1980s. He didn't believe that Bill was unaware the IRS was trying to contact him. He didn't find merit in the argument that the original assessment was illegal.
A district court judge affirmed Wilson's ruling, which ordered the home sold and the proceeds handed over to the IRS.
• • •
On Aug. 30, Anna stood in her family room, sweeping the floor one last time. Workers with St. Vincent de Paul were hauling away what was left of their furniture: chairs, lamps, a recliner. She plucked a massive jar of artichokes from the fridge and threw it in a black garbage bag.
They had appealed the decision to give the IRS their home, saying it violated the state's Homestead Act, which protects a primary residence from creditors. But it didn't matter. The IRS had asked them to leave by Aug. 31.
Anna was dumbstruck.
"It's almost like a pebble rolls down a hill, and it picks up speed, and it becomes an avalanche," Anna said. "And every little thing tags on and adds to it. That's what this case is. A mistake that nobody wants to admit."
Anna and Bill moved in to the spare bedroom of a friend, who had also been gracious enough to let them store some of their things. They needed to figure out where to go next.
The next day, a mediation was scheduled with Department of Justice attorneys.
Anna harbored a little hope that maybe the IRS might offer them the house. Marrero, the IRS expert, had told them to come up with an amount they might be willing to pay. Anna had been thinking about it, but Bill refused.
"That's extortion," Bill said angrily. "Why should we have to buy our house back?"
"Let's say we go there tomorrow and by some miracle of God there is a settlement," she said to him.
"There is no settlement," he said. "You think they're going to pay us back for all the furniture and all the legal fees? There's no way. Zero is the deal. I'm telling you."
He walked off.
"Well there's no sense talking about it, if this is the way you feel," she replied softly.
• • •
What happened in the mediation Aug. 31 is confidential. That day, Anna and Bill returned to their home one last time. They finished cleaning the house and took photos.
They mailed the keys to the IRS with a letter, asking that they take care of the house until their appeal was heard.
In September, the IRS posted a notice on the door saying the home would be sold at auction. It's valued at about $360,000.
Anna and Bill are still staying at a friend's. They are talking about buying another home. They just hope the IRS doesn't take that one, too.
Times researcher Caryn Baird contributed to this report. Leonora LaPeter Anton can be reached at [email protected] or (727) 893-8640.