LEGAL SETTLEMENTS

In law, a settlement is a resolution between disputing parties about a legal case, reached either before or after court action begins.


WHO MUST APPROVE A LEGAL SETTLEMENT AT THE UW? 

All legal settlement at the University of Wisconsin must be approved and submitted for payment by the Office of Legal Services.

HOW TO PAY LEGAL SETTLEMENTS 

The payment mechanisms for making legal settlements at the University of Wisconsin are based on the nature of the action as follows:

  • If wages, payment is through Payroll and reportable on the employee’s W-2.  Use one of the following account codes for wage related payments:
Code
Number
Description Type
1008 Salary Related Legal Settlements-Faculty/Academic Expense
1539 Salary Related Legal Settlements-Classified Expense
  • If not wages, payment is through a Payment to Individual Report (PIR) and reportable on a 1099-MISC.  Use one of the following account codes for wage related payments:
Code
Number
Description Type
1909 Non Salary Legal Settlements-Faculty/Academic Expense
1944 Non Salary Legal Settlements-Classified Expense

Note:    After submitting a PIR payment for legal settlements please forward a copy of the PIR to the Tax Compliance Manager (Jose A. Carus, Jr.).

REPORTING REGULATIONS 

The UW reports all legal settlements per IRS, Program Manager Technical Assistance, Income and Employment Tax Consequences and Proper Reporting of Employment Related Judgements and Settlements, Oct. 22, 2008 as published in the IRS Federal Tax News on July/August 2009.

Download Legal Settlements