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PI - Personal Injury - Auto Accident settlement- Why ins. company need my atty's TAX ID # before issuing a settlement check?

Los Angeles, CA |

I had an AUTO accident and it was settled last week. The opposing party, Nationwide insurance company asks for my attorney's TAX ID # before issuing a settlement check? Why? Is this common?

Insurance company has a hard time reaching my attorney. My attorney does not call immediately. Ins com asked me to deliver the message to my attorney. Who is receiving the check? Is the Settlement check made out to my attorney or me?

Attorney Answers 14


  1. Of course, your attorney must pay taxes. I'm curious why you would even know this.

    Personal injury cases only; I'm good at it; you be the Judge! All information provided is for informational and educational purposes only. No attorney client relationship has been formed or should be inferred. Please speak with a local and qualified attorney. I truly wish you and those close to you all the best. Jeff www.nyelderinjurylaw.com


  2. Yes, it is common. The insurance company will 1099 the attorney so the attorney will pay taxes on his or her portion (fees) as income.

    I am licensed in California only and my answers on Avvo assume California law. The above answer is for general information only and is based on the information you posted. Every case is fact dependent, so to get a thorough analysis of your situation, you will need to consult face to face with an attorney licensed to practice in the jurisdiction where the incident took place. Do not conclusively rely on any information posted online when deciding what to do about your case. No attorney-client relationship shall be created through the use reading of this response on Avvo. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information in this response.


  3. The insurance company must obtain the attorney's Tax ID number to report the payment to the IRS - they have no choice to do otherwise. That does not mean that the money you receive from your attorney's trust account will be reported to the IRs - typically it is not in a personal injury case. However, some of your recovery might be taxable - you should consult a tax adviser or attorney about that.


  4. It is to 1099 your attorney (so that they pay taxes on it). Like my colleague, I, too, am a bit perplexed as to why you even know this information.


  5. Carriers are required to get that information because they have to issue a 1099 tax form to your attorney for the gross amount that is tendered to him/her for the settlement of your claim. It has no bearing on the amount you should be getting, except that, time wise, the carrier will not likely issue the settlement check until they have that information. Speak with your attorney.


  6. Yes. This is common practice for the attorney to provide a tax ID # for issuance of payment from an insurance carrier following an accident settlement.

    Nothing in this communication should be construed as creating an attorney client relationship. This is for informational purposes only. Attorney will take no action on your behalf unless and until a written retainer agreement is signed. There are strict time deadlines on filing claims and, as such, you are advised to consult with and retain an attorney immediately to file such claims timely or you will lose any right to recovery.


  7. Yes, it is common practice for the insurance company to ask for the law firm's tax id. The law firm will typically recieve a 1099 at the end of the year and the law firm will be obligated to pay taxes. The settlement draft should include both the client's name and the law firm's name. The check is then endorsed by the client and law firm and deposited in the law firm's attorney client trust account. The attorney will then pay the law firm, the client and any outstanding medical liens.


  8. This is typical. The insurance company needs to report for IRS purposes.

    Because every legal situation is different and depends on many factors, the responses provided at this site are not and are not intended to be, legal advice or a guarantee of the outcome of your matter. Likewise, it is not intended to create an attorney-client relationship. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. However, contacting us does not create an attorney-client relationship. Such a relationship is only created when our firm and any potential client agree upon and enter into a written retainer agreement.


  9. For IRS 1099

    Only 29% Contingency Fee! Phone: 215-510-6755 www.InjuryLawyerPhiladelphia.com


  10. Federal law requires the insurance company to send the 1099 to the attorney for the full amount of the settlement.

    The settlement check is nearly always payable jointly to the client and the attorney. The attorney deposits the check into his/her trust account and disburses the funds from that account. If your attorney is not responsive or doesn't pay you your share, contact the State Bar.

    My answers to questions posted on Avvo are not intended to constitute legal advice or to create an attorney-client relationship.


  11. This seems like an ideal question to put to your attorney. I would not want to be viewed as meddling in your attorney-client relationship.


  12. I agree with the responding attorneys. For these types of questions, you may want to contact your lawyer directly and ask him this.


  13. We get 1099s at the end of the year. Somewhat bothered that you are being used as a middle man between your attorney and the opposing insurance company.