For those who think that proceeds from the access lawsuits they file are not "theirs"-- see what the courts and IRS say:
A surprising number of plaintiffs in ADA/access lawsuits claim that the payments made to settle those lawsuits are not their income, because they are paid to another individual or firm. Despite receiving thousands of dollars from each suit they file, some do not report this income as taxable because they do not want to lose income-related disability benefits, while others seek waivers of court filing fees and service costs, etc. Of course, taxpayers pay more whenever those who are required to report income fail to do so.
Generally, it is our understanding that the financial proceeds of ADA/access lawsuits are reportable to the human plaintiffs who are making the claims, even if some organization is included in the lawsuit or receives the funds; basically, since only a human being is entitled to claim discrimination, it appears that the profitable discrimination claims are immediately vested in them and the income relating to those claims will generally be attributable to them, even if they make complex arrangements for the checks to be paid to someone else.
Many plaintiffs have used a variety of tactics to discourage defendants from reporting the income from these lawsuits as required by law (generally, a 1099 should be issued to both the plaintiff and the attorney representing them, for the full amount of the settlement payment, but always consult qualified tax and legal advisors to make sure).
Read what the U.S. Supreme Court and the Internal Revenue Service has to say about the tax treatment of financial proceeds of access lawsuits: |
