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Specific to Nevada Laws: My employer has offered me a severance…

Specific to Nevada Laws: My...

Specific to Nevada Laws: My employer has offered me a severance package in exchange for a waiver of all claims after an event at work left them open to a huge lawsuit. I am inclined to accept it and just walk away but they are calling it a voluntary severance package which means I will be taxed at the employment rate. Im wondering if I can demand it be structured in a way that limits my tax liability a little.

My claims are very valid and they KNOW IT so I have some room to make demands if Im going to sign an agreement. They start with sexual harassment after I was sexually assaulted, harassment due to HR's treatment of the situation and then retaliation by a senior VP. Can I demand it be structured in a way that wont require me to pay full employment taxes? Physical pain is limited to a reaction I had to the stress medication I was given. I know stress and anxiety dont fall under pain and suffering but the mental aspect of being assaulted is pretty harsh. Is there a middle ground anywhere to help eleviate some of this burden?

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Answered in 16 minutes by:

3/21/2014

Employment Lawyer: Tina, Lawyer replied 9 years ago

Tina, Lawyer

Category: Employment Law

Satisfied Customers: 33,167

Experience: JD, BBA, recognized by ABA for excellence.

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Hello and welcome,

There would not typically be a way to structure the severance pay to avoid federal taxes. Even if you went to trial and were awarded an amount as compensatory damages, it would typically be taxable under IRS regulations unless the damages were a result of physical injury or sickness under IRC Sec. 104.

I understand that the mental aspect of sexual harassment may be the most difficult to overcome and because of that, you may wish to negotiate more severance to compensate you than what is being offered by the employer. But you would not typically be able to avoid income taxes to the IRS, although NV does not have a state income tax, so you should not be concerned about that.

I hope this helps clarify the situation for you. My goal is to provide you with excellent service - if you feel you have received anything less, please reply back as I am happy to address follow-up questions. Kindly rate my service when I have answered your questions so I will be compensated for my time assisting you. Thank you!

Tina

Tina, Lawyer

Category: Employment Law

Satisfied Customers: 33,167

Experience: JD, BBA, recognized by ABA for excellence.

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Tina and 87 other Employment Law Specialists are ready to help you

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Customer reply replied 9 years ago

I'm not sure you read my question. I'm not asking how to avoid federal taxes. I'm asking if there is way to structure it that can help reduce them from the wage rate. I also indicated that there was some physical pain and suffering from a medical perspective but you never even touched on that.

Employment Lawyer: Tina, Lawyer replied 9 years ago

Hello again, Mia.

I believe there is a misunderstanding here since I did read your question and address it directly.

Characterizing the payment as wages or in lieu of wages is the reason the IRS would tax the payments to you and there is no way to avoid that as I indicated.

I did address the physical pain but you indicated that was a result of the treatment not the injury itself, so that would not typically qualify as a physical injury which would not be taxes. The pain and suffering would normally qualify as a physical injury if you can get the employer to characterize some amount of the payment as compensation for physical injury, which is not likely since then they would be admitting liability or fault in the case. That is not something most companies are willing to do as part of a severance. So if you are looking for that, you may wish to refuse the severance and pursue legal action against them.

I hope this helps clarify the situation for you. My goal is to provide you with excellent service – if you feel you have received anything less, please reply back as I am happy to address follow-up questions. Kindly rate my service when I have answered your questions so I will be compensated for my time assisting you. Thank you!
Tina

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