Settlement of Qui Tam action considered a “prize or award” for purposes of New Jersey state income tax and must be declared as income.

The plaintiff reported fraudulent billing practices at certain hospitals to the Federal Government and was subsequently paid almost $1.3 million as his share of the recovery. The Appellate Division held that the money was to be considered a “prize or award” and subject to state income tax. Further, the court held that the plaintiff was unable to deduct the amount that was paid to his attorney as legal fees or to other claimants who had reported similar allegations. As such, the plaintiff was required to pay state income tax on the full $1.3 million even though he only actually received about $550,000.

_{Case Law Alerts, 2^nd Quarter, April 2018}

_{Case Law Alerts is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2018 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.}