Structured Settlements Definition

This section applies to structured settlement factoring transactions entered into on or after july 8 2004. A structured settlement factoring transaction means a transfer of structured settlement payment rights including portions of structured settlement payments made for consideration by means of sale assignment pledge or other form of encumbrance or alienation for consideration.

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Structured settlement factoring transaction. Structured settlement factoring transaction athe term structured settlement factoring transaction means a transfer of structured settlement payment rights including portions of structured settlement payments made for consideration by means of sale assignment pledge or other form of encumbrance or alienation for consideration. In order for such transfer to be approved the transfer must comply with internal revenue code section 5891 and any. A few months ago i added a structured settlement factoring discount rate calculator link to the discount rate section of the structured settlement factoring transaction page. The provisions of section 3405 regarding withholding of tax shall not apply to the person making the payments in the event of a structured settlement factoring transaction. In the early days of factoring a structured settlement there were widespread abuses and individual beneficiaries of structured settlements were preyed upon by unscrupulous factoring companies. Most states have adopted some form of the model state structured settlement protection act. To avoid the excise tax the factoring transaction must be approved by a qualified order defined by sec. 5891b2 as a final order judgment or decree finding that the transfer of structured settlement payment rights does not contravene any statute. The term structured settlement factoring transaction means a transfer of structured settlement payment rights including portions of structured settlement payments made for consideration by means of sale assignment pledge or other form of encumbrance or alienation for consideration. Independent professional advice is required under the structured settlement protection acts of certain states before selling the rights to future structured settlement payments to make sure that the annuitant seller receives a fair market value from the factoring company buyer and that the transaction is in the best interest of the selling party and any applicable dependents. This document is not an official pronouncement of the law or the position of the service and cannot be used cited or relied upon as such. Excise tax on structured settlement factoring transactions audit technique guide. Here are my thoughts on why this calculator is vital to this page. A the structured settlement payee is domiciled in a state or possession of the united states which has not enacted a statute providing that the structured settlement factoring transaction is ineffective unless the transaction has been approved by an order judgment or decree of a court or where applicable a responsible administrative. This guide is current through the publication date.