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Are there federal tax rules that apply to structured settlements?

April 26, 2017federal tax rules settlements structured

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Are there federal tax rules that apply to structured settlements?

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The Periodic Payment Settlement Act of 1982 (Public Law 97-473) formally recognized and encouraged the use of structured settlements in physical injury cases by designating payments from a structured settlement as tax-free. Section 104(a)(2) of the Internal Revenue Code clarifies that the full amount of the structured settlement payments, including the acceleration when, for example, Rapid Settlements purchases your annuity, is tax-free to the victim.