SECTION 1. MODIFICATION OF QUALIFIED ORDER REQUIREMENTS FOR APPROVED 
              TRANSACTIONS.

    (a) In General.--Subparagraph (A) of section 5891(b)(2) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of clause (i) and by adding at the end the following new clause:
                            ``(iii) satisfies the requirements of 
                        paragraph (5), and''.
    (b) Transaction Requirements.--Subsection (b) of section 5891 of 
such Code is amended by redesignating paragraph (5) as paragraph (6) 
and by inserting after paragraph (4) the following new paragraph:
            ``(5) Transaction requirements.--
                    ``(A) In general.--A transfer of structured 
                settlement payment rights shall be treated as 
                satisfying the requirements of this paragraph only if 
                the transfer meets the following requirements:
                            ``(i) The annual discount rate of the 
                        consideration for the transfer, determined by 
                        taking into account charges, fees, and other 
                        expenses, does not exceed the prime rate plus 5 
                        percentage points.
                            ``(ii) The aggregate amount of charges, 
                        fees, and other expenses payable by the payee 
                        do not exceed 2 percent of the value of the 
                        consideration to the payee (net of such 
                        charges, fees, and other expenses).
                            ``(iii) The payee is not liable for any 
                        penalty, and will not forfeit any amounts 
                        already paid or incurred, if the transfer does 
                        not satisfy the requirements of this paragraph.
                            ``(iv) The transferee has given written 
                        notice of the transferee's name, address, and 
                        taxpayer identification number to the annuity 
                        issuer and the structured settlement obligor 
                        and has filed a copy of such notice with the 
                        State court or responsible administrative 
                        authority issuing the qualified order.
                            ``(v) The transfer is fair and reasonable.
                            ``(vi) Not later than 5 days, and not 
                        earlier than 15 days, before the date on which 
                        the payee first incurs any obligations with 
                        respect to the transfer, the transferee 
                        provides to the payee a disclosure statement 
                        which sets forth in a clear and conspicuous 
                        manner the following:
                                    ``(I) The remaining amounts payable 
                                and payment dates under the structured 
                                settlement.
                                    ``(II) The aggregate of such 
                                amounts.
                                    ``(III) The discounted present 
                                value of the structured settlement 
                                payment rights determined by using a 
                                discount rate equal to the applicable 
                                Federal rate, compounded annually.
                                    ``(IV) A statement of the total 
                                consideration made in exchange for the 
                                structured settlement payment rights.
                                    ``(V) An itemized list of all 
                                charges, fees, and other expenses 
                                payable by the payee, or deductible 
                                from the gross amount otherwise payable 
                                to the payee, with respect to the 
                                transfer.
                                    ``(VI) The value of consideration 
                                to the payee net of the charges, fees, 
                                and other expenses described in 
                                subclause (V).
                                    ``(VII) The quotient (expressed as 
                                a percentage) of the amount of net 
                                consideration described in subclause 
                                (VI) divided by the discounted present 
                                value of the structured settlement 
                                payment rights determined under 
                                subclause (III).
                                    ``(VIII) The annual discount rate 
                                of the consideration for the transfer 
                                determined by taking into account 
                                charges, fees, and other expenses.
                                    ``(IX) The amount of any penalties 
                                (including any liquidated damages) 
                                payable by the payee in the case of any 
                                breach of the transfer agreement by the 
                                payee.
                    ``(B) Prime rate.--For purposes of this paragraph, 
                the term `prime rate' means the bank prime rate for the 
                first day of the month in which the transfer agreement 
                is executed, as published in the Federal Reserve 
                Statistical Release on selected interest rates (daily 
                or weekly), and commonly referred to as the H.15 
                release (or any successor publication).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to structured settlement factoring transactions (as defined in 
section 5891 of such Code) entered into later than 180 days after the 
date of the enactment of this Act.
Amends the Internal Revenue Code, with respect to the tax exemption for structured settlement factoring transactions (i.e., transfers of the right to receive periodic payments under a settlement of a legal claim for damages in exchange for a lump sum payment)&nbsp;to require that&nbsp;court orders approving such transfers include additional requirements, including that: (1)&nbsp;the annual discount rate of the consideration for&nbsp;a transfer does not exceed the prime interest rate plus 5%; (2) the aggregate amount of charges, fees, and other expenses payable by the payee of the lump sum&nbsp;payment&nbsp;do not exceed 2% of the value of the consideration to the payee; (3) the payee is not liable for any penalty or forfeiture if the transfer does not satisfy the additional requirements imposed by this Act; (4) the transferee (the entity receiving the right to the periodic payments)&nbsp;has given written notice of its name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of such notice with the state court or other authority issuing the&nbsp;order approving the transfer; (5) the transfer is fair and reasonable; and (6) the transferee makes certain disclosures to the payee.
To amend the Internal Revenue Code of 1986 to strengthen the rules for approved structured settlement factoring transactions.