The I.R.S. Dilemma: A Way Out?

The Internal Revenue Service is demanding back taxes from the fishing community on their General Electric settlement money, which is a pity.

It is more than 10 years now since the Food and Drug Administration and the State of New York banned the harvesting of P.C.B.-polluted striped bass in state waters, and during that time bass fishermen who depended on the "money fish" to put them over the top have been forced to remake not only their jobs but their lives.

What they lost in the bass ban was more than money; for many it was the tools of their trade. Their fishing boats, nets, and other gear became, for all intents and purposes, worthless.

The fishermen sued G.E., whose illegal discharge of P.C.B.s into the Hudson River had triggered the ban, for the destruction of their livelihood and for their obsolete property. In 1994, nine years after the ban was imposed, they were awarded compensation. The I.R.S., however, claims the money they received represented reportable income, and seeks taxes, interest, and penalties on it.

At the time of the settlement, both sides were aware that might happen, though they hoped it would not. The lawyers who brought the G.E. lawsuit (the husband of The Star's associate editor was one of them) did not see the case as strictly about the loss of income. No fishermen, so far as was known, had been forced to apply for public assistance because they could no longer seine for stripers. Instead, they found other jobs, perhaps less rewarding to their spirits but more to their pocketbooks.

The compensation they received was paid for the loss of their fishery and related property. Their lawyers and accountants accepted that, and so did General Electric, which never sent the fishermen the 1099 forms that would have been required if it understood the payments to be taxable.

To argue too much with the I.R.S., however, is expensive, and the result, hinging on Byzantine rules and regulations, is uncertain.

There may, however, be another solution. This district's Congressional Representative, Michael B. Forbes, should consider submitting in the House what is called a "private bill" on the fishermen's behalf, requesting they be exempted from this unjust assessment.

Almost since the tax system came into being, Congress has ameliorated the effects of harsh rulings by enacting private bills. In recent years, such resolutions have absolved farmers from paying taxes on Federal money given them not to grow crops, provided relief to rich individuals whose wheelings and dealings brought unanticipated tax consequences, and helped out entertainment and food conglomerates by allowing them to deduct expenses the I.R.S. had deemed non-deductible, among other things.

Mr. Forbes, who has always lent an attentive ear to the problems of the fishing community, may have the opportunity in the months ahead to help them as never before. Perhaps he can even see the fishermen through the storm of I.R.S. demands to safe harbor.