Nobody wants to pay taxes if they don’t have to, but you also don’t want to NOT pay if the money is considered taxable income by the IRS – that could cost you a lot in penalties and interest. It looks like there will be some pretty large payouts with this settlement so the tax consequences could be huge for some people. I read that the IRS REQUIRES a settlement company to send a 1099 unless the settlement qualifies for tax exception. But does anyone know what the IRS says? Was there ever an official determination by the IRS? I emailed the settlement administrator with a few questions and they responded that they would not be sending 1099s but that we need to talk to a tax professional about how to handle it. I’ve read several opinions on whether the Big Fish Settlement was taxable or not.
