Jay Stein and his wife, Deanie, are suing the United States of America to resolve a tax dispute.
The Steins filed the suit against the government last week in U.S. District Court for the Middle District of Florida, seeking to recover $3.38 million in taxes they were forced to pay last year after the Internal Revenue Service disallowed a tax deduction.
The deduction was for 500,000 shares of Stein Mart Inc. stock the couple donated to the Jay Stein Foundation Trust in 2005.
Jay Stein is chairman and CEO of Stein Mart, the company founded by his grandfather more than a century ago. His family controlled about 14.9 million shares of the Jacksonville-based fashion retailer when Stein Mart filed its proxy statement in the spring, representing 32.8 percent of all outstanding shares.
According to the lawsuit, the fair market value of the 500,000 shares donated to the foundation was about $12.67 million when the Steins made the donation 10 years ago.
The suit says the Steins were unable to deduct the full amount of the donation on their 2005 tax return, under federal tax law, so they deducted a portion of the donation each year from 2005 through 2010.
In October 2014, the IRS sent the Steins a notice of deficiency saying the agency was disallowing the deduction and ordering them to pay an additional tax of $3.38 million.
The Steins paid the tax in December but believed they did not owe it, so they filed a claim for a refund of the $3.38 million in February.
“More than six months have elapsed since the filing of these claims and no action has been taken thereon,” the Steins said in the lawsuit.
So, they filed the lawsuit last week seeking to recover the $3.38 million, plus interests and costs.
A Stein Mart official said Jay Stein was travelling Thursday and did not want to comment beyond what is in the lawsuit.