**TAX TREATMENT OF				STRUCTURED SETTLEMENT ARRANGEMENTS**

Scheduled for a Hearing 

Before the

HOUSE WAYS AND MEANS

SUBCOMMITTEE ON OVERSIGHT

on March 18, 1999

Prepared by the Staff

of the

JOINT COMMITTEE ON TAXATION

March 16, 1999

JCX-15-99

----

**CONTENTS**
**INTRODUCTION
**I.  SUMMARY
**II.  PRESENT LAW AND BACKGROUND
**III.  DISCUSSION OF ISSUES
**IV.  DESCRIPTION OF PROPOSALS
	A.	President's Fiscal 2000 Budget Proposal	B.	H.R. 263, The Structured Settlement Protection Act

**INTRODUCTION
	The Subcommittee on Oversight of the House Ways and Means Committee hasscheduled a public hearing on March 18, 1999, on issues relating to the tax treatment ofstructured settlement arrangements.  This document,(1) prepared by the staff of the JointCommittee on Taxation, describes present law, background and issues relating to structuredsettlement arrangements, and describes recent proposals to alter the tax treatment of sucharrangements.

	Part I of this document is a summary of the discussions contained in the remainder of thepamphlet. Part II is a description of present law and background. Part III is a discussion of issuesrelating to structured settlement arrangements. Part IV describes recent proposals. 

**I.  SUMMARY
**Present law and background**

	A structured settlement arrangement generally provides for periodic payments asdamages in cases involving personal physical injuries or physical sickness, or for amountsreceived under workmen's compensation acts for personal injuries or sickness.  An exclusionfrom gross income is provided to the assignee of a liability in such a case for amounts receivedfor agreeing to the assignment, provided requirements are met relating to the payments.  Suchpayments generally are excludable from income by the recipient, whether received as a lump sumor as periodic payments.

**Discussion of issues**

	The economic benefit in the structured settlement arrangement, as compared to a lump-sum settlement, arises because the Federal government forgoes taxation of the earningscomponent of each year's annual payment.  Economists usually argue that such subsidies distortindividual choice and lead to inefficient outcomes.  Nevertheless, it can be argued that the choiceof the lump sum settlement may create an externality, that is, a cost to taxpayers at large, notborne by the individual who chooses the lump sum settlement.  Despite the implicit tax subsidy,the available evidence indicates that the majority of personal injury awards are paid as lump sumpayments, not through structured settlement arrangements.  

	An individual's  decision to sell his or her rights at a later date involves the samecomparison the individual makes in initially agreeing to a structured settlement arrangement inlieu of a lump sum payment.  The individual must weigh the value of the purchase price offeredcompared to the expected present discounted value of the income stream being sold.  Issuesarising from the transfer of structured settlement payment streams involve whether such sales areconsistent with the purpose of the tax provisions, whether consumer protection or consumerfreedom of economic choice is a more important policy, and whether the transfers should bestopped so as to eliminate present-law uncertainty as to their tax results.

**Description of proposals**

        **President's fiscal 2000 budget proposal**

	The President's proposal would impose an excise tax on any person acquiring a paymentstream under a structured settlement arrangement.  The amount of the excise tax would be 40percent of the difference between (1) the amount paid by the acquirer to the injured person and(2) the undiscounted value of the acquired income stream.  The excise tax would not be imposedif the acquisition were pursuant to a court order finding that the extraordinary and unanticipatedneeds of the original recipient of the payment stream render the acquisition desirable.

**H.R. 263, "The Structured Settlement Protection Act"**

	H.R. 263, "The Structured Settlement Protection Act" (106th Cong., 1st Sess.) wasintroduced by Mr. Shaw for himself, Mr. Stark, and others.  In general, H.R. 263 would impose atax on certain acquisitions of structured settlement payment streams, equal to 50 percent of theamount equal to the excess of (1) the aggregate undiscounted amount of structured settlementpayments being acquired, over (2) the total amount actually paid by the acquirer to the seller. H.R. 263 would provide an exception if the transfer is undertaken pursuant to the order of therelevant court or administrative authority finding that the extraordinary, unanticipated, andimminent needs of the structured settlement recipient or spouse or dependents render such atransfer appropriate.

**II.  PRESENT LAW AND BACKGROUND
	A structured settlement arrangement generally provides for periodic payments asdamages in cases involving personal physical injuries or physical sickness, or for amountsreceived under workmen's compensation acts for personal injuries or sickness.  Present lawprovides tax-favored treatment for structured settlement arrangements for these payments, undera provision enacted in 1983.(2)  In that legislation, the Periodic Payment Settlement Tax Act of1982, Congress expressed its reasons for making the change to the tax law:
Despite several revenue rulings that indicate that the Internal Revenue Service considersthat periodic payments as personal injury damages are excludable from the gross incomeof the recipient, the committee believes it would be helpful to taxpayers to providestatutory certainty in the area.  Likewise, the committee believes that a person whoundertakes an assignment of the liability for such payments from the person originallyliable should not include amounts received for doing so in gross income if those amountsare used merely to purchase certain types of property to specifically cover the liability.(3)
	Under the provision, an exclusion from gross income is provided for amounts receivedfor agreeing to a qualified assignment to the extent that the amount received does not exceed theaggregate cost of any qualified funding asset.(4)
	A qualified assignment means any assignment of a liability to make periodic payments asdamages (whether by suit or agreement) on account of a personal injury or sickness (in a caseinvolving physical injury or physical sickness), or as compensation under any workmen'scompensation act, provided the liability is assumed from a person who is a party to the suit oragreement, and the terms of the assignment satisfy certain requirements.   Generally, theserequirements are that (1) the periodic payments are fixed as to amount and time; (2) the paymentscannot be accelerated, deferred, increased, or decreased by the recipient; (3) the assignee'sobligation is no greater than that of the assignor; and (4) the payments are excludable by therecipient under Code section 104(a)(1) as amounts received under workmen's compensation actsas compensation for personal injuries or sickness or under Code section 104(a)(2) as damages onaccount of personal injuries or sickness.
	A qualified funding asset means an annuity contract issued by an insurance companylicensed in the United States, or any obligation of the United States, provided the annuitycontract or obligation meets statutory requirements.  An annuity that is a qualified funding assetis not subject to the rule requiring current inclusion of the income on the contract whichgenerally applies to annuity contract holders that are not natural persons (e.g., corporations) (sec.72(u)(3)(C)).  In addition, when the payments on the annuity are received by the structuredsettlement company and included in income, the company generally may deduct thecorresponding payments to the injured person, who, in turn, excludes the payments from his orher income (sec. 104).  Thus, neither the amount received for agreeing to the qualifiedassignment of the liability to pay damages, nor the income on the annuity that funds the liabilityto pay damages, generally is subject to tax.
	In addition to the exclusion provided under present law for the assignee of the liability, anexclusion is also accorded to the recipient of the payments of damages under a structuredsettlement arrangement.  Present law provides an exclusion from gross income for individuals foramounts received under workmen's compensation acts as compensation for personal injuries orsickness (sec. 104(a)1)).  An exclusion from gross income for individuals is also provided for theamount of any damages (other than punitive damages) received (whether by suit or agreementand whether as lump sums or as periodic payments) on account of personal physical injuries orphysical sickness (sec. 104(a)(2)).
	If a recipient of damages chooses to receive a lump sum payment, and then to invest ithimself, generally the earnings on the investment are includable in income.  For example, if therecipient uses the lump sum to purchase an annuity contract providing for periodic payments,then a portion of each payment under the annuity contract is includable in income, and thebalance is excludable under present-law rules based on the ratio of the individual's investment inthe contract to the expected return on the contract (sec. 72(b)).  By contrast, the periodicpayments received under a structured settlement arrangement as damages for personal physicalinjuries or physical sickness generally are fully excludable from the recipient's income (sec.104(a)(2)).
	The exclusion for the liability assignee requires that the payments to the injured personunder the qualified assignment cannot be accelerated, deferred, increased, or decreased by therecipient (sec. 130(c)(2)(B)).  Consistent with these requirements, it is understood that contractsunder structured settlement arrangements generally contain anti-assignment clauses.  It isunderstood, however, that injured persons may nonetheless be willing to accept discounted lumpsum payments from certain "factoring" companies in exchange for their payment streams.  Thetax effect on the parties of these transactions may not be clear under present law.
**III.  DISCUSSION OF ISSUES
**The economic benefit of structured settlement arrangements**

	Settlements in cases involving damages on account of personal injury or sicknessgenerally are paid in one of two ways.  The recipient (the plaintiff in the case) may receive alump sum settlement, or the recipient may agree to a structured settlement arrangement.   The useof a structured settlement arrangement creates an economic benefit.  To see this, consider thefollowing simple examples.

	Suppose an individual agrees to settle a personal injury claim for $100,000, and thisamount is paid to the individual as a lump sum (rather than used to fund a structured settlementarrangement for periodic payments).  The $100,000 is excludable from the gross income of therecipient.  The recipient could then use the $100,000 to purchase an annuity contract that, giventhe recipient's age and other relevant factors, would pay the recipient $10,000 per year for therest of his or her life.(5)  Under present law, a portion of each of the annual payments of $10,000 isincludible in the recipient's gross income. Generally, each annual payment is partially excludableas tax-free recovery of the investment in the contract (the $100,000 premium), and partiallyincludable based on the expected return on the investment in the annuity contract.  As a result,the net after-tax annual payment to the recipient is something less than $10,000.  For the sake ofthe example, assume the recipient's after-tax annual payment is worth $9,500.

	Alternatively, the defendant could have agreed to pay $100,000 to purchase a structuredsettlement arrangement.  Under the arrangement, the same annuity contract could be purchased. Under this alternative, the entire $10,000 annual payment would be tax-free to the recipient. Hence, the recipient would be better off.  Of course, the benefit of the exclusion of the entirepayment under the annuity contract need not accrue solely to the recipient.  Another possibleoutcome is that the defendant could spend somewhat less, say $95,000, and purchase an annuityas part of a structured settlement arrangement that would pay the recipient $9,500 (tax free)annually for the rest of his or her life.  Under this scenario, the recipient would be indifferent asbetween choosing the structured settlement arrangement and receiving a lump sum payment of$100,000 (as described in the preceding paragraph).(6)  However, the defendant would save$50,000 in expenditures to settle the case.

	As the examples make clear, the economic benefit in the structured settlementarrangement, as compared to a lump-sum settlement, arises because the Federal governmentforgoes taxation of the earnings component of each year's annual payment.  As such, present lawprovides a tax subsidy for the use of structured settlement arrangements.

**Public policy interest in tax subsidy for structured settlement arrangements**

	Economists usually argue that tax subsidies such as that accorded to structured settlementarrangements distort individual choice and lead to inefficient outcomes.  They argue that freechoice permits individuals to make the highest and most preferred use of economic resources.

	Nevertheless, it can be argued that the choice of the lump sum settlement may create anexternality, that is, a cost to taxpayers at large, not borne by the individual who chooses the lumpsum settlement.  This externality could arise as follows.  The amount of damages in a caseinvolving personal physical injuries or physical sickness may be based on the lifetime medicalneeds of the recipient.  If a recipient chooses a lump sum settlement, there is a chance that theindividual may, by design or poor luck, mismanage his or her funds so that future medicalexpenses are not met.  If the recipient exhausts his or her funds, the individual may be in theposition to receive medical care under Medicaid or in later years under Medicare.  That is, theindividual may be able to rely on Federally financed medical care in lieu of the medical care thatwas intended to have been provided by the personal injury award.  Such a "moral hazard"(7)potential may justify a subsidy to encourage the use of a structured settlement arrangement inlieu of a lump sum payment to the recipient, to reduce the probability that such individuals needto make future claims on these government programs.  Under the structured settlementarrangement, by contrast to the lump sum, it is argued that because the amount and period of thepayments are fixed at the time of the settlement, the payments are more likely to be available inthe future to cover anticipated medical expenses (assuming the payment stream is not transferredby the recipient).

	Some also may argue that it is appropriate for the government to induce injured personsto make choices to protect themselves.  They suggest that individuals often are poorly informedabout their medical needs and the cost of life-long care.

	Critics of this view counter that while it may be appropriate for the government to ensureactions in the best interests of minors and incompetent adults, that competent adults should befree to make their own choices, at no financial penalty.  Proponents of the tax subsidy note thatpresent law does not mandate a choice, but rather only offers a financial inducement.

**Utilization of structured settlement arrangements**

	Despite the implicit tax subsidy, the available evidence indicates that the majority ofpersonal injury awards are paid as lump sum payments, not through structured settlementarrangements.(8)  There are several possible explanations for this result.

	Recipients may have unrealistic or inaccurate information regarding their mortality riskand potential returns from investment.  If a recipient believes his life will be shorter thanactuaries estimate, or if he believes that he can generate investment returns greater than those thatappear to be offered under the structured settlement arrangement's annuity contract, he willestimate that the economic value of the lump sum payment is greater than the expected presentvalue of the structured settlement arrangement.  In a simple sense, the allure of a substantial one-time payment may be irresistible.

	Another possibility is that defendants' offers of structured settlement arrangements leaverecipients largely indifferent between a lump sum settlement and a structured settlementarrangement.  That is, in their offering of structured settlement arrangements, the defendants maybe trying to retain the entire tax benefit for themselves.  Because each recipient only negotiateswith one defendant, the recipient cannot comparison shop.  The defendant's motivation generallywould be to minimize the cost of attaining a settlement, and thus the defendant may have littleincentive to offer some of the tax benefit to the recipient.

**Why might an individual choose to sell rights to an existing structured settlementarrangement?**

	Some individuals who have elected structured settlement arrangements have later soldsome or all of the rights to their payments under the arrangement.  As time passes, individuals'needs and desires change.  Some individuals may find that technological change has enabledthem to receive the medical care they require on an on-going basis at a lower annual cost thanwhen they chose the structured settlement arrangement.  Other individuals may reason that theycould earn a higher annual income if they invested the funds themselves, such as by using theproceeds to start their own business.   An individual's  decision to sell his or her rights at a laterdate involve the same comparison the individual makes in initially agreeing to a structuredsettlement arrangement in lieu of a lump sum payment.  The individual must weigh the value ofthe purchase price offered compared to the expected present discounted value of the incomestream being sold.  The individual may choose to sell because, erroneously or correctly, hediscerns that either his mortality risk or his investment return will be different from thoseunderlying the existing structured settlement arrangement.  For example, if the individual hasreason to believe that his life span will be shorter than that assumed in the structured settlementarrangement, then the individual may prefer to sell the structured settlement payment stream sothat he can have larger annual payments, albeit for a shorter period of time.  The informedindividual will realize that in selling the structured settlement arrangement, he may well beconverting tax-free investment returns into taxable returns when invested by the individualoutside of the structured settlement arrangement.  It is also possible that a recipient may havemisunderstood at the time of entering into the structured settlement agreement that the then-current value of the payment stream was less than the total gross amount of the payments, andthe recipient may subsequently have come to understand that the value of deferred paymentsgenerally is no greater than the amount of the lump sum, at any particular time.

**Issues arising from transfer of structured settlement payment streams**

Consistency with purpose for tax subsidy of structured settlements.--Transfer of thepayment stream under a structured settlement arrangement arguably subverts the purpose of thestructured settlement provision of the Code to promote periodic payment for injured persons. Some argue that the real purpose of the provision is to protect injured persons by ensuring thatthey have a source of income even though their capacity to earn income may have beenimpaired.(9)  Further, subsequent purchases of the payment stream under a structured settlementarrangement by so-called "factoring" companies often occurs at deep discount.  It is argued thatthe potential for deep discounting of the value of the payment stream may financiallydisadvantage injured persons that the provision was designed, in part, to protect.  It could be saidthat the tax law already provides an incentive for structured settlement arrangements, and ifpractices have evolved that are inconsistent with this purpose, addressing them should be viewedas proper.

	On the other hand, if the market for the sale of rights to structured settlementarrangements is competitive, the seller should receive the full fair market value of his or herannuity.  If this is the case, a seeming deep discount may merely reflect the competitive market'spricing of the individual's mortality risk and the opportunity cost of investment funds.  Theseemingly large discount may only be such in comparison to the sum of an undiscounted streamof annuity payments.

Consumer protection and consumer sovereignty.-- Both the President's proposal and H.R.263 (described below) seek to discourage the subsequent sale of payment streams under astructured settlement arrangement by imposing an excise tax.  The President's proposal and H.R.263 arguably respond to the public policy concern of "moral hazard," with the result that coststhat would have been covered by the structured settlement payment stream are later thrust uponthe taxpaying public.  The President's proposal states that "recipients of structured settlementsare less likely than recipients of lump sum awards to consume their awards too quickly andrequire public assistance."(10)  The President's proposal also suggests that consumer protection isnecessary, suggesting that some individuals are willing to accept what are termed "heavilydiscounted lump sum payments."(11)

	By imposing the excise tax on the amount of the discount, rather than on the entireamount of the payment stream acquired, it could be said that H.R. 263 and the President's currentproposal are well targeted to the aspect of the transaction that could financially disadvantage theinjured person: the amount of the discount.  (By contrast, an earlier proposal in the President'sfiscal year 1999 budget would have imposed the excise tax on the entire amount of the paymentstream that was acquired.)  It could nevertheless be argued that acquirers still have an economicincentive to acquire payment streams, so long as the tax on the discount is less than the ratewhich would discourage the acquisition transactions completely.  Thus, if 40 percent (50 percentin the case of H.R. 263) is not the tax rate at which transactions could no longer be profitable forthe acquirers, it could be said that the provision does not achieve the purpose of protecting theinjured person by preventing the sale of the payment stream.  Conversely, if 40 percent or 50percent is that tax rate, then the proposals could be assessed as effective at achieving thatpurpose.  If transactions were to continue after imposition of the tax, sellers of payment streamswould be worse off than before the tax, because acquirers would discount more deeply thepurchase of the payment stream to achieve the same profit level they did before the tax.  Criticscould argue that if the tax rate is set at a level that does not totally discourage the transactions,then the proposal would fail to achieve its goal of protecting the original recipients of paymentstreams.

	Opponents of these proposals ask why, if the Code permits individuals to choose betweena lump sum payment and a structured settlement arrangement at the time of settlement of apersonal injury claim, the Code should discourage a subsequent reconsideration of that decision. They note that, in selling all or part of the payment stream from a structured settlementarrangement, the individual is left in a position similar to that he or she would have been in byinitially choosing a lump sum payment.  Opponents of the proposal argue that effectively lockingindividuals into a previously negotiated payment stream is antithetical to the normal rules thatapply in a market economy of permitting a fully informed individual to make a choice that he orshe deems to be in his or her best interest.  Generally in a market economy, consumer choice isgiven deference.

	Opponents may also argue that it is not the function of the tax law to prevent injuredpersons or their legal representatives from transferring rights to payment.  Arguably, consumerprotection and similar regulation is more properly the role of the States than of the Federalgovernment.

	Proponents of the proposal argue that choices may not be fully informed.  As discussedabove, if an individual has an unrealistic view of his or her mortality prospects and investmentopportunities, that individual may make a poor choice.

Elimination of uncertainty under present law.--An additional result of the proposals maybe to limit the uncertainty arising under present law from the acquisition with respect to the taxtreatment of payors under existing structured settlement arrangements.  H.R. 263 explicitlyprovides that the acquisition of the payment stream does not violate the requirement of present-law section 130 that the payments cannot be accelerated, deferred, increased, or decreased by therecipient (although the President's proposal does not explicitly so provide).

	On the other hand, it could be argued that limiting or stopping the acquisition transactionsthrough imposition of tax on them is not the most efficient way to provide certainty in the taxlaw.  Some argue, further, a subsequent transfer of a payment stream does not give rise toconstructive receipt of the value of the retained payment stream to the transferor under presentlaw, so there is no reason to believe that the exclusion for the assignee of the liability undersection 130 of the Code is jeopardized by the transfer. Thus, they argue, there is no need forlegislation to clarify this point.

**IV.  DESCRIPTION OF PROPOSALS
**A.  President's Fiscal 2000 Budget Proposal**

	The President's proposal would impose an excise tax on any person acquiring a paymentstream under a structured settlement arrangement.  The amount of the excise tax would be 40percent of the difference between (1) the amount paid by the acquirer to the injured person and(2) the undiscounted value of the acquired income stream.  The excise tax would not be imposedif the acquisition were pursuant to a court order finding that the extraordinary and unanticipatedneeds of the original recipient of the payment stream render the acquisition desirable.

	The proposal would be effective for acquisitions occurring after the date of enactment. No inference would be intended as the contractual validity of the acquisition transaction or itseffect on the tax treatment of any party other than the acquirer.

	The proposal is similar to a provision contained in the President's budget proposals forfiscal year 1999, except that under that proposal, the amount of the excise tax would have been20 percent of the consideration for acquiring the payment stream.

**B.  H.R. 263, "The Structured Settlement Protection Act"**

	H.R. 263, "The Structured Settlement Protection Act" (106th Cong., 1st Sess.) wasintroduced by Mr. Shaw for himself, Mr. Stark, and others.(12)  In general, H.R. 263 would imposea tax on certain acquisitions of structured settlement payment streams, equal to 50 percent of theamount equal to the excess of (1) the aggregate undiscounted amount of structured settlementpayments being acquired, over (2) the total amount actually paid by the acquirer to the seller.

	H.R. 263 provides that a tax is imposed on any person who acquires, directly orindirectly, structured settlement payment rights in a structured settlement factoring transaction atax equal to 50 percent of the factoring discount (as defined in the bill).  The bill provides anexception in the case of a structured settlement factoring transaction in which the transfer ofstructured settlement payment rights is (1) otherwise permissible under applicable law, and (2)undertaken pursuant to the order of the relevant court or administrative authority finding that theextraordinary, unanticipated, and imminent needs of the structured settlement recipient or spouseor dependents render such a transfer appropriate.  For this purpose, the bill defines a relevantcourt or administrative authority to mean the court or administrative authority that hasjurisdiction over the underlying action that was resolved by the structured settlement, or if noaction was brought, a court that would have such jurisdiction, or that has jurisdiction by reasonof the residence of the structured settlement recipient.

	The bill defines a structured settlement factoring transaction as a transfer of structuredsettlement payment rights (including portions of structured settlement payments) made forconsideration by means of sale, assignment, pledge, or other form of encumbrance or alienationfor consideration.

	Factoring discount is defined under the bill as the amount equal to the excess of (i) theaggregate undiscounted amount of structured settlement payments being acquired in thestructured settlement factoring transaction, over (ii) the total amount actually paid by the acquirerto the person from whom such structured settlement payments are acquired.

	The bill would specifically provide that the occurrence of a structured settlementfactoring transaction does not affect the tax treatment of the parties to the structured settlementunder Code sections 72, 130 and 461(h).  Thus, the bill would clarify that the exclusion for theassignee of the liability that is currently provided under section 130 would not be affected by thefactoring transaction.

	The bill would impose a reporting requirement on the person making the structuredsettlement payments.  The bill would be effective for structured settlement factoring transactionsoccurring after the date of enactment of the bill.
**FOOTNOTES**
1.   This document may be cited as follows: Joint Committee on Taxation,*Tax Treatmentof Structured Settlement Arrangements,* (JCX-15-99), March 16, 1999.
2.   P.L. 97-473, Jan. 14, 1983 (97th Cong., 2d Sess.).
3.   The rulings referred to in the committee report are Rev. Rul. 77-230, 1977-2C.B. 214;Rev. Rul. 79-220, 1977-2 C.B. 74, and Rev. Rul. 79-313, 1979-2 C.B. 75.  Report of the HouseCommittee on Ways and Means to accompany H.R. 5470, H.R. Rep. No 97-832, 97th Cong., 2dSess., 4; similar language appears in the Report of the Senate Committee on Finance toaccompany H.R. 5470, the Periodic Payment Settlement Act of 1982, S. Rep. No. 97-646, 97thCong., 2d Sess., 4.  The conference agreement followed the House bill.  Conference Report toaccompany H.R. 5470, the Periodic Payment Settlement Act of 1982, H. Rep. No. 97-984, 97thCong., 2d Sess., 12.
4.   Section 130 of the Internal Revenue Code of 1986 (the "Code").
5.     The seller of an annuity contract, usually an insurance company, invests the $100,000premium in a portfolio of assets such that the income from the assets and the spreading ofmortality risk across numerous individuals enables the seller to pay the recipient $10,000 peryear for life and generate some profit for the seller.
6.   The recipient would not be indifferent as between the lump sum and the structuredsettlement arrangement, however, if the present value of the structured settlement arrangementdiffers from the amount of the lump sum.
7.   "Moral hazard" generally refers to the situation where the insured through his or heractions can affect the probability with which an insurance payout will occur, or can affect thesize of the payout that will occur.
8.   See Insurance Services Office, Inc., *NAIC Closed Claim Survey for CommercialGeneral Liability*, "Survey Result,"1997, Table 15.  This study reports under a 1997 survey thatfor losses over $75,000, 215 claims out of a total of 1,763 claims, or 12.2 percent, usedstructured settlements (in lieu of another method of payment of the claim such as a lump sum). The *NAIC Closed Claim Survey for Commercial General Liability* was conducted by ISODATA, Inc., a wholly owned subsidiary of Insurance Services Office, Inc., under the auspices ofthe National Association of Insurance Commissioners ("NAIC"). The survey gatheredinformation on commercial general liability bodily injury claims, excluding medical malpractice.The large claim sample consisted of 1,763 claims that closed between July 1, 1997, and October31, 1997, with loss payments to the claimant of $75,000 or more. Twenty-nine insurers,representing 66 percent of the target general liability market, participated in the survey. 
9.   While the legislative history of the Periodic Payment Settlement Tax Act of 1982 doesnot explicitly so provide, a Senate floor statement by Senator Baucus, upon introduction ofsimilar legislation in 1981 (S. 1934, The Periodic Payment Settlement Act of 1981, 97th Cong.,1st Sess.), referred to the advantages of periodic payments over lump sums in that they "provideplaintiffs with a steady income over a long period of time and insulate them from pressures tosquander their awards."  Vol. 127, Part 23 Cong. Rec. 30462 (Dec. 10, 1981).
10.   Department of the Treasury, *General Explanations of the Administration's RevenueProposals*, February 1999, 192.
11. *Ibid*.
12.   The bill is similar to H.R. 4314 (105th Cong., 2d Sess.), introduced in 1998 by Mr.Shaw for himself, for Mr. Stark, and others, and also to S. 2543 (105th Cong., 2d Sess.),introduced in the Senate by Senator Chafee, for himself, for Senator Baucus, and others.********************