Since 1954 IRS Code Section 104 has ensured cash settlements of personal injury cases, including workers' compensation, are tax exempt.
The idea of using periodic payments to settle physical injury claims is tied to the Thalidomide tragedy which caused severe birth defects in the 1960s. It resulted in more claims than the manufacturers could pay. Periodic payments, first made by means of a trust, compensated the injured party to a greater degree than would have been possible through a lump sum cash settlement.
Then later, in 1979, Revenue Ruling 79-220 set a precedent for dealing with periodic payment settlements, assuring each periodic payment would flow tax-free on physical injury cases if these procedures were followed.
In 1983, the Periodic Payment Act made the various tax rulings into law. Specifically, Section 104 was amended to include cases settled via periodic payments and Section 130 was created to allow for the assignment of the payment obligation to a third party. While changes to the tax code have occurred that affected structured settlements, the tax-exempt status of the periodic payment income remains intact.
Now, at the forefront of the structured settlements industry, EPS is expanding the concept of periodic payment solutions to a wider variety of commercial and individual situations whether they be tax-free or tax-deferred.
EPS, and its predecessor companies, are proud to have been among the founders of the industry. Its principals were proponents of the establishment of the National Structured Settlement Trade Association, better known as the NSSTA. In 35 years in business, EPS has provided five NSSTA Presidents, assumed numerous industry leadership roles, and completed over 60,000 settlements. Learn more by visiting About Us.