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The Wagner Law Group

The Wagner Law Group is a nationally recognized practice in the areas of ERISA and employee benefits, estate planning, employment, labor and human resources and investment management.

 

 

Established in 1996, The Wagner Law Group is dedicated to the highest standards of integrity, excellence and thought leadership and is considered to be amongst the nation's premier ERISA and employee benefits law firms. The firm has eight offices across the country, providing unparalleled legal advice to its clients, including large, small and nonprofit corporations as well as individuals and government entities worldwide. The Wagner Law Group's 33 attorneys, senior benefits consultant and seven paralegals combine many years of experience in their fields of practice with a variety of backgrounds. Nine of the attorneys are AV-rated by Martindale-Hubbell and six are Fellows of the American College of Employee Benefits Counsel, an invitation-only organization of nationally recognized employee benefits lawyers.  Five of the firm's attorneys have been named to the prestigious Super Lawyers list for 2018, which highlights outstanding lawyers based on a rigorous selection process. The Wagner Law Group is certified as a woman-owned and operated business by the Women's Business Enterprise National Council. 

 

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Boston 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

 

Washington, D.C.

Tel: (202) 969-2800

 

Fax: (202) 969-2568

 800 Connecticut Avenue, N.W.

Suite 810

Washington, D.C. 20006

 

Chicago

Tel: (847) 990-9034

Fax: (847) 557-1312

190 South LaSalle Street

Suite 2100

Chicago, IL 60603

 

  

Palm Beach Gardens 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

Tampa

Tel: (813) 603-2959

Fax: (813) 603-2961

101 East Kennedy Boulevard

Suite 2140
Tampa, FL  33602 

  

San Francisco

Tel: (415) 625-0002

Fax: (415) 358-8300

300 Montgomery Street

Suite 600

San Francisco, CA 94104

  

St. Louis

Tel: (314) 236-0065

Fax: (314) 236-5743
25 W. Moody Avenue
St. Louis, MO  63119 

 

Lincoln, MA

Tel: (617) 532-8080

Fax: (617) 532-9090

55 Old Bedford Road

Lincoln, MA 01773

 

 

www.wagnerlawgroup.com

 

 

 

Unwanted Employer-Paid

  Life Insurance Taxable to Employee

 

August 29, 2018

 

 

 

The Fifth Circuit Court of Appeals, in Ramsay v. Commissioner of Internal Revenue, has upheld the Tax Court's determination that the value of employer-paid group term life insurance was taxable compensation for an employee despite his claim that he neither requested nor wanted the coverage.

 

Law. In general terms, Internal Revenue Code Section 79(a) provides that an employee's gross income includes the value of group term life insurance provided under a policy carried by his or her employer, to the extent that the coverage exceeds $50,000, minus any amounts paid by the employee towards the cost of coverage.

 

Background. The employee's 2011 federal tax return reflected $891 in imputed income from a life insurance policy provided by his employer. However, the employee's 2011 return did not report various capital gains and dividends that he had received that year, and it also reflected an overpayment, which he requested be applied to his 2012 return. The IRS subsequently sent the employee a notice of deficiency regarding the capital gains and dividends, and the employee responded by filing a petition with the Tax Court.

 

In 2015, the employee filed an amended tax return for 2011 that recognized (as income) the previously unreported capital gains and dividends, but removed the $891 in life insurance premiums that he had previously reported as income on his original 2011 return. The employee asserted that the $891 should not have been included in his 2011 taxable income because he neither requested nor wanted the life insurance coverage. The employee also alleged that he had previously persuaded the IRS that the imputed income from the same insurance policy that was reported on his 2010 Form W-2 was properly excluded from his tax return for that year. Finally, the employee claimed that the IRS should have accepted his amended return with the $891 in imputed income omitted.

 

Tax Court. The Tax Court held that the value of employer-paid group term life insurance was taxable to the employee despite his claim that he never wanted the life insurance because he had not overcome the applicability of three well-established rules.

 

First, the Tax Court observed that the employee's reporting the $891 cost for the insurance as income on his original 2011 return constituted an admission that must be overcome by cogent evidence. Here, although the employee claimed that he had notified his employer in 2011 that he did not want the coverage, the policy was nonetheless in effect and provided a taxable benefit to the employee. Accordingly, the Tax Court concluded that the employee had not provided evidence sufficient to overcome the admission made on his original 2011 return.

 

Next, in addressing the employee's argument concerning his 2010 tax year filing, the Tax Court explained that each tax year stands alone, so that the acceptance of a position by the IRS for one year is not controlling for other years.

 

The Tax Court concluded by observing that the IRS was not required to accept and process the employee's amended return on which he deleted the $891 in imputed income, noting that "the acceptance or rejection of an amended return is solely within the discretion of the Commissioner." The employee proceeded to appeal the Tax Court's finding to the Fifth Circuit Court of Appeals.

 

Fifth Circuit. The Fifth Circuit agreed with the Tax Court's findings and rationale for the matter and upheld its determination. Specifically, the Fifth Circuit noted that: (i) the matter arose because the employee had filed an amended return after the IRS sent him the notice of deficiency; (ii) the employee's reporting of the $891 constituted an admission that required cogent evidence to overcome; and (iii) the employee had not provided cogent evidence to overcome this admission.

 


 

 

 

 

 

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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.