Lawsuit Settlements may be Taxable

Prior to August 20, 1996 lawsuit settlements were tax exempt, however, Congress revised the tax law §104 (a) (2) to exclude all Lawsuit Settlements may be Taxable
Prior to August 20, 1996 lawsuit settlements were tax exempt, however, Congress revised the tax law §104 (a) (2) to exclude all settlements that were not for physical injury or physical sickness.
If your tax return was filed excluding settlement, you could be liable for understatement of income tax penalty under §§6662(a) and (b) (2). IRS form 1099-MICS should be issued for settlements.

Please be advised that this website is a general information resource and it is not intended to provide legal advice in your particular case. You should consult with an attorney to obtain legal advice regarding your matter.