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If you received an award in a personal injury case, you may have opted to receive a series of periodic structured settlement payments rather than receiving a lump sum of cash up front. The payments are usually received as a...
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Structured Settlement Confidentiality
Recent rules issued by the Internal Revenue Service have confirmed that physical injury cases are not subject to disclosure requirements to the IRS. This means those personal injury victims who opted to accept some or all of their damage compensations through structured settlements are assured of their confidentiality from disclosure to the IRS under existing federal regulations.
The IRS and the Treasury Department received a significant number of comments regarding the confidentiality filter that it had imposed on the beneficiaries of structured settlements. After reviewing these comments, the Treasury Department and IRS decided to narrow the confidentiality filter in their final ruling regarding the disclosure issue. The final rules were formally approved by Pamela F. Olson, Assistant Secretary for Tax Policy at the U.S. Treasury.
The IRS had originally proposed a set of rules regarding the confidentiality agreements in the context of tax shelters in October 2002. The NSSTA however argued that the scope of the IRS proposal was so broad that ant that if it had been finalized, would have included standard confidentiality provisions in personal injury settlement agreements.
Structured settlements had been recognized by the Congress since 1982. Structured settlements give a blanket of long-term financial stability to injury victims and to their families by allowing them to receive their personal damage compensations through a stream of tax-free payments over a set period of time as compared to a single, large lump sum payment that were often frivolously spent. Structured settlements are customized according to the needs of the victims. Due to these obvious benefits, structured settlements have become an inherent part of physical injury settlements.
With the assurance of confidentiality from disclosure to the IRS, physical injury victims can now choose structured settlements and still feel secure. A settlement will remain confidential only if there is a provision requiring confidentiality.
If you have ever considered getting cash for your structured settlement, you may first want to contact a lawyer and financial advisor. There are specific regulations in most states that restrict the sale of structured settlements. You will also need...
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