ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, March 29, 1996 TAG: 9603290061
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press|
A group of 750 former IBM employees sued the Internal Revenue Service on Thursday for refunds of the taxes they paid on the severance the company gave them in downsizing actions.
The group contends the severance payments amounted to a settlement of personal-injury claims because workers had to sign a document releasing IBM from liability when they left.
The IRS sometimes exempts certain kinds of settlements from income tax, such as personal-injury awards and some types of discrimination. The IRS had not seen the suit, filed in a federal district court in Binghamton, N.Y., and had no immediate comment, spokesman Steve Pyrek said.
A group of 1,500 former IBM employees in North Carolina sued the IRS in 1994, saying the severance document released the company from age-discrimination liability. They gave up last year after the Supreme Court ruled people must pay taxes on judgments in workplace age-discrimination cases.
The new suit claims IBM's downsizing effort subjected workers to emotional and physical pain and suffering.
``The employees experienced a variety of emotional and physical symptoms, including insomnia and other sleep disorders, weight gain, headaches, hypertension, heart trouble and other trauma,'' the suit said.
It also said alcoholism rates rose among IBM employees, and marital problems became more common.
The attorney representing the workers, Neil Kimmelfield, said their legal approach was influenced by the Supreme Court ruling.
But he added: ``If our factual investigation had made us believe that what was going on was just protection from age-discrimination claims, either we would have dropped it or we would have looked into various state laws to see how they varied from federal law. That's not what our factual investigation uncovered.''
The workers represented in the lawsuit, chiefly from IBM's manufacturing facilities in western New York, are seeking $15 million in tax refunds.
They are part of the National Organization of Downsized Employees, a Poughkeepsie, N.Y., organization started by former IBM workers that now claims 3,000 members.
For organization members not included in the Binghamton suit, lawsuits may be filed in other parts of the country, Kimmelfield said. If that happens, there is a chance the suits will be consolidated.
For some former workers, thousands of dollars are at stake. Often, the payment for a departing IBM worker was a year's salary or more. And employees who left near the end of the year had their payment taxed at a higher rate, because it was added to salary already earned.
IBM will not be a party to the suit. Kimmelfield said the plaintiffs probably will ask the company to produce documents and executives as evidence for their case, however.
To respond to major changes in the way companies use computers, IBM cut its staff from just more than 400,000 in 1986 to about 230,000 now.
Millions of workers lost jobs in work-force reductions at other companies during the late 1980s and early 1990s. But no workers have mounted a tax fight in such an organized fashion as the former IBM workers.
LENGTH: Medium: 64 linesby CNB