A relative has been receiving workers compensation from employer for four years.
She applied and was approved for Social Security disabled benefits while receiving the workers
Compensation payments, which had never been taxed in the past. Are both payments now taxable? If yes, how much? Who will notify her to start reporting and paying?

Workers comp is non taxable.

Moreover, if the SS payments cover several years and are delivered in a lump sum payment this year you may redistribute those payments over those prior years to avoid tax.

See:
Publication 915 (2008), Social Security and Equivalent Railroad Retirement Benefits (http://www.irs.gov/publications/p915/index.html)

DavidCR:

You need to see a competent tax professional face-to-face to prepare the relative's return, because the computation of which Five Rings speak are NOT easily done.