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Chapter 13 lawsuit settlement - ins co. wants a W9
When an individual files a petition under Chapter 13, the bankruptcy estate
is not treated as a separate entity for tax purposes. Any income, such as
this lawsuit, is income to the Debtor.
Debtor should provide the W-9 to the insurance company and will have to pay
income tax on the proceeds.
Sincerely,
*Michael Avanesian, Esq. *
Simon Resnik Hayes, LLP
15233 Ventura Blvd., Suite 250
Sherman Oaks, CA 91403
Tel: 818.783.6251 | Cel: 818.817.1725
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On Mon, Aug 31, 2015 at 7:44 PM, jesseelaw@aol.com [cdcbaa] wrote:
>
>
> Weird to pay the money directly to the Chapter 13 trustee. Sounds
> like some or all the parties did not understand the difference between a
> Chapter 7 estate and a Chapter 13 estate and the different roles trustee's
> play in each chapter. I assume this was a cause of action arising
> postpetition, or not exempted if it was prepetition. If postpetition, and
> some portion is for reimbursement of out pocket costs I would take issue
> with trustee's label of that part as income. If prepetition and exempted,
> I would also fight the label on the exempted portion. Did the debtor have
> an Attorney? If so general practices is for it all have gone through the
> attorney's client trust account and the attorney completes the W-9. If no
> attorney or the attorney decided not follow standard practice it is the
> debtor who should provide the W-9. Depending on what the settlement
> proceeds are compensating it may or may not be taxable. The insurance
> company is generally required by the IRS to provide the 1099 at the end of
> the year to the distributees, so the W-9 completion is required so the
> proper tax id number is reported to the IRS.
>
> Sounds like the settlement agreement will need to be modified to issue
> the check to the debtor.
>
> Mark T. Jessee
> Law Offices of Mark T. Jessee
> "A Debt Relief Agency"
> 50 W. Hillcrest Drive, Suite 200
> Thousand Oaks, CA 91360
> (805) 497-5868 (805) 497-5864 (Facsimile)
>
> NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY THE INTENDED RECIPIENT
> OF THE TRANSMISSION, AND THIS COMMUNICATION IS INTENDED TO BE PRIVILEGED BY
> LAW. IF YOU RECEIVED THIS E-MAIL IN ERROR, ANY REVIEW, USE, DISSEMINATION,
> DISTRIBUTION, OR COPYING OF THIS E-MAIL IS STRICTLY PROHIBITED. PLEASE
> NOTIFY US IMMEDIATELY OF THE ERROR BY RETURN E-MAIL AND PLEASE DELETE THIS
> MESSAGE FROM YOUR SYSTEM. THANK YOU IN ADVANCE FOR YOUR COOPERATION
>
> In a message dated 8/31/2015 6:49:03 P.M. Pacific Daylight Time,
> cdcbaa@yahoogroups.com writes:
>
>
>
> Debtor settled a lawsuit during a chapter 13. Debtor is plaintiff.
> Defendant is insured. The agreement is for ins. co. to pay funds directly
> to Chapter 13 trustee for disbursement. Ins. Co. wants a W9 from the
> Trustee, but Trustee will not provide one due to cited IRS Code not
> requiring trustee to provide W9. Ins. co. doesn't want to pay without a W9.
> Trustee says settlement is income to Debtor. Does debtor need to provide a
> W9 to ins. co.? If so, won't check need to be made directly to Debtor?
> Is the W9 legally required for Ins. Co. to pay settlement, or just
> internal policy?
>
> This is not a personal injury settlement.
>
>
> Holly Roark
> Certified Bankruptcy Specialist*
> *and Sports Lawyer*
> holly@roarklawoffices.com **primary email address**
> www.roarklawoffices.com
> *Central District of California & District of Idaho* - Consumer
> Bankruptcy Attorney
> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
> T (310) 553-2600; F (310) 553-2601
>
> *By State Bar of California Board of Legal Specialization
>
>
>
>
When an individual files a petition under Chapter 13, the bankruptcy estate is not treated as a separate entity for tax purposes. Any income, such as this lawsuit, is income to the Debtor.Debtor should provide the W-9 to the insurance company and will have to pay income tax on the proceeds.Sincerely,Michael Avanesian, Esq.Simon Resnik Hayes, LLP15233 Ventura Blvd., Suite 250Sherman Oaks, CA 91403Tel: 818.783.6251 | Cel: 818.817.1725
The post was migrated from Yahoo.
Weird to pay the money directly to the Chapter 13 trustee. Sounds like
some or all the parties did not understand the difference between a Chapter 7
estate and a Chapter 13 estate and the different roles trustee's play in
each chapter. I assume this was a cause of action arising postpetition, or
not exempted if it was prepetition. If postpetition, and some portion isfor reimbursement of out pocket costs I would take issue with trustee's
label of that part as income. If prepetition and exempted, I would also fight
the label on the exempted portion. Did the debtor have an Attorney? Ifso general practices is for it all have gone through the attorney's clienttrust account and the attorney completes the W-9. If no attorney or the
attorney decided not follow standard practice it is the debtor who shouldprovide the W-9. Depending on what the settlement proceeds are compensating
it may or may not be taxable. The insurance company is generally requiredby the IRS to provide the 1099 at the end of the year to the distributees,so the W-9 completion is required so the proper tax id number is reported to
the IRS.
Sounds like the settlement agreement will need to be modified to issue
the check to the debtor.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868 (805) 497-5864 (Facsimile)
NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY THE INTENDED RECIPIENTOF THE TRANSMISSION, AND THIS COMMUNICATION IS INTENDED TO BE PRIVILEGED BY
LAW. IF YOU RECEIVED THIS E-MAIL IN ERROR, ANY REVIEW, USE, DISSEMINATION,DISTRIBUTION, OR COPYING OF THIS E-MAIL IS STRICTLY PROHIBITED. PLEASE
NOTIFY US IMMEDIATELY OF THE ERROR BY RETURN E-MAIL AND PLEASE DELETE THISMESSAGE FROM YOUR SYSTEM. THANK YOU IN ADVANCE FOR YOUR COOPERATION
In a message dated 8/31/2015 6:49:03 P.M. Pacific Daylight Time,
cdcbaa@yahoogroups.com writes:
Debtor settled a lawsuit during a chapter 13. Debtor is plaintiff.
Defendant is insured. The agreement is for ins. co. to pay funds directly to
Chapter 13 trustee for disbursement. Ins. Co. wants a W9 from the Trustee, but
Trustee will not provide one due to cited IRS Code not requiring trustee toprovide W9. Ins. co. doesn't want to pay without a W9. Trustee says
settlement is income to Debtor. Does debtor need to provide a W9 to ins. co.? If
so, won't check need to be made directly to Debtor?
Is the W9 legally required for Ins. Co. to pay settlement, or just
internal policy?
This is not a personal injury settlement.
Holly Roark
Certified Bankruptcy Specialist*
and Sports Lawyer
_holly@roarklawoffices.com_ (mailto:holly@roarklawoffices.com) **primary
email address**
_www.roarklawoffices.com_ (http://www.roarklawoffices.com/)
Central District of California & District of Idaho - Consumer Bankruptcy Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067
T (310) 553-2600; F (310) 553-2601
*By State Bar of California Board of Legal Specialization
Weird to pay the money directly to the Chapter 13 trustee. Sounds
like some or all the parties did not understand the difference between
a Chapter 7 estate and a Chapter 13 estate and the different roles trustee's
play in each chapter. I assume this was a cause of actionarising postpetition, or not exempted if it was prepetition. If
postpetition, and some portion is for reimbursement of out pocket
costs I would take issue with trustee's label of that part as income.
If prepetition and exempted, I would also fight the label on the exempted
portion. Did the debtor have an Attorney? If so general
practices is for it all have gone through the attorney's client trustaccount and the attorney completes the W-9. If no attorney or the attorney
decided not follow standard practice it is the debtor who should provide the
W-9. Depending on what the settlement proceeds are compensating it may or
may not be taxable. The insurance company is generally required by
the IRS to provide the 1099 at the end of the year to the distributees, so the
W-9 completion is required so the proper tax id number is reported to the
IRS.
Sounds like the settlement agreement will need to be modified
to issue the check to the debtor.
Mark T.
JesseeLaw Offices of Mark T. Jessee"A Debt Relief Agency"50 W.Hillcrest Drive, Suite 200Thousand Oaks, CA 91360(805) 497-5868 (805)
497-5864 (Facsimile)NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY
THE INTENDED RECIPIENT OF THE TRANSMISSION, AND THIS COMMUNICATION IS INTENDED
TO BE PRIVILEGED BY LAW. IF YOU RECEIVED THIS E-MAIL IN ERROR, ANY REVIEW, USE,
DISSEMINATION, DISTRIBUTION, OR COPYING OF THIS E-MAIL IS STRICTLY PROHIBITED.
PLEASE NOTIFY US IMMEDIATELY OF THE ERROR BY RETURN E-MAIL AND PLEASE DELETE
THIS MESSAGE FROM YOUR SYSTEM. THANK YOU IN ADVANCE FOR YOUR COOPERATION
In a message dated 8/31/2015 6:49:03 P.M. Pacific Daylight Time,
cdcbaa@yahoogroups.com writes:
Debtor settled a lawsuit during a chapter 13. Debtor is plaintiff.
Defendant is insured. The agreement is for ins. co. to pay funds directly to
Chapter 13 trustee for disbursement. Ins. Co. wants a W9 from the Trustee, but
Trustee will not provide one due to cited IRS Code not requiring trustee to
provide W9. Ins. co. doesn't want to pay without a W9. Trustee says settlement
is income to Debtor. Does debtor need to provide a W9 to ins. co.? If so, won't check need to be made directly to Debtor?
Is the W9 legally required for Ins. Co. to pay settlement, or just
internal policy?
This is not a personal injury settlement.
Holly
Roark
Certified Bankruptcy
Specialist*
and
Sports Lawyer
holly@roarklawoffices.com **primary email
address**
The post was migrated from Yahoo.
Debtor settled a lawsuit during a chapter 13. Debtor is plaintiff.
Defendant is insured. The agreement is for ins. co. to pay funds directly
to Chapter 13 trustee for disbursement. Ins. Co. wants a W9 from the
Trustee, but Trustee will not provide one due to cited IRS Code not
requiring trustee to provide W9. Ins. co. doesn't want to pay without a W9.
Trustee says settlement is income to Debtor. Does debtor need to provide a
W9 to ins. co.? If so, won't check need to be made directly to Debtor?
Is the W9 legally required for Ins. Co. to pay settlement, or just internal
policy?
This is not a personal injury settlement.
Holly Roark
Certified Bankruptcy Specialist*
*and Sports Lawyer*
holly@roarklawoffices.com **primary email address**
www.roarklawoffices.com
*Central District of California & District of Idaho* - Consumer Bankruptcy
Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067
T (310) 553-2600; F (310) 553-2601
*By State Bar of California Board of Legal Specialization
Debtor settled a lawsuit during a chapter 13. Debtor is plaintiff. Defendant is insured. The agreement is for ins. co. to pay funds directly to Chapter 13 trustee for disbursement. Ins. Co. wants a W9 from the Trustee, but Trustee will not provide one due to cited IRS Code not requiring trustee to provide W9. Ins. co. doesn't want to pay without a W9. Trustee says settlement is income to Debtor. Does debtor need to provide a W9 to ins. co.? If so, won't check need to be made directly to Debtor?Is the W9 legally required for Ins. Co. to pay settlement, or just internal policy?This is not a personal injury settlement.Holly RoarkCertified Bankruptcy Specialist*and Sports Lawyer
holly@roarklawoffices.com**primary email address**
www.roarklawoffices.com
Central District of California & District of Idaho - Consumer Bankruptcy Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067T (310) 553-2600; F (310) 553-2601
The post was migrated from Yahoo.