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Monsanto Settlements: The IRS is the Biggest Winner

  • 8 August 2019
  • Author: Cari Holbrook
  • Number of views: 234
Monsanto Settlements:  The IRS is the Biggest Winner

The bizarre Trump tax law that kills tax deductions on legal fees means Monsanto plaintiffs walk away with much less than they hoped, as they are double-taxed on legal fees. And the IRS? It could score billions of dollars.  

Roughly 10,000 plaintiffs and counting are waiting to take their turn suing Monsanto for damages they claim are due to the dangerous health risks of its popular Roundup weed killer. The lesson we can learn from the first plaintiffs, though, is that the IRS is the real winner.  

As the second verdict in the Roundup saga was handed down earlier this month, Forbes’ Robert W. Wood dissected the outcome and put forth a caution for future attorneys and plaintiffs in similar situations. In short: $5 million in compensatory damages and $75 million in punitive damages were awarded. Those punitive damages are fully taxable according to new tax laws – even the half or so handed over to attorneys (which they’ll also be taxed on). In the end, the plaintiff will likely get to keep $2.5 million of that $80 million verdict.

Don’t be caught off-guard in similar cases. Tax considerations should be worked out well before entering a courtroom. Too many plaintiffs are being blindsided by a huge, unexpected tax bill long after the case is closed. The origin of the claim, whether it includes physical versus emotional injuries, how damages are allocated, and how attorney fees are paid each play a role in what part of the settlement is taxed, as Wood lays out here

It’s never too early to bring in a tax advisor to help ensure a winning settlement doesn’t unwittingly lose to the IRS. Contact us with questions. 

Photo via 123rf.com

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