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IRS renews 'Willie's Nightmare'
The agency says Texaco station owner William DeCesare can't claim money he spent on a gas spill cleanup as a loss -- and it's auditing him, to boot.
By BOB WYSS
Journal-Bulletin Staff Writer
William J. DeCesare spent $300,000 of his own money to clean up a gasoline spill that threatened three public water systems.
To state officials, that made him a hero.
But to the U.S. Internal Revenue Service, he is a deadbeat.
The IRS is auditing DeCesare and his service station, Willie's Texaco. The agency is contesting DeCesare's decision to claim money that he spent on the spill as a loss for tax purposes, according to Ralph Kinder, DeCesare's lawyer.
The IRS's reasoning is that the spill occurred before DeCesare owned the station, so he was not responsible for cleaning it up and it cannot be claimed as an expense, said Kinder.
``It's wrong and we plan to prove it,'' said Kinder. ``It's a case of where they are trying to squeeze the little guy.''
``It's blatantly outrageous,'' said Sen. Michael Lenihan, who praises DeCesare as a hero. ``To put this guy through yet another hurdle . . . it's disappointing.''
The state ordered DeCesare to begin the cleanup.
``It sounds like he is being whipsawed between the state and federal governments,'' said another admirer, Lt. Gov. Bernard A. Jackvony.
It's the latest chapter in ``Willie's Nightmare.''
That was the title of a six-part Journal-Bulletin series last year about DeCesare's travails.
The troubles began in December 1993, when the state ordered DeCesare to immediately clean up a gasoline spill that seeped out of underground tanks at his station at 5819 Post Rd., East Greenwich. The state labeled it a health emergency because of the spill's proximity to the wells of three water systems.
DeCesare complied even though the spill had occurred in 1973, when Exxon owned the station and he was the manager. Environmental standards were more lenient at the time, and Exxon ignored the spill. The company sold the station to DeCesare in 1983.
A state fund was established to compensate owners such as DeCesare, but it took effect July 8, 1994, after DeCesare had spent most of his money.
Three years ago, as DeCesare struggled to run the station, his wife died.
Since DeCesare ran out of money, more than $1 million, mostly from the state, has been spent on the cleanup, which is continuing.
``He is a profile in courage,'' said Lenihan. ``He put his own money out, when he could have contested this, and bought time in court. I admire what he did and we should take and recognize that.''
Last year DeCesare obtained bipartisan support from Lenihan, a Democrat, and Jackvony, a Republican, at the General Assembly.
Lenihan sponsored legislation that would have moved back the effective date of the state Underground Storage Tank Financial Responsibility Fund from July 1994 to December 1993 so that DeCesare's expenses would be eligible for reimbursement.
The bill passed the Senate, aided by Jackvony, who presides over the chamber, and Lenihan, who is chairman of the Senate Finance Committee.
It failed in the House.
House leaders worried that the bill would have made not only DeCesare eligible for the fund, but many others.
``The fear was that it would have diluted the fund to the point where no one could use it,'' said Lenihan.
The fund is financed by a 1 cent per gallon tax paid by motorists. It is managed by Rep. Vincent J. Mesolella, a powerful member of the House leadership.
New legislation introduced this year not only pushes back the effective date but it also applies only to single service stations. Lenihan is optimistic it will pass both branches.
``I would hope that this will show that the system does work for someone who did the right thing from the beginning,'' said Kinder, DeCesare's lawyer. ``We came to the plate from the very beginning.''
Both Lenihan and Jackvony say the IRS audit and tax dispute should not affect the legislation.
``I don't care what the IRS is doing,'' said Jackvony. ``It seems that this man acted responsibly and we owe it to him to recognize that because he put his financial life on the line.''
The IRS takes a different view.
``They take the position that since he was cleaning up someone else's mess, he is not eligible'' to claim the expense on his taxes, said Kinder.
Kinder said an IRS auditor has made that initial finding, and it is now being appealed so that it can be considered at an IRS hearing. Kinder said DeCesare's options after that are to appeal either to U.S. Tax Court or the U.S. District Court.
A spokeswoman for the IRS said the agency does not comment on individual taxpayer cases, to protect the confidentiality of the individual or business.
The IRS was harshly criticized last fall during congressional committee hearings for abusing its power. The strongest outrage centered on how it treated smaller businesses or individuals that are less able to defend themselves.
The IRS responded with a public apology and promised to reform. President Clinton has called IRS reform a top priority and Congress is on a fast track to restructure the agency.
Kinder declined to provide further details about the tax case and DeCesare's tax returns. He said the case is still being negotiated with the IRS.
DeCesare is also wary. He declined several requests to be interviewed for this story.
Last year, readers reacted with sympathy and support for DeCesare following publication of ``Willie's Nightmare.'' Time and again customers pulled up to his pumps and told him they were amazed and upset by his misfortunes.
The IRS audit is not the only threat.
As long as the spill remains, DeCesare lives under the prospect of getting socked with a hefty fine from the state Department of Environmental Management.
DEM continues to run the pumps and other costly machinery at the site that are cleaning the underground spill, but the agency and DeCesare are close to a plan to allow him to take back control of the cleanup.
To do that he needs money from the reimbursement fund.
But the board responsible for the fund has been working at glacial speed.
Created in July 1994, it has struggled to release any money from the fund and the General Assembly has funneled millions of dollars off to balance the budget.
Last September it did authorize an ``emergency'' appropriation of $500,000 for Willie's Texaco and four other stations labeled as high priorities.
So far one check has been written for Willie's Texaco.
The amount is $654.49.
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