Thursday, June 3, 2004

Richard B. Risk, Jr. has published A Case for the Urgent Need to Clarify Tax Treatment of a Qualified Settlement Funb Created for a Single Claimant, 23 Va. Tax Rev. 639 (2004). Here is part of the Introduction:

There is a pressing need for the Treasury–through the Internal Revenue Service (Service)–to issue guidance on the tax treatment of an Internal Revenue Code (Code) section 468B designated settlement fund (DSF) or qualified settlement fund (QSF) created for the benefit of a single claimant to facilitate a section 130 “qualified assignment” of a periodic payment liability. Injured claimants routinely are harmed a second time by self- insured entities and liability insurance companies when settlement or judgment terms include periodic payments. The use of a DSF or QSF is effective in removing the adversarial party from involvement in the distribution of the claimant’s damage proceeds. However, assertions of potentially adverse tax treatment of the payments to injury victim payees are causing victims either to forego tax-free periodic payments altogether or else place themselves at the mercy of the adversary….