The_RANDy_Corporation
03-20-2001, 05:09 PM
Figgers they'd start w/ Alabama. I wonder who pays these after they are all dissipated. The plaintiff, the lawyer, both? However, I don't understand the last paragraph about insurance companies paying off punitive damage awards. By definition, insurers don't pay the punitive damages of their insureds. Maybe they are talking about direct actions against the insurers. Bad faith perhaps.
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Mar 20, 2001 - 04:52 PM
IRS Working to Collect Taxes Due on Jury Awards of Punitive Damages
By Curt Anderson
The Associated Press
WASHINGTON (AP) - Aided in part by newspapers, an Internal Revenue Service project in Alabama has netted more than $43 million in taxes and penalties from people who were awarded punitive damages by juries but didn't give the proper share to Uncle Sam.
The project, begun in 1995, is now being used by IRS agents around the country as a guide to ensure that the government gets its share of money awarded in lawsuits. Newspaper stories provided one way for agents to find out about large awards.
"There was obviously a compliance problem," said IRS spokesman Ken Hubenak. "There can be sizable settlements that are taxable, but people are treating them as non-taxable."
Under federal law, in general compensatory damages for physical injury, including lost wages, are not taxed. But virtually all punitive damages are taxable, as are certain awards of back pay.
When these damages are channeled through an employer - as in a work discrimination case - the IRS is notified and it's relatively easy for the agency to make sure people comply by matching documents with returns.
But in many other lawsuits, it's up to taxpayers to report damage awards as income on their tax returns. The Alabama project demonstrates that hundreds do not, although one reason could be that people don't realize the taxes are owed.
Through fiscal year 2000, the IRS in Alabama closed 1,543 cases in which nearly $43 million in taxes and penalties were owed on punitive damages.
Guidelines stemming from the project circulated nationally for IRS agents suggest that "one readily available source" of checking on punitive damage awards is the local newspaper.
"This is an excellent source of identifying taxpayers that have gone to court and had a jury verdict," the guidelines say.
Agents are also instructed to check civil lawsuit records in courthouses and at state governments, including records showing insurance company involvement. These sources, the IRS said, are more likely to disclose settlments made prior to a trial.
"Insurance companies are usually the defendents in these cases and are a prime source of information for lawsuits or payments made in lieu of a lawsuit," the guidelines say.
http://ap.tbo.com/ap/breaking/MGAAME26KKC.html
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Mar 20, 2001 - 04:52 PM
IRS Working to Collect Taxes Due on Jury Awards of Punitive Damages
By Curt Anderson
The Associated Press
WASHINGTON (AP) - Aided in part by newspapers, an Internal Revenue Service project in Alabama has netted more than $43 million in taxes and penalties from people who were awarded punitive damages by juries but didn't give the proper share to Uncle Sam.
The project, begun in 1995, is now being used by IRS agents around the country as a guide to ensure that the government gets its share of money awarded in lawsuits. Newspaper stories provided one way for agents to find out about large awards.
"There was obviously a compliance problem," said IRS spokesman Ken Hubenak. "There can be sizable settlements that are taxable, but people are treating them as non-taxable."
Under federal law, in general compensatory damages for physical injury, including lost wages, are not taxed. But virtually all punitive damages are taxable, as are certain awards of back pay.
When these damages are channeled through an employer - as in a work discrimination case - the IRS is notified and it's relatively easy for the agency to make sure people comply by matching documents with returns.
But in many other lawsuits, it's up to taxpayers to report damage awards as income on their tax returns. The Alabama project demonstrates that hundreds do not, although one reason could be that people don't realize the taxes are owed.
Through fiscal year 2000, the IRS in Alabama closed 1,543 cases in which nearly $43 million in taxes and penalties were owed on punitive damages.
Guidelines stemming from the project circulated nationally for IRS agents suggest that "one readily available source" of checking on punitive damage awards is the local newspaper.
"This is an excellent source of identifying taxpayers that have gone to court and had a jury verdict," the guidelines say.
Agents are also instructed to check civil lawsuit records in courthouses and at state governments, including records showing insurance company involvement. These sources, the IRS said, are more likely to disclose settlments made prior to a trial.
"Insurance companies are usually the defendents in these cases and are a prime source of information for lawsuits or payments made in lieu of a lawsuit," the guidelines say.
http://ap.tbo.com/ap/breaking/MGAAME26KKC.html