Thousands of technology workers are facing huge tax bills by Monday's income tax filing deadline because of company stock they purchased last year that has since plummeted in value.

Accountants and politicians from Silicon Valley to Boston say they have been inundated with horror stories about shares purchased with employee options that workers once had hoped would make them rich. Instead, employees are saddled with big tax bills on profit they never saw.

Many of these workers now owe far more in taxes than their stock is worth. Former Cisco engineer Jeffrey Chou, 32, owes $2.5 million in taxes on company stock he purchased last year that has since withered in value. Chou figures that if he were to sell everything he owns, including the three-bedroom Foster City, Calif., townhouse that he shares with his wife and 8-month-old daughter, the family still could not pay the bill.

"I've lost sleep. I can't eat. I cannot pay, and we're ruined," Chou said.

The one thing sustaining Chou is a small but growing movement among the financially devastated workers to try to change the rules that snared them. But the issue is an uphill battle legislatively because of a widespread perception that the victims were done in by their own greed or bad planning: In essence, they played the option lottery and lost.

"This is not the most politically compelling story," said one congressional staffer.

Many of the affected workers, however, said they believed they were doing the right thing by exercising options and then hanging on to the stock instead of selling it for quick profit. Some did not understand the tax implications of their stock purchases, and many said they wanted to show loyalty to their companies.

"There was this feeling of 'hold on to it for the long term,' " said Marilynn Goldberg, an unemployed Redwood City, Calif., executive recruiter who faces a $500,000 tax bill from Portal Software Inc. stock she purchased using options last year. Shares of the Cupertino, Calif.-based company have fallen more than 80% since then.

"You have to remember, it's a new phenomenon," she said. "A lot of the people [using options] had never had them before."

What also rankles is the idea that top management may have escaped this pain. Accountants say some companies have allowed their executives -- although not typically their rank-and-file workers -- to cancel stock purchases made last year if the shares subsequently declined. The Securities and Exchange Commission has said the practice is legal, but told companies they must record an expense that will lower their reported profit. In addition, the companies must disclose the cancellations in future annual reports. So far, no companies have made such cancellations public.

Portal Software and Cisco say they are not among the companies that rescinded executive stock sales.

"We do not undo stock transactions after the fact," said Cisco spokesman Steve Langdon.

There are two kinds of options that companies use to reward workers: incentive options and the more common nonqualified options. Incentive options can trigger an especially nasty trap for the unaware or the unprepared. Buying stock with these options triggers the alternative minimum tax, or AMT, a parallel tax system Congress devised to make sure the rich don't completely avoid taxes.

Chou used incentive stock options to buy about 100,000 Cisco shares last year, paying 5 to 10 cents for each share. At the time, Cisco stock was trading between $60 and $70 a share. The difference between the price he paid and what the shares were worth -- about $6.9 million -- is taxable to him as profit, even though he never sold the shares.

Under the AMT, the first $175,000 of Chou's taxable income is taxed at a federal 26% rate, and any amount over that is taxed at 28%. Add in state taxes, and the bill is $2.5 million.

Chou could sell his shares now, but it wouldn't solve his problem. Cisco closed Thursday at $17.98 a share, which means that his stake is worth about $1.8 million. To pay his state and federal tax bill, he needs an additional $700,000.

Federal tax law offers an out to those who used incentive options to buy stock last year, but only if the shares were sold before Dec. 31. The employee would still owe taxes, but only on the difference between what the employee paid for the stock and what it was worth on the day they sold. What's more, they would have the money to pay the bill, thanks to the stock sale.

The problem is that some tech workers didn't hear about the loophole in time to sell their shares. Others said they didn't believe their stock would fall so far that they wouldn't be able to sell it by the tax deadline to pay their bill.

That group includes Chou and many of his friends who used incentive options.