Jottings By An Employer's Lawyer

Tuesday, October 14, 2003

6th Cir. Holds Plaintiff Not Responsible For Income Tax on Attorney's Contingency Fee

One of the few issues that has gained the enthusiastic support of both the plaintiff and defense employment law bars in recent years is an attempt to reform the tax law so that more of a plaintiff's recovery, particularly in settlement will not be taxed. So it is fitting that I found a reference to Banks v. Commissionerr of Internal Revenue (6th Cir. 9/30/03) in Workplace Fairness, a blawg from the employee's perspective. Although the 6th Circuit refused to go along with plaintiff's characterization of his settlement as for a personal injury (and thus non-taxable), it did agree that the $150,000 contingency fee earned and paid to his attorney, was not income to him. The Workplace Fairness article points out the split in the circuits on this very important issue when it comes to resolving lawsuits.

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