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Wrongful Imprisonment Structured Settlement Damages & Getting a Lump Sum of Cash

According to Lane Powell in the 4th quarter of 2015 the United States Congresss decided to eliminate the unknowns related to the tax treatments of damages related to wrongful incarceration. The newly creaed IRS code section 139F provided that gross income doesn't include compensation that was received by an individual as a result of wrongful imprisonment as a result of an individuals crime. If an individual had paid taxes on that compensation in the years in which the statue of limitations would be closed were eligible to receive a tax refund if filed by the 2nd to last week of December.

In Relation To Structured Settlements

Where a client of the Einstein team has a high dollar settlement from a personal injury case the claimant may prefer to receive periodic payments that are structured in such a way that they are supposed to cover the damages and expenses of the recipient. This is in opposition of receiving a lump sum at the time of settlement.  Typically in a structured settlement scenario the transaction for the defendant typically makes a single payment that comes from an insurance company like Met Life, Prudential, Berkshire Hathaway, etc... (an “assignment payment”) to a third party (an “assignment company”), which assumes the defendant’s obligation to make the periodic payments. The assignment company typically uses the assignment payment to purchase an annuity and arranges for the claimant to receive the annuity payments, retaining a portion of the assignment payment as compensation for its services.

These wrongful conviction settlements are retroactively tax free as they should of always been. Wrongful Convictions Tax ReliefAct was adjusted in 2015 and made headlines for those who were exonerated thanks to DNA evidence and other court cases where a potential innocence project attorney stepped up to the plate and helped an innocent man or woman to be freed from jail.

If a settlement holder has payments that they are due to receive as a result of being incarcerated in their state prison or a federal prison system and they are looking at what options they may have to receice a lump sum of cash today to do what they please with those funds then you are encouraged to call Einstein at the number listed above to discuss what options you may have.