Civil rights killed through taxation


I just got off the phone with an attorney. She told me she's currently not doing civil rights cases because of a new Tax decision (114TC399) that a Judge Hue (Republican)of the 7th Ciruit court made?

I may have my facts off a bit, but what she told me was that by the time attorney fees and this new large tax comes out of your reward, you won't have anything left to make it worthwhile. She said the current administration in government has heavily taxed settlements.

What is this taxation she's claiming killed civil rights cases? What's the truth? How much tax do people who feel their civil rights have been abused gets taken out of their settlement?

She said I'm wasting my time because of taxes? What can I do??

Brett McFall,

2 answers  |  asked Jan 8, 2003 3:22 PM [EST]  |  applies to Illinois

Answers (2)

John Otto
New tax on civil rights awards

I don't know of any Judge Hue on the 7th Circuit, and I don't think there are any new taxes on civil rights awards. For quite some time now, some civil rights awards have been taxed, like other income, unlike personal injury awards. However, I believe it is still the law that if the basis for the civil rights award is an actual physical injury, it is not taxed.
Remember, in any event, the income tax is not 100 percent. So, what your lawyer is really telling you is that your case does not have a monetary potential worth pursuing.

posted by John Otto  |  Jan 10, 2003 5:28 PM [EST]
Aaron Maduff
Civil rights killed through taxation

There has been an ongoing problem with taxation of civil rights awards and there is a proposed bill to address that concern. However, as a general rule, we have not closed down our civil rights practices. These cases still need to be pursued. Of course without knowing the specifics of your case, I cannot begin to assess whether or not it is worth pursuing.
Aaron Maduff

posted by Aaron Maduff  |  Jan 8, 2003 3:56 PM [EST]

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