HSA mishandled by State Farm, IRS issue now

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HSA mishandled by State Farm, IRS issue now

Post by KateMG » Mon Nov 13, 2017 11:36 am

My husband and I both opened and contributed to our HSA accounts December 31st, 2015. My account went through just fine while sitting in the office at State Farm. Then, State Farm had a computer glitch, preventing my husband's account to be opened in the same manner. We were assured that since everything was dated and received in-person by the State Farm rep on the last day of the year, everything would be the same as my contribution. Fast forward 20 months, and I have just received a notice from the IRS that we owe back taxes since State Farm only reported 1 HSA contribution in 2015. Conversations with State Farm state "We don't have anything written stating this was to be applied to 2015, so we automatically applied it to 2016 per our policy. By the way, you have erroneously made 2 contributions in 2016." Frustration through the roof. How can I get this corrected? Obviously my husband's account was supposed to be exactly the same as my account, but State Farm is not interested in looking at the full scenario.

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Re: HSA mishandled by State Farm, IRS issue now

Post by mrsbetsy » Mon Nov 13, 2017 12:14 pm

Having the unfortunate experience of dealing with the IRS a lot over the past few years, if there is no paper trail, you will lose. Document, document, document.

In the future, send an "I understand the situation to be...." letter when these things happen. Follow up and never assume anyone has actually done their job. Especially thieves like State Farm!

Count this as an experience on your path to wisdom. Don't wait to the last minute to do anything but $hit happens. Pay and move on.

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Re: HSA mishandled by State Farm, IRS issue now

Post by Spirit Rider » Mon Nov 13, 2017 1:08 pm

I am assuming you have received a CP-2000 notice. Do you have anything with the 12/31/2015 date from State Farm.

Contrary to the previous response, I have always been treated fairly by the IRS. I recently resolved a CP-2000 issue for 2015 where the IRS took my word for something that I did not have documentary evidence. It required some back and forth, but ultimately I received a terse response:

Your 2015 Form 1040 inquiry is closed
Amount due $0.00

Call the number on the CP-2000 notice and talk to a live person. Explain the situation and ask for their help. I have always found that people even IRS agents want to be helpful. The bottom line is that it can't hurt.

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Re: HSA mishandled by State Farm, IRS issue now

Post by Nate79 » Mon Nov 13, 2017 1:43 pm

Is this is an employer plan? If so do you have any benefit person at work to advocate for you? If not thru work why in the world would you want an HSA thru an insurance company like State Farm?

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Re: HSA mishandled by State Farm, IRS issue now

Post by Katietsu » Mon Nov 13, 2017 9:04 pm

You indicate that you went to a local office in person. You should go back to that office in person and try to resolve it from there. If you have already done that and do not feel that they have advocated for you, then get a new agent. Your agent should at least try to get this fixed using their support team members.

One challenge that I see, is that it has been almost two years. Apparently you did not notice the error on the statements sent to you by State Farm. I would guess that may make it more challenging to get changed.

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Re: HSA mishandled by State Farm, IRS issue now

Post by celia » Mon Nov 13, 2017 9:21 pm

Did you make your contributions using one check or two? Did they go through the bank on the same day? That's part of the paper trail. So is the paperwork you did to open the account. And you each signed and dated a form, I'm assuming. I believe they have to save a copy of it and maybe even give one to you. And since then, you've likely received account statements, right? If you were "unimaginative" and both picked the same funds on the same date, your balances would now be the same.

That sure sounds to me like you opened the accounts on the same date.

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Re: HSA mishandled by State Farm, IRS issue now

Post by Finridge » Tue Nov 14, 2017 7:23 pm

The deadline for contributing to your HSA for 2015 was not December 31, 2015. It was April 18, 2016. Hopefully this helps you.

After you get this resolved, change custodians.

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