June 29, 1998 12:00 PM

As far as Shirley Barron knew, the only thing that would make Aug. 5, 1996, memorable was that it was her father-in-law’s 75th birthday. Her husband, Bruce, 47, seemed in great spirits that evening when the couple stopped at Donald Barron’s Derry, N.H., nursing home with a gift. “He was joking around, very lighthearted,” says Shirley, who headed home to East Derry, N.H., while Bruce returned to his law office, as he did many an evening. It was the last time she would see him.

Sometime that night, Bruce made the two-hour drive to the couple’s Cape Cod vacation house, shut the garage door and left his station wagon running. A suicide note made his motivation clear: Hounded for years by the Internal Revenue Service over a disputed tax bill he could not pay, he had seen no other way out. For Shirley Barron, 50, a small-town librarian and mother of one, her husband’s death marked the beginning of a battle that would strike a historic blow against the most feared federal agency. Says U.S. Sen. Judd Gregg (R-N.H.), who helped bring her case to the attention of Congress: “She’s just a citizen who was wronged, who said, ‘Enough’s enough. I’m going to stand up for myself.’ ”

The trouble began after Bruce joined three partners in 1984 to finance a new recycling plant in Salem, N.H. The project failed a year later, and he claimed an $80,000 loss on his tax return. The IRS ultimately denied the deduction and in 1991 billed him for more than $230,000, including penalties and interest. A modestly successful lawyer without that kind of money, Barron tried in vain to negotiate a settlement. “It began spiraling down after that,” says Barron’s lawyer and accountant, Richard Maloney.

In 1993, IRS agent Donna Greeley took over the case, and—according to court papers—proceeded to place liens on the Barrons’ homes and mail letters to his clients demanding that they send his fees directly to the IRS. “It was obviously an attempt to embarrass Bruce,” says lawyer Joseph Hamilton, a close friend. She even emptied the $330 savings account of their daughter Carrie, then 13. In May 1995, Barron offered to pay the IRS everything he could raise without selling his homes: $30,500.

Rejecting the offer, Greeley garnisheed Shirley’s wages and seized her checking and retirement accounts, making it nearly impossible to pay bills. “We worked hard, and then this rogue agent comes and tries to put us on the streets,” says Shirley. “I don’t know how anyone can treat another human being that way.”

After Barron thought he and the IRS had reached a settlement in 1995, he persuaded his local bank, Pelham Bank & Trust, to hold off on any action that would jeopardize the Barrons’ home. But the paperwork confirming the deal became stuck for months in the IRS bureaucracy. On August 5, 1996, the bank notified Barron it was foreclosing on his home to satisfy the tax liens. To the Barrons, the brown three-bedroom home, bought in 1978, the year before Carrie was born, represented the life they had built together.

Bruce had hidden his desperation, even from Shirley. “None of us had any clue,” says his friend Hamilton. So when Bruce called at 10 the night he died to say he would be working later, Shirley was unconcerned. “I asked him to let the dog out when he got home,” she recalls, “and he said he would.” After his mother and sister discovered Bruce’s body the next day, his secretary found a note. “The IRS and [the bank] are bigger than me,” it began. “One sits, does nothing, and watches you die. One needs to clear its books.”

Barron’s death slowed the IRS down not at all. First the agency put a lien on the $200,000 life insurance payout, and then one morning an agent showed up at Shirley’s door, waving his badge and threatening to throw her in jail unless she met with the IRS. She finally struck back last June with a $1 million wrongful death suit against the IRS—perhaps the first of its kind ever filed.

Facing an army of 22 government lawyers, Shirley’s attorney William Brennan was nonetheless able to obtain a settlement April 20 under which the IRS erased the tax debt—by then more than $400,000—and paid her over $40,000 for legal fees. Though the IRS has declined to comment on the case, Brennan says the agency bowed in part to pressure from the media and members of Congress: “They wanted to put this case behind them.” Last month, Shirley got her life insurance check. Part will go to the mortgage, part to pay tuition for Carrie (who will start college in Vermont this year), and the rest to replenish the family’s lost savings. “I would fight again, even though the toll was enormous,” says Shirley. “I felt I owed it to Bruce.”

Thomas Fields-Meyer

Mark Dagostino in East Derry

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