Qualified Assignment

An assignment is said to be qualified if it satisfies the criteria set forth in Internal revenue Code Section 130. Qualification of the assignment is important to assignment companies because without it the amount they receive tp induce them to accept periodic payment obligation would be considered income for federal income tax purposes. If an assignment qualifies under Section 130, however the amount received is excluded from the income of the assignment company. This provision of the tax code was enacted to encourage assigned cases. Without it, assignment companies would owe federal income taxes but would typically have no source from which to make the payments.

Furthermore, once an agreement is reached, these payments generally cannot be accelerated, increased, decreased, etc. In fact, the total amount paid out must match the total judgment amount. Also, in some jurisdictions, one can actually sell their structured settlement for a buyout. However, several states have actually prohibited one's ability to sell a structured settlement. In any case, contacting a tax attorney would be a wise move before selling a structured settlement, as there would likely be tax consequences.