injury claim by accepting payments on scheduled basis than being settled as a whole. That is the claimant will receive settlement for his injury from the other person on monthly or quarterly or early basis depending upon the agreement. These types were first started in Canada for the case of children affected by the side effects of the drug Thalidomide. Thalidomide was a drug used to suppress nausea in pregnant women during their first trimester during this time morning sickness and nausea is common. The drug had some side effects on the foetus resulting in the children born with deformed eyes, urinary tract, heart, blindness and deafness and many other deformities.
Structured type of Settlements:
Structured settlement is used in case of injury and product liability cases. Structured settlement is chosen so as to avoid other costs of legal activities like facing a number of trials. Since this type of settlement is easier to handle rather than paying money as whole structured settlement has become more popular in United States. The IRS had several rules for making claims in case of injury and several other tax inclusions thus structured settlements were more preferred.
Structured settlements were made a part of the statutory law in many countries including Australia, Canada, England and the United States. Structured settlements will include include income tax either based on the amount settled periodically or on the calculation of the whole amounts. In some cases the payment will be made through purchasing annuities either one or more depending on the amount which will guarantee payment in periodic terms. Structured settlement payments are called periodic payments, when this is combined into a judgement trial it is called periodic payment judgement.
These settlements are liable to taxes. In order to qualify for tax treatment, these settlements should meet some requirement some of them are stated below:
- It is an agreement for scheduled payment of the damages that can be excluded from the gross income under which is being controlled by Internal Revenue Code with the Section 104(a) (2).
- It is also an agreement for the scheduled payment of the compensation that falls under any workers’ compensation law that can be excluded under which is being controlled by the Internal Revenue Code Section 104(a)(1).
- The scheduled payments should mandatorily be one of the characters explained above that falls under the Internal Revenue Code Section 130(c)(2) and also it is mandatory to be payable by a person who:
- Forms a party to the suit or an agreement or to a claim for workers’ compensation or
- By a person who has just assumed the liabilities for such scheduled payments that falls under a qualified assignment with Internal Revenue Code Section 130.
There are few consultancies that have this particular business where they render these kinds of services to the people. As most of the times people gets into the dispute but they would never know the process they have to follow to get them resolved and finally they suffer. This is simply waste of time for them. This company that deals with structured settlement and their disputes they require one to provide all information about the Insurance Company and any paper works which will detail the payment structure. Hence as soon as one gives information about all the above requested things; accompanied with the approximate amount of lump sum one is really looking to get they will avail their customers with a cash offer. These kinds of service providers looks at all aligned on a case by case basically.