Taking on the IRS Over $1,000 (98-1667 Baral v. U.S.)

Many taxpayers are afraid of a phone call from the Internal Revenue Service. They're afraid of the myriad forms, the possible miscalculations and, worse, being audited.

But the tables were turned when 79-year-old David Baral decided to sue the IRS over a $1,000 credit dispute in 1993.

After hours of visiting law libraries and reading lengthy documents, the former Washington Post mailroom worker represented himself in the lower courts.

"I had to do it. I was required to do it,'' said Baral about his suit against the IRS. It became a matter of resolve; the IRS against a mailman, who'd done his research. "They owed me the money and they refused to give it to me."

Baral's lawsuit stems from a 1988 tax return he didn't file on time. Upon first calculation, Baral feared that the money the IRS held from his weekly paycheck wouldn't be enough to cover all that he owed.

So, he sent an extra $1,100 to the agency -- before he completed all the necessary forms -- in an attempt to cover the amount. On April 15, 1989, he filed for an extension on his forms, which gave him four more months to submit his return.

Baral was sure that money left over from his 1987 income tax return and the money he had already sent in would cover what he owed the IRS.

But he didn't send in his 1988 forms to the agency until 1993, when they wrote to remind him of it.

"He filed between 1989 and 1993,'' said Walter Rockler, who would become Baral's attorney after he lost at trial and on appeal. "He just filed late [for 1988].''

Four years after he filed for an extension, Baral learned that he had indeed overpaid the IRS by $1,175. And, he wanted his money back in the form of credit.

But the IRS refused to give the money back, claiming that Baral had run out of time to request the refund.

Although Baral lost in the District Court and the U.S. Court of Appeals he continued to file for the $1,000 that was owed.

"I was pretty confident that I had the better hand, even though the courts didn't agree with me," Baral said. "I think the government is miscalculating the law here, and the only way I could get this resolved was to take it to the U.S. Supreme Court.''

Now, the 6-year-old suit could cost thousands, including court fees and the possible cost of an attorney, said Rockler. "It's not the money. It's the principle," Baral said.

With the hours he spent in a law library, the retired worker found a case he says could help him win in the U.S. Supreme Court. In 1945, the Rosenman v. United States case featured the same elements of Baral's dispute in which the statue of limitations had run out on an IRS form.

"The Rosenman case is the key to the U.S. Supreme Court,'' said Rockler, who has argued before the Court a few times. "It's very critical to this case." And Baral found it himself.