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BT Currents - Hot Topics in Employment Law

19 Dec Tax Deduction to be Curtailed for Some Settlements of Sex Harassment Claims

  The federal tax bill published late on Dec. 15 has a number of provisions that, if enacted, would deny an employer’s ability to deduct payments made in settlement of employee claims. If the tax bill passes, the negotiation of both the nature of settlement payments/court awards and reporting to the IRS will become even more critical given its impact on the deductibility of settlement payments. Get your tax lawyer involved early in the negotiation to help you document your preferred tax reporting position.  …

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14 Apr It’s Tax Time . . . . What Does That Mean For Settling Employment Claims?

    Last summer, the Internal Revenue Service (IRS) issued a Memorandum regarding the reporting requirements for attorney’s fees paid to settle an employment claim.  The Memorandum makes it clear that the manner in which the settlement agreement is drafted and payments are made could impact tax liabilities for both the employee and the employer.   According to the IRS Memorandum, all payments for employment claims, including the specific allocation to attorney’s fees, must be included in the individual’s income, even if the fees are…

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