Johnny Johnson admits he made errors on his 1974 and '75 tax returns and paid the federal government $3,500 less than he should have.
But he doesn't think those honest mistakes gave the government the right to drag his name through the mud and destroy his career as an insurance executive. So he sued the Internal Revenue Service, saying it wrongfully publicized his case because it wanted to make an example of a high-profile taxpayer.He won. Big time. The 76-year-old Johnson was paid $3.5 million by the IRS three weeks ago to settle the case.
"I do not wish to imply that I did not do anything wrong," Johnson said Wednesday. "But I do say in the strongest terms that I did not do anything intentionally wrong.
"It was wrong, but it was not wrong enough that the IRS was justified in doing to me and my family what they did."
IRS spokesman Frank Keith in Washington said simply, "The IRS believes this is a reasonable resolution ending 15 years of litigation." He said it was the largest settlement the IRS has ever made to an individual.
Johnson had already sued the IRS twice for issuing a news release on April 15, 1981 - tax day - revealing that he had pleaded guilty to evading $3,500 in taxes.
In 1991 a federal judge awarded him $10.9 million, but an appeals court ruled the following year that he had filed his lawsuit under the wrong statute. He refiled, and in 1996 a jury ordered the IRS to pay him more than $10 million. This time, an appeals court ruled the judge in the case appeared to be biased against the IRS.
Johnson was planning to take the IRS to court a third time when the settlement was reached in February. He received his $3.5 million on April 1 and put it into a trust fund for his grown children.
The former executive vice president for the American National Insurance Co. in Galveston, Texas, saw his troubles with the IRS begin in 1976 after his company sued the agency for disallowing deductions it had claimed on a business deal.
Within a year, Johnson said, the company itself and its top executives were audited. When auditors determined he owed $3,500 from the 1970s, the IRS pressed to have him indicted.
Under terms of a plea bargain, the U.S. Attorney's office was to identify him by his given name, Elvis Johnson, which he said nobody in Texas knew him by. It was not to give out his home address or occupation and no press release on his case was to be issued.
After he complained when the IRS issued a release on tax day that was headlined, "Insurance executive pleads guilty in tax case," the agency made some minor changes to it and issued it again two days later.