Structured settlement factoring transactions

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. The tax under subsection (a) shall not apply in the case of a structured settlement factoring transaction in which the transfer of structured settlement payment rights is approved in advance in a qualified order. For purposes of this section, the term “qualified order” means a final order, judgment, or decree which— finds that the transfer described in paragraph (1)— is issued— For purposes of this section, the term “applicable State statute” means a statute providing for the entry of an order, judgment, or decree described in paragraph (2)(A) which is enacted by— For purposes of this section— The term “applicable State court” means, with respect to any applicable State statute, a court of the State which enacted such statute. In the case of an applicable State statute described in paragraph (3)(B), such term also includes a court of the State in which the payee of the structured settlement is domiciled. A qualified order shall be treated as dispositive for purposes of the exception under this subsection. For purposes of this section— The term “structured settlement” means an arrangement— which is established by— under which the periodic payments are— The term “structured settlement payment rights” means rights to receive payments under a structured settlement. The term “structured settlement factoring transaction” means a transfer of structured settlement payment rights (including portions of structured settlement payments) made for consideration by means of sale, assignment, pledge, or other form of encumbrance or alienation for consideration. Such term shall not include— The term “factoring discount” means an amount equal to the excess of— The term “responsible administrative authority” means the administrative authority which had jurisdiction over the underlying action or proceeding which was resolved by means of the structured settlement. The term “State” includes the Commonwealth of Puerto Rico and any possession of the United States. If the applicable requirements of sections 72, 104(a)(1), 104(a)(2), 130, and 461(h) were satisfied at the time the structured settlement involving structured settlement payment rights was entered into, the subsequent occurrence of a structured settlement factoring transaction shall not affect the application of the provisions of such sections to the parties to the structured settlement (including an assignee under a qualified assignment under section 130) in any taxable year. The provisions of section 3405 regarding withholding of tax shall not apply to the person making the payments in the event of a structured settlement factoring transaction.