Structured Settlements Definitions

There's more definition about structured settlements,which one has been added in my blog.

There's other definition about structured settlements.

A definition of "Structured Settlement" can be found in Internal Revenue Code (IRC) section 5891 (c)(1) (26 U.S.C. 5891 (c)(1)), which states that a structured settlement is an "arrangement" that meets the following requirements:

1. A structured settlement mus be established by:

a). A suit or agreement for periodic payment of damages excludable from gross income under Internal Revenue Code Section 104 (a)(2) (26 U.S.C. 104 (a)(2)).

b). An agreement for the periodic payment of compensation under any worker's compensation law excludable under Internal Revenue Code Section 104(a)(1) (26 U.S.C. 104(a)(1)).

2. The periodic payments must be of the character described in subparagraphs (A) and (B) of Internal Revenue Code Section 130(c)(2) (26 U.S.C. 130(c)(2)) and must be payable by a person who:

a). Is a party to the suit or agreement or to a workers compensation claim.

b). By a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with Internal Revenue Code Section 130 (26 U.S.C. 130).

It is important to note that the language immediately prior to Internal Revenue Code Section 5891 (c)(1) states that the definition that appears there is for the purpose of this section. Internal Revenue Code Section 5891 entitled "Structured Settlement Factoring Transactions" deals with the excise tax imposed on the factoring discount, when there is a purchase of structured settlement payment rights and the exceptions to the excise tax. A number of structured settlement industry commentators have been observed attempting to broaden the express language that appears in the Internal Revenue Code.