WOULD SOMEONE PLEASE HELP ME! STATE FARM SCREWED ME OUT OF $5,550!!! PLEASE HELP!!!

[AnArmyVeteran]

WOULD SOMEONE PLEASE HELP ME WITH THIS PROBLEM! STATE FARM just cost me $5,000!! (PLEASE!)

(I KNOW THIS IS LONG, BUT WOULD YOU PLEASE READ ALL OF IT & PASS IT AROUND? I NEED HELP WITH THIS!)

How the State Farm Insurance Screwed Me Today with a Massive $5000 Tax Bill

State Farm seems to be just another corporation where its workers check their souls at the company door, if they even have them to start with. I went to a tax preparer this morning and was told because State Farm cancelled my life insurance policy I would owe $5,000 in taxes, instead of getting a $550 refund.

Last January 2009, I paid for my yearly insurance premium of $130.70 for a life insurance policy my Dad talked me into getting soon after I got out of the US Army. I made the payment on time, but State Farm 'lost' it. They didn't notify me of the lost check and a couple of months later they cancelled the policy I've had for almost 40 years.

Through the years, when times were rough, I made loans against the policy, which was permitted by the company. Once I borrowed money from my policy to help my brother who's wife just had a baby. They didn't have medical insurance so I paid for the $4,000 medical expenses so they wouldn't be in debt. State Farm often encouraged borrowing against the policy, saying it was a good way to get temporary help. It wasn't even necessary to repay the loan because it was just added to the total loan of the policy. If I died, the policy would still pay, but subtract the debt balance from the payment. Having a loan against the policy was not only permitted, but encouraged by State Farm. Hell, at this moment, I truly am worth more dead than alive. The 'insurance' is in effect until April 17th, so if I died before then the insurance company would have to pay. But that is probably why State Farm cancelled my policy without telling me. It seems obvious they are purging people who are getting older to lessen their financial risk. And they don't give a damn about the great harm they cause to the people they are targeting.

My policy also had a paid-up feature where it automatically paid your premium if you choose not to pay. It's just added to the loan. But last year, even though I made a payment to them to keep my policy current, they canceled my policy. Then they sent me a complicated statement saying I received a payment of over $23,000 for 2009, when I didn't take a dime out of the policy during 2009. The last time I took a loan against the policy was years ago. Then I later learned that the $23,000 would be added as taxable income to all my other taxable income for 2009.

Had State Farm not deceived me by not being honest, I would have received a $550 tax refund for 2009, but because State Farm 'said' I didn't make my payment last January 2009, my tax bill is now almost $5,000.

After feeling completely violated, I left the tax preparer's office and went to the nearest State Farm agent. I explained the situation and was then put on the phone with a 'higher up' in the organization. He told me if a mistake was made State Farm would issue a new 1099 form to the IRS saying I did not receive any money from them, because I didn't. But he said to prove a 'mistake' was made I had to show him a cancelled check. He assumed no responsibility if his company lost the payment. Nor would he accept any responsibility to explain why his company failed to notify a loyal 40 year State Farm customer the ramifications of not making a payment. At no time did State Farm ever mention the tax liability which would result from a missed payment, regardless of the origination of the fault. Of course, corporations are infallible. They never make mistakes. And if they do, they never admit to them.

I talked to a person who said his name was Daniel. I said I wanted to write a letter directly to him and asked for his address. He willingly gave me the address, but when I asked him for his last name he gave me a company code instead. I remember when people used to be proud of who they were. They didn't hide behind masks or fake names. People used to act with honor and had empathy & compassion for other people. They didn't check in their integrity, honor and common human decency at the door where they worked. But unfortunately, that world doesn't exist in corporations any more. People are apparently ashamed of revealing who they are. I suppose they are afraid of an angry person who felt violated in some way. But if corporate leaders acted with honor and treated people with respect and empathy they wouldn't have to hide behind fictitious names.

I've worked many years for corporations, but I wouldn't dream of hiding behind a disguise. But I didn't have to. I always treated people fairly, with respect and I always great valued them. But in today's corporate world people are not even looked at as human beings. People are nothing but a revenue sources to be exploited as much as possible until they can be discarded. That's what State Farm did to me today. It doesn't matter to a corporate worker if their actions greatly harm other people. Sometimes I wonder if some of them take great satisfaction in knowing they hurt others.

I told the State Farm representative "Daniel" that a corporation can do whatever it wants to do. They make their own rules and they can always amend their rules. But in my case, they chose to do nothing. They didn't care that a missing $130.70 check, misplaced by them, led to a massive $5,000 tax debt causing great financial harm to a fellow human being and a loyal customer. They didn't care that I would be in debt to the IRS for years while trying to pay it off.

On my drive back home I heard on the radio about how tea baggers were out today demonstrating against the government. They are filled with anger, rage, fear and loathing for the government, but seem to cheer on corporations like State Farm's abuse of human beings. They attack the government for asking them 10 inane questions on the US Census, but say nothing while corporations invade their lives daily, acquiring and accumulating every personal piece of information they can. And you can be sure that corporations will use that information to exploit you or profit off your information by selling it and reselling it. But instead of attacking the real evil in this country, tea baggers glorify unbridled capitalism and savagely attack the government, even if the government is trying to help them.

And if they are purging people who are getting older isn't that a federal crime? Any lawyers out there!!!!!!


IF THERE IS ANYONE WITH ANY IDEAS TO HELP IN THIS SITUATION, PLEASE HELP!!!!!

[Lydia Leftcoast]

1. You need to talk to a lawyer, preferably one that specializes

in suing financial institutions. (Yes, there is a such a specialty.)

[old mark]

4. I agree- talk to a lawyer immediately. It is the olny thing they understand,

and by the way, it is not just State Farm - I think you are right about them trying to dump older policyholders.
FWIW, your bank may be able to trace the check if it was cashed-someone at the insurance company may have stolen it.

mark

[Brickbat]

2. I'm sorry.

I don't know the ins and outs of insurance so I don't know how out of line this is. But I just wanted to let you know that this

I talked to a person who said his name was Daniel. I said I wanted to write a letter directly to him and asked for his address. He willingly gave me the address, but when I asked him for his last name he gave me a company code instead. I remember when people used to be proud of who they were. They didn't hide behind masks or fake names. People used to act with honor and had empathy & compassion for other people. They didn't check in their integrity, honor and common human decency at the door where they worked. But unfortunately, that world doesn't exist in corporations any more. People are apparently ashamed of revealing who they are. I suppose they are afraid of an angry person who felt violated in some way. But if corporate leaders acted with honor and treated people with respect and empathy they wouldn't have to hide behind fictitious names.

is one of the most true things I've ever read on DU.

[enlightenment]

3. Have you talked to your bank to see if they have a record of the

canceled check? January 2009 isn't that long ago. You might have to pay them to get a copy, but it should be much - and it seems that would resolve the problem (if I'm reading your post correctly).

[AzNick]

16. I only do online payment

This saved my butt once in the past, as the bank was able to show a check was printed and mailed.

[W_HAMILTON]

5. Well, first...

...can you not go to your bank and get an electronic copy of the canceled check? I know I can go back a long time for electronic versions of canceled checks with my bank.

Secondly, do you know how much you paid into the life insurance program over the course of the 40 years? I am assuming it is quite a bit. Companies usually let you take out loans against your policy, but they don't normally let you borrow more than the policy is worth. Even if you can't find out a way of getting taxed, you should only be taxed on the earnings from the plan, not any contributed capital (ie, your premiums through the years). That is considered a recovery of capital, and you are not taxed on that portion. If you don't have this information, the company should be able to get this for you.

[Nicholas D Wolfwood]

6. They may indeed be purging.

Checks do get lost, however, either in the mail or in the dozens of different hands these things pass through in the processing procedure. They have no way of proving they ever had the check in the first place - and neither do you.

Ultimately, your biggest gripe was that they immediately canceled your policy. If you've been paying faithfully since January 2009 - the time of your missing check - it seems rather strange that they would do this and would fit into your claims. It's also strange that they didn't call you about it. I don't blame you one bit for concluding that they didn't want you as a customer anymore, all things considered.

That said, I would strongly advise - in the future - to closely monitor whether or not your checks are getting cashed. If they did cash your check, the problem should be solved quickly. If they didn't, you would've known they didn't get their money a long, long time ago. Since you're on the internet, I'd also highly recommend online payments. Instant notification of received payment helps a lot.

[uppityperson]

7. Over the yrs, dealing with SF, I found my local people to be very helpful, higher up not so much

My local office has to deal with us on a regular basis, live in the community, etc. Their prime job was keeping us happy. The higher up I went, the less they cared about anything except making money.

I don't know if you have a local person who you trust, but that is what I've done in the past (after having a car accident).

I would also get a copy of the canceled check from your bank, mailing it to them AND keeping a copy of anything you send. Or are you saying you sent the check and they never deposited it? In which case I think they are required to send you notice that you were in arrears. Does your state have an Insurance Commissioner?

Our SF told me that the payment I make at the end of this month (April) actually is for coverage in May.

[peace13]

8. I am confused about the 23K payment that they say you received.

Did they enter the wrong policy number? Do you have a State Farm agent? I would walk in and ask for some much needed service! If not,take you paperwork to an agent in you community and calmly talk to them about the problem.

[whistler162]

10. Likely the outstanding loan amount

once canceled it became income.

The OP should write a detailed, no offense, non-rambling letter to the CEO, Illinois and Texas state insurance departments.

[AnArmyVeteran]

14. Isn't State Farm practicing discrimination against older Americans?

They consider any and all money borrowed from the policy, even if it was from 1975 to be paid out in 2009, when it wasn't. I was involved in a lawsuit twenty years ago that I won. I was wronged by an employer in 1986, but the case didn't get to court until 1989. In 1986 I made very little money, especially since I didn't receive the unemployment after being fired. When I won my case in 1989 I received $6,000. And when I filed for taxes that year I had to include the $6,000 as income for THAT year, not for 1986, when the incident occurred.

So how can an insurance company tell the IRS they paid you all the money borrowed over 40 years in a lump sum in 2009? Why is there a difference? I always thought you were taxed in the year in which you received the money. But State Farm seems to have a different scheme (scam).

And why is State Farm being so adamantly opposed to reactivating the policy? My suspicion: My age. I'm sure State Farm uses every opportunity to purge people they consider risks. But isn't it against the law to discriminate according to law? It was awfully convenient of them to lose my payment and wonder if they do the similar thing to everyone else over 50?

What organization files suits against corporations which purge people because of their age, race or status?

[DeschutesRiver]

24. Sorry, I am confused - did you ever pay back the $23,000 that you borrowed against the policy?

We have a similar deal with our life insurance, ie you can borrow against the policy for any reason, including making payments for the policy. In fact, dh did this at one point, and while it can be an advantage (a loan when you need it, no questions asked), the issue you ran into just isn't explained well to customers in advance (although it is probably all there in the fine print of your policy).

While the policy is in force, it is a loan between you and the company. If you pay it back under the policy, that is the end of it. However, if the policy doesn't exist anymore, than this money is no longer a loan, and becomes income in the year the policy cancelled. You don't pay taxes on money you borrow, in the years you borrowed it, because it isn't income. The policy cancellation is what turned this from loan to income, and triggered the need to pay taxes at that moment of time.

[DeschutesRiver]

26. About the policy cancellation issue

We have other insurance with State Farm, and have run into instances of "misplaced payments", but they've been resolved quickly. For example, we get the premium notice, send in the payment and then get a raft of cancellation notices. When we call our agent, he calls the company, they find that we did send in the check, and it is all fixed.

I don't understand the timeline re the missing payment and the policy cancellation. How long after receiving the cancellation notice did you call them to ask for an explanation and find out that a payment hadn't been credited, thus triggering a cancellation?

[Mojeoux]

9. Dear AAVET

Ok,

I have found with big companies is that SOMETIMES everything can depend on who you are talking to.

Try calling back and back and back and getting more and more and different people to talk to about what they've done to you.

Keep your voice modulated and try not to express the insane preposterousness of what's going on and that you are going to keep calling. Just call and call. It's a big company with lots of managers and supervisors. The second someone starts stating the company-line, hang up and keep calling.

I've never tried to the tune of $5,000.00. But I managed to get my brother and I $2,400.00 we were owed from one of my late mother's insurance companies. It was Liberty Mutual.

Anyway, it worked with my cable company too.

God bless, good luck.
MJ

PS sometimes just changing the last number of a phone number can get you to interesting offices.

[Toucano]

11. Shouldn't you file for an extension until the matter gets resolved?

I wouldn't want to sign a tax return saying I owe money that I don't owe.

[pitohui]

20. well the inadequacy of the poster's tax preparer is whole nother issue

either the tax preparer is completely incompetent or the tax preparer was unable to get thru the poster's hysteria and panic

i do my own taxes and as i said in my other post, i've had almost this exact same situation

i put a letter to the IRS explaining why i didn't owe the tax, and that i was in the process of gathering proof

this is what he should have done, rather than signing a return acknowledging that he owes a tax he presumably doesn't owe

the IRS is reasonable, they give you time to get yr paperwork together and prove yr point

[ellenfl]

12. i did not read the whole post but

did your check clear your account? if not, you may be sol as you should have caught that it was not deducted from your account. however, you say that your policy had an auto payment feature which should have paid it. an attorney can look at your policy to see if sf played fast and loose with it. you may want to try a legal clinic to save yourself some $. i don't know how much a private practice attorney might charge.

now, take a deep breath and good luck.

ellen fl

[FarCenter]

19. If the check was processed by SF and paid by his bank, the bank should have the image

Banks keep the images for 7 years.

[quiet.american]

13. Don't have any advice to offer on this, but K&R for visibility. nt

[pitohui]

15. for cryin' out loud, just send em a copy of the canceled check already

i don't see what the big deal is, if you lost your proof of payment, simply go to your bank and ask them to supply you with a new copy of the canceled check in question

if it was paid recently, it will be free to do this, if the payment was some time ago MAYBE the bank will charge you AT MOST a $5 or $10 fee

i just don't see what's the point in yelling at some doofus clerk over the phone when you should just be faxing over a copy of the proof of payment in question

companies lose payments all the time, but your cxl'd checks are kept on record by your bank, which is why you can get an accurate bank statement from the bank in question each month

i had the same EXACT thing happen to me, i received a 1099 claiming i had received a payment of $20,000 from a company that had actually gone bankrupt and never paid me, i sent a letter to the IRS telling them this and eventually sent them a corrected copy of the 1099 that i got by asking IN WRITING, not by shouting over the phone, at a clerk for that company -- i did not have to pay the disputed amount of tax while it was in dispute and once i proved i had not received the money, the IRS agreed that i owed them nothing and i got my usual refund

you are panicking over the kind of paperwork screw-up that is common, happens all the time, and can be easily fixed if you just do it instead of panicking

the IRS knows that insurance companies have screwed up paperwork before, you are not the first person this has ever happened to, if you didn't get the money, you don't owe tax on it

period

just breathe for a minute

i've never resolved a complicated three party screw-up by yapping on the phone at a clerk, it requires that you arrange your thoughts and your needs IN WRITING

first-- explain (in writing) to IRS that you didn't receive this money and that you don't owe the extra tax and you are now in the process of getting your documents together to prove it, second, get a proof of payment from the bank, third get proof of reinstatement of your insurance from state farm, then finalize with IRS that you are in fact still insured w. state farm, didn't close the policy and hence you're repaying the LOAN so it is not INCOME on which you owe taxes

it's harder to type out than it is to do, just take your time

i've mixed screw-ups like this before, as i've said, the IRS is easy to work with

[Fumesucker]

17. Why do you think they're called "Snake Farm"?

Sorry you got bit.

[MadHound]

18. Talk to a lawyer, if need be talk to your state attorney general, and your state insurance board

Those would be the folks to contact. Get all your records in order. Good luck, State Farm are bloodthirsty scum.

[Nothing Without Hope]

21. Guess you're not one of the thrilled "neighbors" their ad wants you to speak with.

Good luck to you.

[deaniac21]

22. You don't balance your checking account?

[deaniac21]

23. You don't balance your checking account?

[Obamanaut]

25. Locate a copy of the processed check that you wrote in 2009.

I don't know if all institutions do this, but both my credit unions have an online service that allows me to download/print both sides of any check I've written - all I need is the check number. I've not been inside either one for years, and have looked at numerous checks on line when I neglected to put them in my check register.

[Better Today]

27. Seems to me you're focusing all wrongly regarding the taxes issue.

It has to do with the $23000 they claim to have loaned you, that you claim you never were loaned. If that is accurate, then you need to have them give you copies of their checks supposedly to you (or transfers) so you can find out whose bank account they actually went into if not yours. Then you'll have a leg to stand on when you claim you don't owe them $23000. However, whatever amount did get deposited into your accounts will be considered income, and you'll have to pay taxes on it.

Regarding the cancellation, if you balanced your checking account regularly you'd have noticed the check didn't clear. If it was an online payment, then the bank should be able to prove it cleared. Then your best, first place to go for the purging concern is your State Insurance Regulator, whomever that is.