With the federal deficit at an all-time high, body shop owner Tom O’Mara figured the government could use all the additional tax revenue it could get. The problem as he sees it, however, is that insurance companies are making it worse by cheating the government when they fail to pay auto claims in full.
“When insurers don’t pay a claim in full, whether it’s an auto claim, a medical claim or a contractor’s claim on a house or business, they’re cheating somebody out of a profit. And when they do that, they’re cheating the economy,” said O’Mara, who owns O’Mara Auto Body in Martensdale, Iowa.
O’Mara assumed that legislators would want to know this and wrote a letter to Pres. Barack Obama as well as his state legislators to inform them of the tax revenues they allegedly are being cheated out of. The letter reads as follows:
I wanted to bring to your attention one way to help the economy, budget crunch and taxpayers in Iowa and the United States of America.
The insurance industry as a whole refuses to pay most claims in full – regardless if it’s a medical claim, homeowner claim, auto claim or any kind of a claim. Now let’s look at the whole picture. When an insurance company refuses to pay a claim in full, the person providing the services is cheated out of income. When a person is cheated out of income, there are no income taxes collected on that money. There also is no sales tax collected on that money. Therefore, the State of Iowa and the federal government lose. The state loses twice, and the Federal Government loses once. The state loses sales tax and income tax, and the federal government loses income tax.
But let’s go a little deeper. If people weren’t being cheated out of the money they weren’t paid, they would have more money to spend. This would help stimulate the economy. If taxes were collected that the state and federal government were cheated out of, this would help lift the burden on the taxpayers.
I know this isn’t a solve-all situation, but it would sure help. If I’m not mistaken, I believe this is called EXTORTION. What do you think? I believe there are millions of dollars a year that are being taken. What do you think is the best way to solve this problem? How would you handle this situation? Do you think there needs to be an investigation in regard to this? Please let me know. Thank you.
O’Mara got one response from State Sen. Staci Appel, and it read:
Thank you for your thoughtful letter regarding insurance claims, the economy and tax issues. I will share your suggestions with Sen. Steve Warnstadt, chairman of the Senate Commerce Committee, and ask that your comments be included in upcoming discussions by that Committee when the Legislature convenes in January.
In the opening weeks of the General Assembly, Sen. Warnstadt asks the insurance commissioner to attend a meeting to make a brief presentation and then answer questions from the committee members. Your ideas would certainly be appropriate topics during those discussions.
Again, thank you for contacting me.
O’Mara believes the response wasn’t good enough.
“When I ask someone who represents me a question, I expect it to be answered,” he said. “Wouldn’t you?”
Based on this one legislator’s response and insurers’ clout, O’Mara doesn’t foresee much action taking place to correct the situation he views as crippling to the economy.
“I feel that the lobby effort on behalf of insurers is too big,” he says. “Plus, these senators and legislators stand there with their hands out wanting campaign donations, and they don’t want to harm their chances of getting them.”
However, O’Mara feels that if enough repairers write their state legislators and inform them about this alleged tax fraud, they might be able to grab some attention and possibly get the wheels of justice moving.
“It’s sad that it takes numbers to do something,” O’Mara says. “Apparently, most shop owners haven’t been hurt bad enough. It’s gone on so long that nothing has been done. Look at the 1963 Consent Decree.”
O’Mara encourages repairers to contact him at [email protected].
More information:
• Iowa DOI to Conduct Labor Rate Survey Following Shop’s Complaint
• Iowa DOI Finds No Wrongdoing After Investigation
