Charles Ulrich, once an ordinary accountant from Baxter, Minnesota, has accomplish something that most Americans only dreamed of. He tangled with the US Government’s Internal Revenue Service, and, recently, he has won. Moreover, his triumph in court could set a precedent for thousands of other Americans, in their negotiations with the IRS.
Ulrich began his quarrel with the IRS at the end of the 1990’s. At that time, many of America’s top insurance companies went public and started selling their stock on the market. Previously, the insurance companies had been owned entirely by their policyholders and were thus known as “mutuals.”
When the insurance companies went public, the policyholders who had previously owned shares in the companies received money and stock from the insurers as compensation. According to Ulrich, MetLife, Inc gave away more than $7 billion worth of shares to its 11million policyholders during this time. Its competitor, Prudential, gave away $12 billion to its policyholders, who also numbered approximately 11 million.
The IRS wanted to tax the policyholders on the compensations that they received. Charles Ulrich, who had worked as an accountant for most of his 72-year life and had received shares of stock as compensation from the insurers Prudential and Indianapolis Life. He didn’t think that the IRS had a legal right to tax him on what he had received.
Ulrich looked into the laws in 2001. At the end of his investigations, he concluded that, indeed, the money and stock shares that the insurance companies gave out to their policyholders’ should not have been taxed. This is because the insurance customers had already paid for their ownership rights through their premiums. If a policyholder had received $20 worth of shares, and resold them for $25, only that $5 of profit should have been taxed–whereas the IRS was levying taxes on the full $25 amount.
Charles Ulrich informed the public of his findings in 2003. Since then, taxpayers who felt they were unfairly taxed by the IRS over this issue have paid Ulrich to submit refund requests in their names. In 2004, one of the people who paid Ulrich in this way–Eugene Fisher of Baltimore, MD–took the IRS to court. On August 6, 2008, the Court of Federal Claims in Washington ruled in Fishers’, and consequently, Ulrich’s, favor.
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Wowsa! Finally glad to see somebody win against the IRS .. this just goes to show that even the almighty IRS themselves can’t interpret all their own ordinances.