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In August, Jerry Blaschko got an alarming letter from the Minnesota Department of Revenue. He had been personally assessed $8,574 for 2009 payroll taxes that were supposed to be paid by the Montgomery Golf Club.
But Blaschko hasn't had anything to do with the golf course for nearly 20 years. Back then, he served as a volunteer board member.
Jerry and his wife, Bev, who live in Burnsville, found themselves swept up in the state's effort to collect unpaid taxes by going after individuals who may have been responsible for an organization's finances.
Bev Blaschko thought she could easily clear up the mistake by calling the Revenue Department on behalf of her husband, who had a stroke a couple of years ago. She wanted to know what records the department had linking her husband to the golf course, but she got off the phone feeling he was guilty until proven innocent.
"They said, 'We've assessed you, and if you don't feel you owe it, you have to prove it,' " she said. "It was just like my husband was somebody trying to evade taxes."
Ron Schwagel, assistant director of the collection division, said the department uses personal liability orders only after making several efforts to collect from the business that owes the taxes. The department's records listed Jerry Blaschko as vice president of the Montgomery Golf Club in 1990. "That is the most recent information we have on record," Schwagel said.
State law allows the Revenue Department to assess certain individuals, including officers or employees of an organization, for withholding or sales tax debt. However, unpaid, volunteer board members are exempt from liability if they do not participate in the financial operations of an organization, according to the law. The Revenue Department issues about 5,500 personal liability orders each year, Schwagel said.
Schwagel said personal liability orders are a key tool for the Revenue Department because "corporations can end, but some individual had to make the decision not to turn over those funds."
Nevertheless, the Revenue Department sent the Blaschkos a letter late last week stating that the assessment had been "withdrawn."
Who's liable for debt?
Until their tax tussle, the Blaschkos didn't know anything about the Montgomery Golf Club's financial problems. The golf course, which is near their former home in Le Sueur County, was sold at a foreclosure sale earlier this year.
The letter sent to Jerry Blaschko at the end of August didn't give much information about the tax debt or why he was being held responsible.
"The following taxes have been assessed against you personally," said the letter, which listed a withholding tax from the period ending December 2009.
The letter also gave instructions for filing a written appeal, which "must include" the facts of the situation and "information and documents which support your position."
Bev Blaschko said a Revenue Department representative told her over the phone that she needed a letter from the golf club, its lawyer and its bank stating that her husband didn't have any authority over the organization's finances. Schwagel said the department's internal notes from the conversation state that Bev Blaschko was told she could provide a written response.
After her phone call to the
Revenue Department, Bev Blaschko tried to get the documentation from the golf course that she thought she needed. But the turmoil at the golf course meant that no one knew who was responsible for clearing up the issue.
Attorney Rick Lea, who is working with some former board members to resolve the tax problem, said at least one other former board member and the course's manager also received personal liability orders. He didn't know why Jerry Blaschko would have received one.
"We don't believe there is any way [the Blaschkos] have personal liability," he said.
Lea said former board members believe all the taxes were paid.
The Blaschkos contacted Whistleblower because they felt as if they had run out of options. They were also troubled that the Revenue Department was relying on old records without doing any more research.
"I think they need to do due diligence before sending out letters like that," Bev Blaschko said. "We shouldn't be involved in this in the first place."