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Another 2,000 ex-IBM workers to sue IRS seeking tax refunds

December 13, 1996

NEW YORK (AP) _ Expanding an unusual federal tax case, more than 2,000 ex-employees of IBM are preparing to sue the Internal Revenue Service to try to win back $46 million in taxes they paid on severance benefits.

Echoing a suit filed in March on behalf of 750 ex-IBM workers, the group contends the severance they received amounted to a settlement of personal injury claims because they had to sign a document releasing IBM from liability when they left.

Under IRS rules, settlement of personal injury claims are exempt from federal income taxes.

The new plaintiffs plan to file a lawsuit in the U.S. Court of Federal Claims in Washington on Monday, said James McDermott, a co-lead attorney in the case.

The lawsuit claims the job cuts ``subjected IBM employees to considerable pain and suffering,″ and that workers experienced ``a variety of emotional and physical symptoms, including insomnia and other sleep disorders, weight gain, headaches, hypertension, heart trouble and other trauma.″

The plaintiffs also allege their stress hurt their families _ driving up alcoholism and causing marital problems, including sexual dysfunction.

The IRS declined to comment on the pending litigation.

The former workers are among tens of thousands of International Business Machines Corp. staff who lost their jobs in the early 1990s as the world’s largest computer company cut costs and tried to revive slumping profits.

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