It’s a tale I’ve told many times: the injured party who settles out and finds that the award is entirely taxable. The 1996 Small Business Job Protection Act did eliminate the need for a tort judgment but left the personal physical injury or physical sickness requirement for Section 104 exclusion. This recognized the trend in the law towards no-fault and other statutory remedies that eliminated the need for a finding of fault. Ser my blogpost “The Egg and I,” 1/22/15.

Physical injury may have been at the core in Toni C. Perry, Docket No. 4647-25, filed 3/25/26, an off-the-bencher from Judge Nega, but the stip of settlement in her State law case didn’t make that clear enough.

“Pursuant to the settlement agreement, the lump sum that petitioner received was for a general release of all claims except for those related to her Connecticut Workers’ Compensation Commission Claim…. Petitioner presented evidence and testimony of physical injuries unrelated to this settlement and many predating the alleged date of the back injury she claims underlies the settlement. Petitioner did not testify or provide any evidence to show that any portion of the settlement proceeds were used or designated for amounts paid for medical care attributable to those injuries.” Transcript, at p. 7.

Workers’ Comp is the exclusive remedy for on-the-job physical injuries, except for employer intentionally-inflicted injuries or employer-created dangerous conditions.

Toni’s testimony shows she didn’t understand the settlement but that’s not the issue.

Toni is represented here by the Quinnipiac University Law School’s LITC. Who represented her in the PI case is not stated, but I won’t unload on him/her. CT has a high bar to avoid Comp exclusivity, and Toni’s employer has plenty of resources to fight a tort claim. Pleading physical injuries on the job will get a swift motion to dismiss for want of jurisdiction.

“Petitioner’s counsel argued that petitioner could just as easily sued for workers’ compensation. But see CONN. GEN. STAT. sec. 31-284(a) (2025); Suarez v. Dickmont Plastics Corp., 639 A.2d 507, 510 (Conn. 1994). They then continued that this somehow supports their position that the settlement is not taxable under section 104. While the Court takes no position on the proper tax treatment of this alternative, it is clear that the lawsuit settled here did not give rise to proceeds that are eligible for exclusion under section 104(a)(2).” Transcript, at p. 8.

No, not any anomaly caused by divergent spousal tax incidents; this is about a penalty practitioners may incur when representing both spouses. Judges have repeatedly warned that representing both spouses can be dangerous to your practice’s health.

Judge Christian N. (“Speedy”) Weiler doesn’t warn the trusty attorneys for Thomas Van Alsburg & Valerie Van Alsburg, Docket No. 3959-20, filed 3/25/26, in hæc verba, because in their case it’s too late. I expect The Phone Call here, but the rest of y’all can learn.

A month after Tom & Val stiped out their deficiencies for the two (count ’em, two) years at issue, they move to vacate the stip and let Val amend the petition to claim innocent spousery. Of course, a stiped decision doesn’t become final until ninety-one (count ’em, ninety-one) days after entry, Section 7481(a)(1). But IRS objects, and there’s a problem.

“Mrs. Van Alsburg, for the first time, now seeks innocent spousal relief some six years after filing her Petition and after the Court has entered its Decision. Petitioners’ Motions essentially seek to permit petitioners to file an amended Petition and now raise for first time a new affirmative defense, without providing a valid reason as to why it was not presented prior to the Proposed Stipulated Decision.” Order, at p. 3. (Footnote omitted, but see infra, as my expensive former colleagues would say).

“Mrs. Van Alsburg alleges that she had no knowledge or reason to know of the understatements, but petitioners presented no evidence to prove that this lack of knowledge just occurred after the stipulated decision was entered based on any mistake inadvertence, [sic] surprise, excusable neglect, newly discovered evidence, or fraud.” Order, at p.3, footnote 3.

Takeaway- Every intake checklist must provide for a thorough conflicts search, but not merely between the proposed client(s) and present or former clients. Too many well-credentialed practitioners have come seriously unglued when representing both spouses. 

No, not a variant on the mashbill nor another premium limited-release. I don’t even know if Judge Christian N. (“Speedy”) Weiler is a fan of Kentucky’s fine distillments. 

But I must give a second Taishoff “Good Job, First Class, With Swords and Diamonds” to Woodford, s/a/k/a Woody, the trusty attorney for Kenneth Walker & Juli A. Walker. Docket No. 2801-24L, filed 3/24/26. Woodford gets Judge Speedy Weiler to reverse his 1/12/26 decision, for whose antecedents see my blogpost “Obamasnod,” 1/8/26. 

And Judge Speedy Weiler awards Woodford’s clients $8788.50 in Section 7430 legals and admins, as well as quashing the APTC IRS assessed without first issuing a SND.

Moreover, IRS folds.

Honest representation at reasonable rates, that’s Woodford’s style.