CONGRESSIONAL RECORD— Extensions of Remarks E1421 HON
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July 24, 1998 CONGRESSIONAL RECORD Ð Extensions of Remarks E1421 (e.g., serious medical emergency for a family action. This regulatory authority is provided NATIONAL WEATHER SERVICEÐ member). In addition, as a threshold matter, to enable Treasury to address issues raised OVER 200 YEARS OF FORECAST- the transfer of structured settlement pay- regarding the treatment of future periodic ING, WARNING AND PROTECTING ment rights must be permissible under appli- payments received by the structured settle- THE AMERICAN PEOPLE cable law, including State law. The Act is ment recipient where only a portion of the not intended by way of the hardship excep- payments have been factored away, the tion to the excise tax or otherwise to over- treatment of the lump sum received in a fac- HON. TIM ROEMER ride any Federal or State law prohibition or toring transaction qualifying for the hard- OF INDIANA restriction on the transfer of the payment ship exception, and the treatment of the IN THE HOUSE OF REPRESENTATIVES rights or to authorize factoring of payment lump sum received in the non-hardship situa- rights that are not transferable under Fed- tion. It is intended that where the require- Thursday, July 23, 1998 eral or State law. For example, the States in ments of section 130 are satisfied at the time Mr. ROEMER. Mr. Speaker, I rise to bring to general prohibit the factoring of workers' the structured settlement is entered into, my colleagues' attention the outstanding work compensation benefits. In addition, the State the existence of the hardship exception to laws often prohibit or directly restrict trans- the excise tax under the Act shall not be of the National Weather Service. Especially fers of recoveries in various types of personal construed as giving rise to any concern over during this red-hot summer, we should ac- injury cases, such as wrongful death and constructive receipt of income of the injured knowledge the tremendous work of the Na- medical malpractice. victim at the time of the structured settle- tional Weather Service to observe, predict, The relevant court for purposes of the ment. forecast and warn the American people of hardship exception would be the original 4. Tax Information Reporting Obligations With weather events. court which had jurisdiction over the under- Respect to a Structured Settlement Factoring The National Weather Service, as part of lying action or proceeding that was resolved Transaction by means of the structured settlement. In the National Oceanic and Atmospheric Admin- the event that no action had been brought The Act would clarify the tax reporting ob- istration [NOAA] of the Department of Com- prior to the settlement, the relevant court ligations of the person making the struc- merce, utilizes a wide variety of tools, from would be that which would have had jurisdic- tured settlement payments in the event that low-tech to state of the art technology to accu- tion over the claim that is the subject of the a structured settlement factoring trans- rately predict and forecast what will happen in structured settlement or which would have action occurs. The Act adopts a new section our skies today, tomorrow, and beyond. jurisdiction by reason of the residence of the of the Code that is intended to govern the It was suggested earlier today that the Na- structured settlement recipient. In those payor's tax reporting obligations in the tional Weather Service doesn't have sufficient limited instances in which an administrative event of a factoring transaction. records of past weather conditions to be able authority adjudicates, resolves, or otherwise In the case of a court-approved transfer of has primary jurisdiction over the claim (e.g., to put this summer's heat wave in proper his- structured settlement payments of which the torical perspective. I would like to remind my the Vaccine Injury Compensation Trust person making the payments has actual no- Fund), the hardship matter would be the tice and knowledge, the fact of the transfer colleagues that the NOAA has the world's province of that applicable administrative and the identity of the acquirer clearly will largest active archive of weather data. Not authority. be known. Accordingly, it is appropriate for only can they tell you what the weather was 3. Need to Protect Tax Treatment of Original the person making the structured settlement in the 1950's, they can tell you what the tem- Structured Settlement payments to make such return and to fur- perature and conditions were during the early In the limited instances of extraordinary nish such tax information statement to the days of the republic. and unanticipated hardship determined by new recipient of the payments as would be How do we now that? The NOAA's National court order to warrant relief under the hard- applicable under the annuity information re- Climatic Data Center has Benjamin Franklin's porting procedures of Code section 6041 (e.g., ship exception, adverse tax consequences handwritten observations of the heat and hu- should not be visited upon the other parties Form 1099±R), because the payor will have to the original structured settlement. in ad- the information necessary to make such re- midity of a Philadelphia summer over 200 dition, despite the anti-assignment provi- turn and to furnish such statement. years ago. sions included in the structured settlement Despite the anti-assignment restrictions Not only does the NOAA have an incredible agreements and the applicability of a strin- applicable to structured settlements and the store of historical data, they are receiving 55 gent excise tax on the factoring company, applicability of a stringent excise tax, there gigabytes of new weather information each there may be a limited number of non-hard- may be a limited number of non-hardship dayÐthe equivalent of 18 million pages a day. ship factoring transactions that still go for- factoring transactions that still go forward. Armed with this wealth of historical data, ward. If the structured settlement tax rules In these instances, if the person making the and constantly added to and refined with the under I.R.C. §§ 72, 130 and 461(h) had been sat- structured settlement payments has actual incorporation of new satellite and computer in- isfied at the time of the structured settle- notice and knowledge that a structured set- formation, the National Weather Service cre- ment, the original tax treatment of the tlement factoring transaction has taken other parties to the settlementÐi.e., the set- place, the payor would be obligated to make ates computer models. These models reflect tling defendant (and its liability insurer) and such return and to furnish such written the heritage of past weather systems, to accu- the Code section 130 assigneeÐshould not be statement to the payment recipient at such rately forecast tomorrow's weather. So when jeopardized by a third party transaction that time, and in such manner and form, as the the National Weather Service says its going to occurs years later and likely unbeknownst to Secretary of the Treasury shall by regula- be hot tomorrow in South Bend, or Dallas or these other parties to the original settle- tions provide. In these instances the payor St. Louis, you can count on it. ment. may have incomplete information regarding Accordingly, the Act would clarify that if I commend the NOAA and the NWS on their the factoring transaction, and hence a tai- outstanding work on behalf of the American the structured settlement tax rules under lored reporting procedure under Treasury I.R.C. §§ 72, 130, and 461(h) had been satisfied regulations is necessary. people. f at the time of the structured settlement, the The person making the structured settle- section 130 exclusion of the assignee, and sec- ment payments would not be subject to any tion 461(h) deduction of the settling defend- AMERICA FACES THREAT FROM A tax reporting obligation if that person BALLISTIC MISSILE ATTACK ant, and the Code section 72 status of the an- lacked such actual notice and knowledge of nuity being used to fund the periodic pay- the factoring transaction. ments would remain undisturbed. That is, the assignee's exclusion of income Under the Act, the term ``acquirer of the HON. NEWT GINGRICH under Code section 130 arising from satisfac- structured settlement payment rights'' OF GEORGIA tion of all of the section 130 qualified assign- would be broadly defined to include an indi- IN THE HOUSE OF REPRESENTATIVES vidual, trust, estate, partnership, company, ment rules at the time the structured settle- Thursday, July 23, 1998 ment was entered into years earlier would or corporation. not be challenged. Similarly, the settling de- The provision of section 3405 regarding Mr. GINGRICH. Mr. Speaker, as former fendant's deduction under Code section 461(h) withholding would not apply to the person Secretary of Defense Donald Rumsfeld point- of the amount paid to the assignee to assume making the structured settlement payments ed out earlier this week, America faces a very the liability would not be challenged. Fi- in the event that a structured settlement real and serious threat from a ballistic missile nally, the status under Code section 72 of the factoring transaction occurs. attack. The bipartisan Rumsfeld commission annuity being used to fund the periodic pay- 5. Effective Date unanimously concluded that the threat is much ments would remain undisturbed. The Act provides the Secretary of the The provisions of the Act would be effec- greater and the warning time available to de- Treasury with regulatory authority to clar- tive with respect to structured settlement fend against that threat is much shorter than ify the treatment of a structured settlement factoring transactions occurring after the the Clinton administration has admitted.