Settlement Agreements, Forms 1099, and Tax Trouble: Lessons from Adusei v. Auer
Federal court rejects expansive claims arising from settlement-related Form 1099 reporting dispute
A recent federal decision out of Arizona offers a useful reminder about the tax treatment of settlement payments, as well as risks that arise when settlement agreements fail to address tax characterization clearly.
In Adusei v. Auer, a former nursing student sued a college, its attorneys, and others after Forms 1099 were issued following settlement of earlier litigation. The plaintiff alleged the settlement funds should have been treated as non-taxable educational reimbursements rather …
