# Tax error question... Need tax expert/attorney advice **URL:** \ **Category:** In My Humble Opinion\ **Created:** [April 28, 2015, 7:36pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739 "2015-04-28T19:36:32Z")\ **Posts on this page:** 11\ **Page:** 2
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [April 29, 2015, 7:56pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/21 "2015-04-29T19:56:56Z")
> [@Stink Fish Pot](#): > > I have no idea how someone would know what would or wouldn’t be open to taxation in a situation like this. She clearly didn’t know a portion of her income was not taxable. I suspect that if this wasn’t discovered, it may have continued to go on for the rest of her life. > > And I agree that people “certify that this information is correct.” But if I remember my own form I signed this year, it said “to the best of my knowledge”. And shouldn’t the insurance company also be held to that standard? The only way to discover the error would be to double-check any legal paperwork and how payments had been processed in the past. For example, one simple step would be checking her pay stubs to see whether disability premiums had been included in taxable compensation or not. Employment contracts, insurance policies, etc. might also have clauses that would help to determine it. I don’t always double-check W-2s at that level of detail, but for certain tax issues, it’s worth it. Another example is when expense reimbursements are involved because employees often know only “the employer paid for it” and not whether the employer excluded it from income under an accountable plan or included it in income for the employee to substantiate on their own return. The W-2 alone might not provide enough information to know the proper tax treatment. The insurance company is also held to a standard of doing things correctly, but their liability under tax law is primarily to the IRS for any penalties or audit adjustments. “To the best of my knowledge” clause is essentially there to establish intent, since there’s a different between criminal intent to commit tax fraud and an honest mistake. The problem is that honest mistakes are still covered by various statutes of limitations. Anyway, you also asked about the type of attorney. My recommendation would be to start by looking at people who specialize in employment law. ---
**Author:** ![Iggy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/iggy/32/3364_2.png) [@Iggy](https://boards.straightdope.com/u/Iggy)\ **Post date:** [April 29, 2015, 8:21pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/22 "2015-04-29T20:21:07Z")
If the OP’s friend is dealing with Unum Provident (a major disability insurer) then the run-around is no surprise. I had the same issue with them taxing benefits that should have been tax free, but quickly corrected the problem. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [April 29, 2015, 8:43pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/23 "2015-04-29T20:43:49Z")
> [@Stink Fish Pot](#): > > I am wondering about this… > > What kind of an attorney would be best for something like this? > > A tax attorney sounds like the logical choice to me, but only on the surface. This will more than likely not be something that even involves the IRS, since as I understand it, it wasn’t their fault. The insurance company is the one who screwed the pooch here, so perhaps a tax attorney would not be the best choice. > > Anyone have any ideas? Since your recourse is likely to be against the insurer, a general civil attorney (they often style themselves as “civil trial attorneys”) would be your best bet. That attorney will refer your friend to other practitioners if necessary. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 29, 2015, 8:48pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/24 "2015-04-29T20:48:16Z")
> [@Stink Fish Pot](#): > > As I understand it, her earned income on disability is supposed to be reported as a lower income, and the tax withheld is on that lower total. I can ask my wife if she remembers the exact percentage, but for some reason, 70% jumps out in my head… > > So, (again, this is how I’m understanding the situation… You are getting this from a non-tax person who is just trying to help). I know this will get wordy, so apologies in advance… > > Again, apologies if I am not explaining this well. I think I got the general idea, though. I showed this to my Bro who worked with the IRS for 20 years and he sez this makes no sense. The issuer or payer doesnt tax anyone. Perhaps you mean they over-reported her taxable earnings? As \*\*Q.N. Jones \*\*says? If so, the IRS hands are tied by the Statue of Limitations, the same things that stops them from auditing your last 20 years of tax returns. The IRS can do nothing, as **Alley Dweller** posted. IANAL, but afaik there is no statue of limitations on what a private company can pay out. They almost certainly can reimburse your friend the difference. True, she can only get back from the IRS the funds still open due to Statue of Limitations, but I cant see why the Insurance company cant pay her the amount the IRS would have paid her otherwise. A Tax attorney cant help, nor can the IRS. Have her write them a firm letter, threatening to take them to the State Insurance Commission. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [April 29, 2015, 8:51pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/25 "2015-04-29T20:51:10Z")
> [@DrDeth](#): > > IANAL, but afaik there is no statue of limitations on what a private company can pay out. Every civil action has a statute of limitations. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [April 29, 2015, 9:06pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/26 "2015-04-29T21:06:05Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Every civil action has a statute of limitations. To be fair, \*\*DrDeth \*\* said there is no statute of limitations on what the the company CAN pay out. Which is true. They can voluntarily pay out as much as they like. The statute of limitations is a restriction on what a court can force them to pay out. But only if they raise the statute as a defense. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 29, 2015, 9:34pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/27 "2015-04-29T21:34:20Z")
> [@Alley\_Dweller](#): > > To be fair, \*\*DrDeth \*\* said there is no statute of limitations on what the the company CAN pay out. Which is true. They can voluntarily pay out as much as they like. The statute of limitations is a restriction on what a court can force them to pay out. But only if they raise the statute as a defense. Exactly. The Insurance company can do the right thing no matter how long ago. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [April 29, 2015, 9:51pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/28 "2015-04-29T21:51:38Z")
While that is true in an absolute sense, I don’t think it’s very useful advice. ---
**Author:** ![gigi](https://avatars.discourse-cdn.com/v4/letter/g/a587f6/32.png) [@gigi](https://boards.straightdope.com/u/gigi)\ **Post date:** [April 29, 2015, 10:11pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/29 "2015-04-29T22:11:46Z")
Does she plan to file emended returns for the last three years based on the revised W-2s? And this thread is really about pursuing the years before that? Or I am misunderstanding? ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 29, 2015, 10:21pm UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/30 "2015-04-29T22:21:36Z")
> [@Really\_Not\_All\_That\_Bright](#): > > While that is true in an absolute sense, I don’t think it’s very useful advice. “Kiss off the money honey, the Insurance company is going to screw you” also is not very useful. I agree it’s more likely, but the power of negative publicity is high. ---
**Author:** ![Q.N.Jones](https://avatars.discourse-cdn.com/v4/letter/q/3da27b/32.png) [@Q.N.Jones](https://boards.straightdope.com/u/Q.N.Jones)\ **Post date:** [April 30, 2015, 12:19am UTC](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739/31 "2015-04-30T00:19:01Z")
One thing your friend can do in the future: decline to have the disability company do the tax withholding for her. She can pay quarterly estimated taxes instead, if she wants to take it out of their hands. But she does need to know exactly what she’s doing, and if the LTD insurer is putting some or all of the non-taxable portion of her benefit into Box 1 (and reporting it as taxable), that won’t solve the problem. [Previous page](https://boards.straightdope.com/t/tax-error-question-need-tax-expert-attorney-advice/718739.md?page=1)