What the Hell is Equitable Recoupment? And why the Hell isn’t it Time-Bared? `

IRC § 6402 gives the government Authority to offset tax refunds, viz. equitable recoupment. But wait, there’s more . . . .

In a taxpayer win, the Ninth Circuit recently reversed the Tax Court and held equitable recoupment was not time barred.  Revah v. Comm’r, No. 11-70211 (9th Cir. Sept. 17, 2014) (unpublished opinion).  Relying on longstanding precedent, the Ninth Circuit held the taxpayers were not statutory barred from applying for equitable recoupment because it’s permitted even with respect to an untimely refund claim.  Thus, even though the taxpayers failed to timely file their refund claims, “untimeliness is not a ground upon which the tax court may deny equitable recoupment.”  Id.

Equitable recoupment is a judicial doctrine that applies where one transaction or event is subject to two taxes based on inconsistent theories.  The equitable recoupment doctrine “allows a litigant to avoid the bar of an expired statutory limitation period” and “prevents an inequitable windfall to a taxpayer or to the Government that would otherwise result from the inconsistent tax treatment of a single transaction, item, or event affecting the same taxpayer or a sufficiently related taxpayer.”  Menard, Inc. v. Comm’r, 130 T.C. 54, 62 (2008).  To establish equitable recoupment a taxpayer must prove: (1) the overpayment or deficiency for which recoupment is sought by way of offset is barred by an expired period of limitation, (2) the time-barred overpayment or deficiency arose out of the same transaction, item, or taxable event as the overpayment or deficiency before the Court, (3) the transaction, item, or taxable event has been inconsistently subjected to two taxes, and (4) if the transaction, item, or taxable event involves two or more taxpayers, there is sufficient identity of interest between the taxpayers subject to the two taxes that the taxpayers should be treated as one.  Id. at 62-63.  In practice, taxpayers often have difficulty mounting arguments of equitable recoupment against the IRS, although the Government typically has more success in this area.

Don't let the Insurance Company push you around

Public Adjusters settle insurance claims for the most amount of money, and in the least amount of time

The IRS audited and made adjustments to the Revahs’ 1999 and 2000 tax returns related to inventory and bad debt, and resulting in a decrease in the net operated losses the taxpayers reported on their 1997 and 1998 returns.  The taxpayers accepted the adjustments assuming that, as the examiner acknowledged, they would be able to reduce income in 2001 through amended returns.  After the exam and in 2005, the taxpayers filed amended returns in accordance with the examiner’s adjustments, but the refund claims were denied as untimely.  The taxpayers petitioned the Tax Court for relief asserting the equitable recoupment doctrine.  The Tax Court (Judge Cohen) found the taxpayers’ inability to use the NOLs to reduce tax liabilities was not the result of the inequitable application of inconsistent theories of taxation contemplated by the equitable recoupment doctrine, and thereby denied the petition.  The Ninth Circuit reversed and remanded in favor of the doctrine’s application, illustrating that there is hope for future taxpayers seeking to offset current IRS liabilities with past credits under the doctrine.

The Good Folks at Selig & Associates represent Contractors, Subcontractors, Day-Care Providers and Minority and Women Owned Businesses before the Internal Revenue Service; New York State Department of Taxation and Finance; New Jersey Division of Taxation; Department of Justice Tax Division, and the Defense Office of Hearings and Appeals. 

Don't let the Insurance Company push you around (Part II)

WHAT IS A PUBLIC INSURANCE ADJUSTER?

• A Public Adjuster is a professional claims person who is licensed by the State Insurance Department to advise and assist individuals and businesses in the preparation, filing and negotiation of claims against their insurance companies. A good public adjuster is an authority on loss adjustment who you can retain to assist you to recover the full amount due you based on your insurance coverage. He or she must pass a comprehensive test, post bond with the state and comply with continuing education requirements.

IS THERE A CONNECTION BETWEEN PUBLIC ADJUSTERS AND INSURANCE COMPANIES?

• A Public Adjuster is engaged by you, the policy holder, to protect your interests. He or she works exclusively for you and has no ties to any insurance company. The insurance company will assign its own adjuster to look after its own interests.

HOW FAR DOES A PUBLIC ADJUSTER’S RESPONSIBILITY EXTEND?

• A Public Adjuster’s responsibility covers every phase of preparation and presentation of your claim, as well as the negotiation of a fair and satisfactory adjustment and recovery of all monies that may become due with regard to the claim. It does not ordinarily extend to the process of replacing damaged or destroyed property.

WILL I RECEIVE MORE PROMPT AND SATISFACTORY SETTLEMENT IF I HIRE A PUBLIC ADJUSTER?

• A good Public Adjuster’s experience and expertise can greatly hasten final settlement of your claim. Through prompt and expert inspection and analysis of your loss, a Public Adjuster can preserve and provide evidence that might otherwise be overlooked or destroyed. He or she will thoroughly document and complete the claim. The more detailed the claim presentation, the more money you will recover.

WHAT IF THE PUBLIC ADJUSTER AND THE COMPANY ADJUSTER DO NOT AGREE ON THE DAMAGES?

• In this event, the policy provides for a process called “appraisal”, which is much like arbitration. It is much quicker and less expensive than litigation (suing in court). This is seldom necessary, simply because the Public Adjuster and the Company adjuster understand value and loss and usually can amicably determine the measure of damage.

HOW IS A PUBLIC ADJUSTER PAID?

• Public Adjusters work on a percentage of your paid claim. The wording of a Public Adjuster Compensation Agreement in New York is specified by the State Insurance Department and cannot be changed except for the percentage. However, no Public Adjuster is allowed to charge any fees in excess of 12.5% of the loss, and most will negotiate a lower fee. When a Public Adjuster is hired as an appraiser, the fee is hourly or a flat fee rather than a percentage.

IF I PAY A PERCENTAGE OF MY CLAIM TO A PUBLIC ADJUSTER, HOW WILL I BE ABLE TO REPLACE MY PROPERTY?

• A properly detailed and prepared claim will invariably result in a higher settlement. The professional services of a Public Adjuster can make the resulting payment from the insurance company far more than it might have been without those services. Many items that qualify for payment may not need to be replaced (Do you need those pants that are two sizes too small?)

WHO RETAINS A PUBLIC INSURANCE ADJUSTER?

• Lawyers, bankers, accountants and businessmen in addition to homeowners and tenants. Once people experience the skill and knowledge of a competent Public Adjuster, they will rarely attempt to settle a claim without one. A Public Adjuster’s best source of new clients is the referral from those they have successfully served.

DO I NEED TO UNDERSTAND MY POLICY?

• Have you ever sat down and tried to read your insurance policy? Many are book-like and contain terms and conditions that defy understanding by laymen. There may be contradictions between the main body of the policy and various endorsements and riders attached to it. Prior court decisions may affect the meaning of certain words or phrases found in your policy. An insurance company is not obligated to point out all the benefits available under their policy, but you can be sure they will take every advantage of clauses that limit your recovery. A good Public Adjuster has the technical knowledge to interpret coverage and make certain you get every available benefit.

CAN’T I PREPARE MY OWN CLAIM JUST AS WELL?

• It stands to reason that a Public Insurance Adjuster who makes adjusting his life’s work can do it more efficiently than the average insured, who may have one large loss in a lifetime. Even if you have experience, for example, if you were a contractor who often writes building repair estimates, a Public Adjuster’s experience as to maximum insurance allowances, fine detail and estimate format can make a major difference. Insurance claimants seldom have the time and the resources to determine the degree of damage or to properly price each individual item. A professionally prepared claim is much more likely to be accepted by an insurance company.

I HAVE BEEN INSURED WITH THIS INSURANCE COMPANY FOR A LOT OF YEARS AND NEVER MADE A CLAIM. SHOULDN’T THAT COUNT FOR SOMETHING?

• The claim department of most insurance companies has little contact with the underwriting department or the individual agent who placed the insurance. A claim is usually handled on its own merits, without consideration of the fact that you have been claim free. However, insurers do share and keep track of every claim you ever made, which may result in closer screening of your present claim.

SHOULD I ACT QUICKLY TO HIRE A PUBLIC ADJUSTER?

• While it may seem logical to wait to see how an insurance company might respond to your loss before considering a Public Adjuster, you should be aware of the perils. Many insurance companies will use a first interview to pin you down to a position or develop information that they might later use to limit or deny your loss. Most people are emotionally distraught right after a large loss and may not always offer information that will be accurate and helpful to their claim. The sooner you retain a Public Adjuster, the sooner your claim will be settled and you will have funds to rebuild or replace damaged property.

IF I HAVE ALREADY SUBMITTED A CLAIM, CAN I STILL HIRE A PUBLIC ADJUSTER?

• It is usually best to hire a Public Adjuster immediately after a loss. However, depending on circumstances, a Public Adjuster will probably be able to assist you even though your claim was submitted. Most good Public Adjusters will offer you a free consultation to explore the prospect of whether or not they can help you. In some cases, a competent Public Adjuster can serve as your appraiser in the above-mentioned appraisal provision for settling a disputed loss.

I PAID MY INSURANCE PREMIUM AND THE POLICY SAYS THE INSURANCE COMPANY WILL PAY FOR MY DAMAGE. WHY SHOULD I ENGAGE A PUBLIC INSURANCE ADJUSTER TO OBTAIN WHAT IS RIGHTFULLY DUE ME?

• The insurance company is prepared to pay what is due to you as it sees it. Even though most company adjusters try to be “fair”, most insurance companies overload their adjusters with a lot of claims. A company adjuster simply doesn’t have the time to give intense personal service to each claimant. There may be more than one way to look at a particular item of damage. A company adjuster’s first duty is to the insurance company who he or she represents. An insurance company is a business whose goal is to make money. The less money it pays out in claims, the more money it makes. Every insurance policy requires that YOU submit a claim. It is not the responsibility of the insurance company to prepare your claim. A Public Adjuster is your representative exclusively, and can devote whatever time is necessary to properly detail your claim with his experience and knowledge for your maximum recovery under the policy.

HOW DOES A PUBLIC ADJUSTER DETERMINE THE ACTUAL LOSS?

• He or she is responsible for detailing and evaluating every item of damage and submitting all required paperwork. This usually involves taking a physical inventory and preparing a comprehensive estimate using his or her skill and experience, or obtaining the services of a proper expert. At the same time a Public Adjuster will make certain that all stipulations, deadlines and requirements of your policy are faithfully observed.

WILL THE INSURANCE COMPANY RECOGNIZE A PUBLIC ADJUSTER AS MY REPRESENTATIVE?

• Absolutely. A Public Adjuster is your legal representative and must be recognized by an insurance company. Most company adjusters actually prefer to work with an experienced Public Adjuster rather than an inexperienced claimant.

DO PUBLIC ADJUSTERS HANDLE CLAIMS OTHER THAN FIRE?

• Yes. A Public Adjuster is licensed to handle all claims of loss to property against your own insurance company, as well as contingent expenses, such as loss of use, business loss of income, and other expenses. A good Public Adjuster is an expert in all types of loss, including windstorm, explosion, snow, hail, smoke, water damage, damage to structures by motor vehicles, inland marine, business interruption, rentals, improvements and betterments, commission and profits, reporting forms and others.

WILL MY AGENT OR BROKER ACT AS AN ADJUSTER ON MY BEHALF?

• An insurance broker serves you at all times in connection with your insurance coverage, but does not have particular responsibility for your claim. Many agents and brokers will assist you with minor claims and claim reporting, but generally do not have the time or experience to render the highly specialized service of insurance adjusting. It should be understood that an insurance agent is a legal representative of the insurance company, not you.

WILL MY INSURANCE POLICY PAY MY ENTIRE LOSS?

• It depends upon the type and amount of insurance you carry. Some policies cover the full cost of replacement while others cover only depreciated value. There are usually strict limits and sub-limits. There may also be issues of under insurance. Because of the variety of coverage that might be afforded, it is suggested that you consult a qualified Public Adjuster to determine how your policy will respond to your loss.

IN THE EVENT OF A LOSS, WHAT STEPS SHOULD I TAKE?

• If you hire a Public Adjuster immediately after a loss, he or she can advise and assist you each step of the way. All policies require that you report the loss as soon as practicable to the insurance company and take steps to preserve property from further damage, including theft. Failure to comply with these obligations may limit or completely void your coverage.

MANY PUBLIC ADJUSTERS ARE CALLING ON ME. HOW DO I CHOOSE THE RIGHT ONE?

• The choice of a Public Adjuster should be a careful one, as you are putting a large asset in the hands of someone you probably don’t know. You should carefully interview a prospective Public Adjuster just as if you were hiring an employee. Check references thoroughly and carefully question each person with whom you speak. Often a lower percentage does not mean you will be better off after settlement. Public Adjusters who are members of the New York Public Adjuster’s Association will often be more qualified as they have made an extra effort to stay in touch with the latest developments in the industry and are subject to the rules of the organization.

WHEN MAY A PUBLIC ADJUSTER CALL ON ME?

• In New York State, no Public Adjuster is allowed to solicit your business between the hours of 6:00 PM and 8:00 AM unless you invite them. Report any violations to the Insurance Department.

  

Don’t Let the Insurance Company Push You Around!

An editorial by David Selig, Federal Tax Practitioner at Selig & Associates

When your home or business suffers a covered loss, the Insurance Company will try to settle for “pennies on the dollar”. The Insurance Company knows that it’s nearly impossible to be objective when your property was just destroyed. It’s a traumatic experience for you and your family – but it’s business as usual for the Insurance Company. Houses catch fire, ships sink and water damages valuable inventory every day of the week. Insurance Companies are in business to make money, and every dollar they save is quite literally, a dollar earned. Accordingly, the Insurance Company employs an army of Adjusters, Accountants and Attorneys.  And each one of these coldblooded professionals is specially trained to skin you alive. You’ve got to protect yourself, says David Selig. In the rough and tumble world of claim settlements, fair exchange is no robbery! You need an aggressive advocate in these difficult times, says Selig. In most cases, a Public Adjuster and Attorney will negotiate a bigger cash settlement than a policyholder ever could. For more information about settling insurance claims, contact Attorney Bradley Dorin at Selig & Associates. 

7 Things to Do (when you have an insurance claim)

1.    Notify your insurance company, viz. put them on Notice.

2.    Keep good records, e.g. the day, date and whom you spoke with; your claim number, and the name of the insurance company’s adjuster.

3.     Ask for a “Certified Copy” of your insurance policy.

4.    Mitigate your losses, e.g. turn off water, secure doors and windows, etc.

5.    Take photos of the damage and photos of all items that you had to throw away.

6.    Keep a detailed record of all expenses and save your receipts.

7.    Contact a qualified Public Adjuster.

Selig & Associates provides the most aggressive tax representation allowed by law. Specializing in Trust Fund Recovery Penalty, Payroll, Income and Sales Tax Controversies. We settle contested tax audits; negotiate excellent payment plans, compromise tax debts, and resolve all civil and criminal tax issues, including innocent spouse relief and separation of liability. Call today for a FREE face-to-face Consultation (212) 974-3435. 

Criminal and Civil Tax Representation including Tax Crimes, Tax Evasion, Failure to File a Tax Return, Criminal Non-Filing, False Returns, Installment Agreements, Partial Payment Agreements, Sales Tax Audits, Sales Tax Controversies, Wage Garnishments, Bank Levies, Seizure of Real Property, Innocent Spouse Relief, Trust Fund Recovery Penalty (TFRP), Payroll Taxes, Statute of Limitations, Offer in Compromise,Administrative Appeals, Collection Due Process Hearings and most other tax matters. 

Tax Representation, Advocacy & Litigation before the Internal Revenue Service, the New York State Department of Taxation and Finance, the Department of Justice Tax Division, the New Jersey Division of Taxation, the Connecticut Department of Revenue Services, the District of Columbia Office of Tax and Revenue, the Pennsylvania Department of Revenue, the Georgia Department of Revenue, the California Franchise Tax Board and the Defense Office of Hearings and Appeals (DOHA). 

Negotiate Property Damage Claims we can evaluate your existing insurance policies to determine what coverage may be applicable to your claim. We research, detail, and substantiate damage to buildings and contents and evaluate any additional covered expenses, including business interruption losses and extra expense claims for businesses.

Construction Arbitration, Mediation & Litigation including non-payment for contracted and/or extra work, work stoppages and/or delays, breach of contract, mechanics liens, back charges and accounting.