Tax,
Litigation & Arbitration
Jul. 15, 2025
Can plaintiffs avoid IRS Forms 1099 on legal settlements?
A single IRS Form 1099 can trigger a mess for plaintiffs--especially when the form is misapplied or duplicative--making it critical to address tax reporting explicitly in settlement agreements.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Most defendants issue IRS Forms 1099 for legal settlements. The form may be issued to the lawyer, the client, or both. Frequently, both the client and the lawyer receive Forms 1099 for 100% of the proceeds. This can make it appear that twice the settlement amount was paid, but such duplicate reporting is usually required in the case of most fully taxable settlements.
The biggest exception is that plaintiffs are not supposed to receive Forms...
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