Why am I being asked to provide my tax returns in my injury case? I saw this question recently in a legal forum. In personal injury and workers’ compensation cases, the defense lawyers often ask for your tax returns. Over our 25+ years of practicing Alabama personal injury law, we’ve seen this question repeatedly. So, I thought I would discuss the issue.
Why Are They Requesting My Tax Returns?
If you have an Alabama personal injury or workers compensation case, tax return requests are routine. Many insurance defense lawyers make this request in every case. Why are they asking for your returns?
In many personal injury cases, lost income or lost employment, is an issue. Maybe you suffered a serious injury and now experience some level of disability. Maybe you were not able to continue working at your pre-injury job. Even if the injuries are not permanent, many people temporarily lose work or income while receiving medical care. Whether your wage loss is temporary or permanent, tax returns are requested to show the amount.
If you are seriously hurt and claiming a loss of income but refuse to produce your returns, the insurance company lawyer is likely to file a motion seeking an order from the court requiring you to produce them. If lost income is an issue, the judge will likely grant that motion.
What Steps Can I Take When Tax Returns Are An Issue?
You don’t have to produce documents just because a defense lawyer requested them. If you have a personal injury lawsuit, you need an attorney who is detailed, prepared and willing to protect your rights. A good attorney will work through the issue with you. Unfortunately, some injury lawyers simply gather all the requested information and produce it. That’s wrong. That’s bad for your case. Your lawyer needs to look closely at all the defense requests. Where requests are objectionable or can be limited, your lawyer should work to do so. In the following paragraphs, I discuss several issues related to the production of tax return records.
- If Lost Income Is NOT An Issue, You Can Object To Disclosing Tax Returns.
Your tax returns show income. How is that relevant if you suffered NO loss of income? Some people suffer serious injuries that result in huge medical bills and tremendous pain. Yet, they are able to keep their job. Maybe their employer accommodated any disabilities or limitations. Maybe their employer provided free time to attend medical visits. If lost income is not an issue, then you need to talk with your lawyer before simply producing tax returns.
- If Lost Income Is An Issue, You May Be Able To Limit The Return Portions Produced.
Your tax returns show several things in addition to your income. If you are married, they may show income earned by your spouse. They may show your charitable deduction. Some of this information is not related to what you earned or did not earn.
Your lawyer has options. Maybe you just produce W2s or 1099s. Maybe you produce returns with redactions for non-income information. These are important issues. Again, they are issues to discuss with your attorney.
- If Lost Income Is An Issue, You May Be Able To Limit The Return Years Produced.
Why does the defense lawyer want 10 years of returns? That seems like a long time. It probably is. Again, talk with your lawyer. In many situations, the defense lawyer request is far too broad. Maybe you can limit the documents produced.
Prepare For The Unusual!
When I was a brand new lawyer (many years ago), I sat through a trial where the primary lawyer represented a lounge singer hurt in a car accident. It was an interesting case for many reasons. The injury was pretty significant and the person claimed a loss of income. The lawyer handling the case had produced the tax returns without really looking at them. Big mistake! In prior years, the singer had claimed virtually every possible expense or deduction. With all the deductions, her prior returns showed virtually no net income. The defense lawyer walked her step-by-step through the returns on cross examination and destroyed the lost income claim. Watching that trial was an early lesson for me. Pay attention to the details in the documents! Prepare your client for the information revealed. Your case depends upon it.
My lounge singer story is just one example of the unusual. I could write endlessly about unusual issues in documents. When I prepare for trial, I obsessively go through the documents. You certainly don’t want to be caught by some surprise at trial. Tax records, like other discovery requests in personal injury cases, need to be discussed with your lawyer. These requests are normal and expected in cases where lost income is part of your claimed damages.
From its office in Huntsville, the Blackwell Law Firm represents people across Alabama following a serious personal injury. If you have questions about an Alabama accident or injury, let us know. Our consultations are always free and confidential.