by Structured Settlement Watchdog
CBC Settlement Funding feasts off the structured settlement payment rights of gullible people who read the unreliable and inaccurate information published by their marketing partners Annuity.org and Structuredsettlements.com. Today's special from CBC's marketing poo poo heads is "Crap on Crostini" about the taxation of structured settlements.
Do I have to pay taxes on my structured settlement?
"The short answer is typically no. The tax status of your structured settlement payments is set when your settlement issuing company structures the settlement and rarely changes. Money you receive from a personal injury or medical event isn’t considered income and so it isn’t taxed like income, according to Section 104(a)(2) of the Internal Revenue Service’s code."
11 Reasons Why StructuredSettlements.Com is A Load of BS
- The Internal Revenue Service does not have a code, except perhaps a figurative "nudge nudge, wink wink" when its enforcement team is about to storm the offices of a factoring company that is not in compliance with a structured settlement protection act.
- The Internal Revenue Code, formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code. It is organized topically, into subtitles and sections, covering income tax, payroll taxes, estate taxes, gift taxes, and excise taxes; as well as procedure and administration. Its implementing agency is the Internal Revenue Service [ Source: CCH Tax Law Editors ]
- There is no such thing as a "settlement issuing company".
- A structured settlement is a form of settling a claim or lawsuit.
- A settlement is a compromise between adverse parties in the claim or in the lawsuit.
- A structured settlement annuity is one of the permissible qualified funding assets as set forth in IRC 130(d).
- A structured settlement annuity issuing company does not structure the settlement, the compromising parties do.
- How structured settlement payments are taxed has to do with the nature of the damages the payments represent.
- Structuredsettlements.com represents that the tax status rarely changes. What would be the rare instance where the structured settlement was tax free and then it changed?
- On August 21, 1996, President Clinton signed the Small Business Job Protection Act of 1996. Taxation of damages was affected by this bill. The Act changed the exclusion from gross income of damages received on account of personal injury or sickness to apply only to damages which are received on account of a physical injury or physical sickness. If the claim resulting in damages or settlement payments has its origin in a physical injury or sickness, then all damages (other than punitive damages) that flow from that injury or sickness are treated as payments on account of that physical injury or sickness. If, however, the claim has its origin in emotional distress, even if subsequent physical injury or sickness is alleged, damages or any settlement payment made is taxable because it stems from a nonphysical injury. (Damages which reimburse the cost of medical treatment are not taxable).
- What is a medical event? If you go into your doctor's office and submit a stool sample and a cup full of urine for testing, or go to the podiatrist to remove an ingrown toe nail is that a medical event that gives you the ability to structure? Of course not. None of them represent damages which are received on account of physical injury or physical sickness.
Click structured settlement tax benefits for more information