IRS lien opens way to pursue tax protester Howard hopes to recoup 10 cents on the dollar

November 12, 1992|By James M. Coram | James M. Coram,Staff Writer

Until the Internal Revenue Service filed a $6 million lien TC against Ellicott City developer Fred Waters Allnutt last month, it looked like Howard County might never collect the personal property taxes he owes.

As a result of the lien, Mr. Allnutt filed for bankruptcy protection. The county now hopes to recoup at least 10 cents on the dollar -- no small change in Mr. Allnutt's case.

The county estimates that Mr. Allnutt owes between $850,000 and $1.2 million in unpaid personal property taxes and in penalties for non-payment.

The county won a judgment of $402,965.08 against Mr. Allnutt and Allnutt Excavating in 1989 for non-payment of personal property taxes for the years 1983-1987.

"Attempts to collect that judgment have been unsuccessful," said Rebecca A. Laws, the county attorney now pursuing the Allnutt case.

"A penalty of 1.5 percent a month is tacked on till the bill is paid. Obviously, the clock is still ticking," she said.

A spokesman at Mr. Allnutt's office said he was too busy yesterday to return calls.

Ms. Laws says no personal property taxes have been paid for the years 1988 through 1992 either and that the taxes alone for those years amount to more than $270,000.

When penalties are added, the newer bill is "at least $300,000," she said.

By law, every business in the state must pay personal property taxes on the inventory of furnishings, equipment and stock it owns Jan. 1 of each year.

"Mr. Allnutt, I am confident, is aware of his obligation to file personal property tax returns under state law," Ms. Laws said, but has not done so for a number of years.

The problem in collecting from Mr. Allnutt, Ms. Laws said, is that he denies ownership of the company or its assets, saying they are leased or owned by someone one else.

"We found some money in associations and other organizations and entities other than himself. But we did not have the wherewithal to untangle his financial transactions to determine if there were any assets on which to recover our claims," Ms. Laws said.

"No matter who owns the business, the business is still required to file personal property tax returns," Ms. Laws said. Were the company's transactions not so complicated, the IRS may have come calling on Mr. Allnutt earlier for a tax liability from 1981 through 1986, Ms. Laws believes.

The IRS filed identical liens Oct. 5 against Mr. Allnutt and seven companies sharing the same 10370 Baltimore National Pike address at the Fred W. Allnutt Building: Constitutional Leasing Association, Fred W. Allnutt Excavating, JFC, JFC Excavating, Sovereign Equipment Association, Sovereign Equipment Co., and Ellicott Building Association, nominee of Fred W. Allnutt. The IRS says Mr. Allnutt has a total tax liability of $6,027,198.79 for 1981 through 1986.

Mr. Allnutt was convicted in 1983 of failure to file a valid 1981 state tax return on an income estimated to be $400,000 and for failure to pay his 1981 retail sales taxes.

He said at the time that he believed payment of taxes with Federal Reserve notes violated the U.S. Constitution. He was given a six-month suspended sentence and five years probation, four of them unsupervised.

"Most of us pay taxes every year" without prodding, Ms. Laws said. "If some don't, the rest of us pay more. My job is to collect from people who don't pay."

Ms. Laws recently called Baltimore attorney Mark J. Friedman, the bankruptcy court-appointed trustee of JFC Excavating, to let him know the county will be filling a proof of claim soon. The filing of the proof of claim "should be adequate to protect the county's interest," Mr. Friedman said.

Mr. Friedman is charged with developing a plan of reorganization to address the claims against Mr. Allnutt.

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