What Other Federal Tax Rules Govern The Use Of Structured Settlements And Qualified Assignments?

What Other Federal Tax Rules Govern The Use Of Structured Settlements And Qualified Assignments?

In order to protect the public, Congress specified in Section 130 the requirements to establish a qualified assignment which include:

• The assignee assumes the liability from the defendant;
  
• Both the victim (and his/her attorney) and the defendant agree that the payment schedule cannot be "accelerated, deferred, increased or decreased";
  
• The payment stream may be excluded from the recipient's gross income for tax purposes;
  
• The injury must be a physical sickness or injury; and
  
• A highly secure funding asset (such as an annuity or U.S. Government obligation) must be used to fund the payments.
  
  
  One result is that the payment stream may now be excluded from the recipient's gross income for tax purposes.