by John Darer CLU ChFC CSSC RSP
In an otherwise helpful review of the Academy of Special Needs Planners annual meeting, Patrick Hindert takes a dramatic leap into hyperbole, praising Richard B. Risk as a paragon of self-restraint and, to S2KM’s knowledge, the first (besides Hindert himself) to connect IRC 468B (the “qualified settlement fund statute”) with IRC 5891 (the “structured settlement factoring excise tax statute”)—a combo S2KM sees as the peanut butter and jelly of Special Needs Settlement Planning.
IRC 5891(c)(2) definition of structured settlement is a subsection about an imposition of an excise tax
” Definitions For the purposes of this section”
To wit…
IRC 5891(c) Definitions For purposes of this section—
(ii) payable by a person who is a party to the suit or agreement or to the workers’ compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130.
Hindert’s so-called watershed moment about Richard B. Risk’s connection between IRC 468B and IRC 5891 is like trying to plug a leaky dam with duct tape—exposing their hilariously selective logic.
If the core argument about single claimant 468B qualified settlement funds is that “one or more claims” strictly means “one or more” and not necessarily more than one, then logically, when the Internal Revenue Code states that the definition applies “for the purposes of this section,” doesn’t it mean it applies exclusively to this section?
That is to say this limited section of the Internal Revenue Code entitled structured settlement factoring transactions”, which begins at IRC 5891(a) with “There is hereby imposed on any person who acquires directly or indirectly structured settlement payment rights in a structured settlement factoring transaction a tax equal to 40 percent of the factoring discount as determined under subsection (c)(4) with respect to such factoring transaction.” (i.e. the section simply imposes an excise tax and describes conditions for exceptions to the tax)
Are settlement planners supposed to be “selectively logical”? So much gum flapping has been done on this subject that it could be an alternative energy source.
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