IRS says it wants its share of BP payments received by oil spill victims

The Internal Revenue Service says oil spill victims who receive BP payments for lost wages will have to pay up come tax time.

Under current law, BP payments for lost wages are taxable -- just like the wages would have been, the IRS said in tax guidance issued Friday. Payments for physical injuries or property loss, however, are generally tax free. Payments for emotional distress? Taxable, though medical expenses related to the emotional distress are deductible.

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