In law, a settlement is a resolution between disputing parties about a legal case, reached either before or after court action begins.
Legal settlement approval and payment
All legal settlement at the University of Wisconsin must be approved and submitted for payment by the Office of Legal Services.
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, 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.