by Structured Settlement Watchdog
On February 19, 2014 a summons was served by the Internal Revenue Service Criminal Investigations division requiring Imperial Holdings Inc. "to produce information about the Company and its former structured settlement business from 2010 to the present.
Although the Company has confirmed that the investigation relates to the Company, it is not aware of what allegations, if any, the IRS intends to investigate. The Company believes that the investigation is in a preliminary stage and is not aware of when such investigation will be concluded. The Company is unable to predict what action, if any, might be taken in the future by the IRS as a result of the matters that are the subject of the summons or what impact, if any, the cost of responding to the summons might have on the Company's financial position, results of operations, or cash flows". Form 8-K filed by Imperial Holdings Form 8-K filed with the SEC February 19, 2014.
Imperial Structured Settlements was one of the big cash now pushers and a member of NASP. One can only speculate why the IRS served Imperial, whose structured settlement operation was a spin off from Peachtree, however it will be interesting to see if the investigation is the first of many IRS forays into Florida to investigate "forum shopping" by companies doing business in the state that might be inviolation of Florida or the structured settlement protection acts of other states, the result of which could trigger a 40% IRS excise tax on the settlement purchaser, pursuant to IRC 5891. That's $400,000 per $1 million of factoring discount plus legal fees!
Given what I have been able to discover in a limited number of cases, if the IRS were to be schooled in what to look and the methodology used to lure non-resident annuitants to Florida a create the illusion of domicile, then it could spell trouble for few companies. I have personally spoken an annuitant who appeared to have been forum shopped and have seen documentation on several others. In one case I saw an annuitant from Arizona who was appeared to have been denied in October 2013 in Arizona and then approved in Sumter County, the cash now pushers' jurisdiction of choice, by Judge Michelle Morley in December 2013.