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Statute of Limitations issue for the severely disabled

Discussion in 'Social Security, Disability & Health' started by sad056, Mar 31, 2021.

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  1. sad056

    sad056 Law Topic Starter New Member

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    Jurisdiction:
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    Apologies on the broad scope of my question. My brother became severely mentally ill over last couple of years. He did not do the necessary financial things that are must, so he has lost a lot due to his mental illness. I gained his guardianship recently and trying to assist him as I uncover issues he needs help, but each issue I encounter statute of limitations.

    1) He was terminated from his work, he started some complaint process on that but then he became comatose. I contacted agencies, but they said statute of limitations has expired (he is short 7-8 months), as it is 300 days (from state) and 180 days (from federal EEOC) or something like that. I think he is short 7-8 months.

    2) For taxes, statute of limitations is 3 years. He did not file taxes since illness. He should have had some refunds 2015/16, but since did not claim/file, so now he is out of statute.

    My question is, is there some "exception process" in law for severely disabled people who do not have the benefit of being able to think and take care of themselves, from these statute of limitations? (or maybe specifically for the 2 issues above)
     
  2. adjusterjack

    adjusterjack Super Moderator

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    The SOL applies to what the IRS can do to a recalcitrant tax not-payer. You can still file the returns for the years that he missed if for no other reason to show the IRS that he wasn't willfully engaging in tax evasion.

    As for the employment thing, you'd be wise to talk to an attorney who knows about that sort of thing.
     
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  3. Tax Counsel

    Tax Counsel Well-Known Member

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    You are not correct to the extent you imply that the SOL applies only to the IRS. There are a number of statutes of limitation (SOL) in federal tax law that applies to the taxpayer, too. One of them is the SOL for filing a claim for refund. Under Internal Revenue Code (IRC) § 6511(a) the rule is that a taxpayer has to make a claim for refund within the later of the following: (1) three years from the date the return was filed or (2) two years from the date that the tax was paid. However, when relying on the three year filing rule there is another rule that comes into play: you only get a refund of the tax paid within the three years immediately preceding the date the return was filed. Amounts paid by withholding from wages, etc., are deemed paid as of the due date of the return, including extensions.

    So, let's suppose that Alan has never filed his 2015 return. That return was due April 15, 2016. Because he had more tax withheld from his job than he owed on his return he would have had a refund. The withholding is credited as being paid April 15, 2016 for the purposes of the refund rule. So Alan finally gets around to filing his return on April 1, 2021 claiming the refund of the overpaid tax. That return filing is considered a refund claim filed at the same time. So the refund claim is filed timely as it was within three years of when the return was filed. However, Alan can only get a refund of any payments he made for 2016 within the three years immediately preceding the date of the refund claim, i.e. any payments he made in the three year period of 4/1/2018 through 4/1/2021. The problem is that his payments were considered made on April 15, 2016, which is outside the three year lookback period. As a result, except in the case I will discuss next, Alan is out of luck here because he filed his refund claim too late.

    But there is a rule here that may help the OP's brother. IRC § 6511(h) provides that the SOL is tolled (extended) for any period that the taxpayer is "financially disabled." A taxpayer is considered financially disabled if "such individual is unable to manage his financial affairs by reason of a medically determinable physical or mental impairment of the individual which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered to have such an impairment unless proof of the existence thereof is furnished in such form and manner as the Secretary may require." IRC § 6511(h)(2). It is important to note that the tolling does not apply for any period in which the taxpayer has a guardian to manage his/her affairs. That means that once the OP was appointed guardian, the time started to run again.

    So, depending on the exact facts here, it may still indeed be possible to get the refunds that the brother should have gotten. It matters what years of returns would be filed, when the brother was first sufficiently impaired enough to be "financially disabled" and when the OP was appointed guardian.

    As for the employment illegal discrimination claim, there might be an opportunity to still pursue that based on equitable tolling, but the OP needs to see an employment law attorney who litigates employment illegal discrimination claims ASAP about that, as again his appointment as guardian might start ticking the time even if there is the possibility to apply equitable tolling. The time frame here would be pretty short.
     
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  4. cbg

    cbg Super Moderator

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    May I ask why he was terminated from his job? Excessive absences? Behavior issues? Poor performance? Something else? What reason did the employer provide?
     
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  5. sad056

    sad056 Law Topic Starter New Member

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    He complained discrimination to HR, and that is when things went wrong, he was was first time poorly rated and then was terminated. He regained another job with same employer but the offer was rescinded. The employment contract mandated arbitration, where all his voice recordings and incriminating evidence was objected upon and not admitted and arbitrator unilaterally decided against him. With the embarrassing voice recordings to the employer out of the way, employer maintained that the whole story was a total honest mistake by a very large employer and the arbitrator agreed. He was already on medications and relapsed into his severe condition.

     
    Last edited: Apr 3, 2021
  6. justblue

    justblue Well-Known Member

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    Was he a party to the conversations being recorded?
     
  7. sad056

    sad056 Law Topic Starter New Member

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    Yes, and his recordings are legal in his state too, however what I understand is, his Attorney did not pursue the issue, he assured my brother that even if recordings are not admitted, his case is already so strong that he already has exceeded the level of evidence that would be sufficient.

     
  8. cbg

    cbg Super Moderator

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    He needs to talk to an employment law attorney NOW. The statute of limitations to file a discrimination claim with the EEOC is 180 days; it is one year at the state level in MN. If there is going to be ANY chance of the SOL being told due to his mental illness it's going to have to be addressed immediately. The longer you wait, the less likely the chance and the chance isn't very good to start with.

    Best of luck to him and to you.
     
  9. sad056

    sad056 Law Topic Starter New Member

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    I actually contacted 2-3 employment attorneys, they were not interested in taking the case, they said employer has arbitration agreement in place and he has been through it already. I called the EEOC and state, they said they would be interested but its past statute of limitations. Thanks.

     
  10. cbg

    cbg Super Moderator

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    Then I really don't know what else you can do.
     
  11. Tax Counsel

    Tax Counsel Well-Known Member

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    (Bolding added.) Unfortunately that likely was the end of what he could have done. If there was an enforceable contract between your brother and his employer that mandated arbitration of this dispute then under the Federal Arbitration Act (FAA) the arbitration provision your brother had no option to go to court and had to do the arbitration. Moreover, the arbiter's decision would be final and have the same effect as a court judgement. There are four reasons in the Act that would allow for a court to overturn the arbiter's decision:

    (1) where the award was procured by corruption, fraud, or undue means;
    (2) where there was evident partiality or corruption in the arbitrators, or either of them;
    (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
    (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.


    FAA § 9(a), 9 USC § 9(a). It is not enough that the arbitration proceeding was not perfect and the arbitration does not have to follow the federal or state rules of civil procedure or evidence, though the arbiter does need to be impartial and there does need to be at least a minimum of due process. The fact that the arbiter ruled that some of the evidence that your brother attempted to introduce was not admissible is not enough to tell me whether, on the whole, the arbitration was impartial and whether he had sufficient opportunity to present his side. But I will tell you that it is pretty difficult to overturn an arbitration decision if the arbiter was at all competent and there were no obvious signs of bias.

    Now, he still could have filed a timely complaint with the EEOC and the state despite the arbitration requirement in the contract and should have done so to cover all his bases. While he still could not have sued the employer himself in court if the arbitration provision in the contract was enforceable that contract would not have prevented the EEOC or the state from going after the employer on your brother's behalf. The problem is, though, that the EEOC takes only a handful of the thousands of complaints it gets each year to litigate itself. The vast majority of complaints just end with the agency giving the employee a right to sue letter, and a right to sue letter would not have helped your brother when he was required to arbitrate the dispute instead.

    But there is always that slim chance the agency would take up the case for the employee and the complaint costs nothing for the employee to make, so it still would have been worth trying. However, unless tolling would apply here, he had only 300 days from the discriminating event (it appears that would be his termination) to file the EEOC complaint and one year for the state complaint. Note that in Minnesota it is not required to first file a complaint with the state before going to court on the state claim, whereas it is mandatory under federal law for an employee to file a timely complaint with the EEOC before he/she may go to court. The agencies told you it was too late, so I'm assuming it's been more than a year since he was terminated. The only hope left there would be if the agencies could be convinced that tolling would apply and they were willing to take up the case for your brother. You'd need a pretty compelling case for that, I think, and your facts don't suggest this is the kind of thing they'd really be chomping to go after.


    Just to clarify, the deadline for filing with the EEOC is 180 days from the discriminating event unless the state also has an illegal discrimination law that protects the employee against the same kind of discrimination he/she encountered (race, sex, religion, etc). If the state has such a law then the time for filing the complaint with the EEOC is 300 days. Minnesota law protects employees against all the same things federal law does except genetic test information. So in the brother's case here, the time for filing the complaint with the EEOC would be 300 days unless the discrimination involved genetic test information, and that's very unlikely as such cases are quite rare — very few employers even collect such information.
     

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