Managing Taxes on Personal Injury Contingent Fees: Avoiding the Pitfalls of Inconsistent Offshore Income Deferral Plans

This CLE webinar will offer guidance about how to recognize and avoid noncompliant contingent fee deferrals, discuss IRS campaigns against aggressive tax planning by plaintiffs' attorneys, and showcase alternative deferral structures that comply with the tax principles in Childs v. Commissioner, 103 T.C. 634 (1994).

Personal injury attorneys may defer receipt of contingency fees if the deferral is properly structured consistent with the tax law principles in Childs v. Commissioner, 103 T.C. 634 (1994). Over time, a variety of alternative fee deferral solutions spun off from the Childs ruling, sometimes called "investment account" options, and attorneys flocked to them.

Recently, the IRS has launched an examination campaign into the companies that promote "non-traditional" tax deferral structures, claiming the promoters are violating 26 U.S.C. 6700 by organizing or promoting abusive tax shelters. The information gleaned in these investigations is expected to be used against law firms and lawyers.

There are alternative fee deferral structures that can comply with Childs and show that taxpayers complied with the constructive receipt and economic benefit rules.

Listen as our panel of experts offers insights and strategies to address critical risks that attorneys face when structuring fees, including IRS scrutiny and investigation resulting in unintended tax liabilities.