Can structured settlements be done for taxable payments?
Yes. Just as there are advantages for attorneys to structure their fees, plaintiffs who receive taxable damage payments can benefit. Examples of taxable payments would be from cases involving age discrimination, sex discrimination, sexual harassment, punitive damages, wrongful termination, emotional distress, pre- and post-judgment interest, and wrongful detainment or imprisonment. Attorney fees can also be done through the reinsurance agreement, rather than through the method described in the previous topic. At least one life insurance company has a periodic payment assumption reinsurance agreement for taxable personal injury cases. Through the reinsurance agreement, a claimant with a personal injury that is not eligible for tax exemption under IRC ยง 104(a)(2) may still receive future periodic payments, being liable to pay taxes on them only in the year in which they are received. This cannot be used in settlements that represent past or future wages to the payee, due to the reporting
