Plaintiffs might receive emotional distress damages tax-free after 2010
Since 1996, emotional distress damages, unlike damages paid on account of physical injuries and physical sickness, have been generally taxable. Plaintiff attorneys and structured settlement industry members lobbied Treasury at a February 23, 2010, Treasury hearing to allow some damages to be received tax-free even without directly satisfying the “physical” requirement. This article discusses the hearing, and how a recommendation by the National Taxpayer Advocate may make it possible for legislation to take us back to pre-1996 days.
This article first appeared in North Carolina Lawyers Weekly.