BP Oil Spill Litigation
In March 2012, BP reached a $7.8 billion settlement intended to cover claims of medical injuries, economic loss and property damage. Tens of thousands of lawsuits have been filed against BP as a result of the catastrophic 2010 oil spill in the Gulf of Mexico. The lawsuits allege that BP failed to adequately prepare for disaster on a systemic level; the company deliberately ignored crucial safety protocols and procedures in order to save time and money. These acts of negligence resulted in devastating consequences for those in the affected region.
With such a broad range of claims, it has been imperative that claimants work with trusted advisors who can navigate them through complicated benefit preservation and tax code implications. Milestone has provided consultation to claimants, educating them on how the acceptance of a settlement may affect and/or benefit them. Some people want their claim paid in cash, but there are a multitude of options, and Milestone has helped guide claimants in the BP Oil Spill litigation through those options. Some examples are as follows:
Businesses that sold or purchased products from affected areas and/or owned, operated, leased property or vessels in the Gulf Coast areas, or had business interrupted, may qualify for a claim. Tax regulations regarding settlement recoveries are handled differently for individuals than for businesses. At Milestone, we will help guide you through these regulations to determine how taxable income will affect your settlement.
Taxable vs. Tax-Free Recoveries for Businesses
Most business claims are not tax exempt, but settlement monies paid for damaged or destroyed property may be tax free if considered a “recovery of basis.” In other words, a claimant can receive up to the amount s/he originally paid for the property. If the claimant receives more in a settlement than what s/he originally paid for the property, the excess funds may be taxed. A clear understanding of the tax code and what it means for your settlement is critical in allowing you to get the recovery you deserve.
Personal Injury/Individual Recoveries
There are a number of categories under which individual claimants or injured parties may be included, not limited to: those who live, work and/or were offered work in the Gulf Coast region during the oil spill and those who owned, leased or worked on property or vessels in the Gulf Coast region during the spills. At Milestone, we will help guide you through tax regulations and determine how they will affect your settlement.
Tax-Exempt Structured Settlements
If you were injured, you have the option to take all or a portion of your settlement funds and place it in a tax-exempt annuity. A structured settlement provides you with an open plan design that allows you to choose when and how your funds are paid in the future. You can begin to collect payments right away or you can defer payments until a point in time down the road. It allows an injured claimant an additional option not available to others to plan their financial future. Structured annuities are unique and specific to personal injury and wrongful death, so having a clear understanding on how they work can be useful in your situation and is always a good strategy.
Taxable vs. Tax-Free Recoveries for Individuals
Section 104 of the Internal Revenue Service Tax (IRS) Code (Compensation for Injuries or Sickness) declares that damages for personal physical injuries or physical sickness are tax free; however, there is still much confusion over what constitutes a “physical” injury or sickness. A clear understanding of the IRS tax code and what it means for your settlement is critical in allowing you to get the recovery you deserve. The guaranteed benefits you will receive from structuring your settlement far exceed the overall funds that you will retain if you accept a cash settlement.
Milestone has been honored to work with BP Oil Spill plaintiffs through this tough time to help them move forward with their lives.