Low-graphic news index |
Sunday, April 1, 2012 - Page updated at 05:30 a.m.
Farmer who sued USDA — and won — now grappling with IRS
By David Zucchino
Los Angeles Times
WASHINGTON, N.C. — For a while, Tim Pigford had money and a small measure of fame.
He was a struggling black tenant farmer when he sued the federal government in 1997 and won the largest civil-rights settlement in history. He testified before Congress and chatted with President Bill Clinton in the White House.
His name was enshrined in legal history: Pigford v. Glickman, the landmark class-action discrimination lawsuit. The government has paid $1.01 billion to 15,600 black farmers denied farm loans or other benefits because of their race.
Today, Pigford rents a cramped, three-bedroom frame home. He drives a rusting 1995 Ford pickup and a Toyota Corolla with 382,000 miles on the odometer — both bought with his settlement cash.
He's 60 years old, out of work and nearly broke. The substantial settlement money he received in 2000 was seized in 2005 by the Internal Revenue Service, he says, in a dispute over back taxes. The agency also garnished the paycheck of his wife, Janice, a schoolteacher.
Pigford says the U.S. Department of Agriculture, along with the IRS, is punishing him for the lawsuit. He offers no proof, just an abiding belief that he was wronged when the government denied his farm-loan requests, and wronged again when his settlement money was seized.
"They want to make my life hell because of that lawsuit — it's pure retribution," Pigford says, eating take-out pork barbecue at his kitchen table. "If I'd known what they were going to pull on me, I'd have spent all that money, or just given it away."
The tale of his dispossession is labyrinthine, hinging on complex legal agreements and the often-incomprehensible U.S. tax code. It is a sobering reminder that not all lawsuit windfalls are as lucrative, or straightforward, as they seem.
The bullheaded tenacity and sense of outrage that brought the federal government to heel also provoked a losing battle with the IRS.
Pigford contends that not all of his settlement payment was taxable because it was won in a civil-rights case. Further, the amount the IRS says he received is larger than what he actually got, he says. And he has documents showing that the IRS billed him for various amounts.
Pigford will not say how much he received in his settlement, but calls it "a nice little payout."
"I wasn't trying to evade taxes," he says. "I just wanted to know how much of my settlement was taxable, but they'd never tell me."
But Pigford also has notices and warnings of the IRS' intent to levy his assets. The IRS even provided him a required face-to-face meeting with an IRS official in 2005.
"It would take Jesus Christ himself to come back here and straighten out this whole mess," Janice Pigford says, clutching the latest delinquent tax notice from the IRS.
Pigford concedes that he can be stubborn and cantankerous.
"They figured if they made my life miserable enough, I'd give in," he says. "But I don't scare easy."
Neither does the IRS, says Cindy Hockenberry, a tax specialist for the National Association of Tax Professionals. "The levy is a pretty effective weapon in their arsenal," she says.
An IRS spokesman said the agency could not comment on individual taxpayers.
Similarly, a USDA spokesman said that agency could not comment on individual cases. He cited instead "definitive actions" the USDA had taken to correct racial discrimination post-Pigford.
The USDA also said the 15,600 farmers who negotiated the $50,000 payments were told of their federal tax obligations. But Pigford negotiated a separate deal.
Other farmers saw their $50,000 payments badly eroded by state taxes and tax debts related to forgiven USDA loans, says Hank Sanders, a lead counsel on the settlement.
Federal taxes were paid on behalf of those farmers. But they were still subject to state taxes on the $50,000 payout, plus federal taxes paid on their behalf.
"They want to make it impossible for these farmers to succeed," says Gary Grant, head of the Black Farmers and Agriculturists Association. "We've been complaining about this for years."
It started in 1976
Pigford was growing corn and soybeans on 75 leased acres in North Carolina in 1976 when he applied for a USDA loan of $150,000 to buy his own farm.
Pigford was awarded a USDA operating loan for seeds, fertilizer and supplies. But year after year, he was denied a farm-ownership loan.
In 1984, Pigford testified before Congress that he was denied loans because of racism. Three months later, a USDA official in North Carolina told him that his application for a 1985 ownership loan, and for another operating loan, had been denied.
Pigford filed a discrimination complaint with the USDA. But as proceedings dragged on, he couldn't pay back his original operating loan. His electricity was cut off for a year. In 1995, federal marshals seized his house under foreclosure proceedings.
In 1997, Pigford filed his discrimination suit. Two years later, a federal judge approved the settlement.
Devil's in the details
A study commissioned by the USDA found that loans to black farmers averaged 25 percent lower than those to white farmers, and that white farmers received 97 percent of all farm-disaster payments for hurricane or flood damage.
Phillip Fraas, a lawyer who represented Pigford early in his case, said he tried to make settlement payments tax-free, but the government balked.
Pigford's settlement didn't include deducting federal taxes from his payment, he says, though he did pay off his USDA operating loan. And, he says, he paid state taxes on his settlement, as well as federal income taxes on his wife's salary, he says.
As for Pigford's claim of a partial exemption for a civil-rights settlement, Hockenberry says she's not aware of any such exemption except in cases of physical injury.
Pigford's original tax bill of about $120,000 has ballooned to $600,000 with penalties and fees, he says.
Pigford lives a circumscribed life these days, surviving on Social Security and his wife's pension.
He has never owned a house, much less a farm. He would love to farm again, he says, but he can't afford it.
"We're in worse shape financially than before Tim filed his lawsuit," Janice Pigford says.
He sighs and picks at his barbecue. "All I ever wanted to do," he says, "was farm my own land."
Copyright © The Seattle Times Company
Low-graphic news index
Graphic-enabled home page