Tax laws and tax policy are critically important for structured
settlements. Based upon interviews he conducted with structured
settlement industry leaders, Jeremy Babener states in his recently published article about "Structured
Settlements and Single-Claimant Qualified Settlement Funds":
"It
seems roundly agreed that the ......structured settlement market owes
its existence almost entirely to the tax subsidy."
With major tax reform predicted for 2011, both the SSP and NSSTA tax
panels provided valuable and generally positive news and information plus
new tax ideas for growing the structured settlement market. For a list of the SSP and NSSTA tax panel participants, see SSP and NSSTA - 6.
The most positive tax information was the declaration of support
for structured settlements during the NSSTA meeting by key
Congressmen including Max Baucus, Chairman of the Senate Finance
Committee; Sander Levin, Chairman of the House Ways and Means
Committee; and David Camp, ranking Republican on the House Ways
and Means Committee.
Congressman Camp provided the most concise tax-oriented legislative
endorsement of structured settlements. Camp stated: "With
tax reform, everything is on the table. But structured settlements are
not on the table. Congress has a long history of support for structured
settlements on a bi-partisan basis. Don't expect much debate over
structured settlements."
The new tax ideas for growing the structured settlement market
were highlighted by Babener in his precursor presentation
to the SSP tax panel titled: "Justifying and Expanding the Structured
Settlement Tax Subsidy". Among Babener's ideas for improving and growing
the structured settlement market, he recommends changing the
current tax subsidy into a tax credit. According to Babener,
who outlines his proposal in an article published in Tax
Notes titled "Expanding the Structured Settlement Tax Exclusion",
the current tax subsidy provides no benefit for structured settlement
recipients unless they pay taxes - which many of whom do not. Babener's
article is available on his Tax Structuring website.
Both the SSP and NSSTA 2010 tax panels featured Michael Montemurro,
Branch Chief, Office of Associate General Counsel of the IRS. SSP has featured Montemurro on two prior tax
panels.
Both the SSP and NSSTA tax panels addressed many of the same
issues:
- Single claimant 468B settlement funds;
- Physical vs.
non-physical personal injuries;
- Non-qualified assignments -
including structured attorney fees;
NSSTA's tax panel also discussed tax issues related to confidentiality
agreements and factoring by assignment companies.
By contrast with NSSTA, SSP allotted more than two hours
(compared with NSSTA's one hour) for its tax panel. In addition, SSP
offered Babener's introductory public policy discussion plus 40 minutes
of follow-up discussion. The added time allowed SSP to incorporate
Michael Montemurro into a broader discussion which included practical
advice (Dan Hindert discussing 468B QSFs), criticism of current tax laws
(Professors Gregg Polsky and Brant Hellwig attacking tax deferrals
for non-physical injuries and plaintiff attorneys fees) plus extended
public policy discussions including secondary market issues.
Both SSP and NSSTA deserve congratulations for their 2010
structured settlement tax panels. SSP's tax panel (organized and
moderated by Richard Risk) has become the new industry standard -
surpassing what NSSTA formerly and regularly featured as its "Tax
Posse". NSSTA's 2010 tax panel (organized and moderated by
Michael Miller) re-established NSSTA as an important educational
resource for structured settlement tax issues.
For prior S2KM reporting about SSP and NSSTA, see S2KM's structured settlement wiki.
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