Not normally. In 1979, the IRS Revenue Ruling 79-220 stated that structured settlements, including all earned interest, were tax-exempt. This was enshrined in law in the 1982 Periodic Payment Settlement Tax Act. However, this doesn't apply to certain cases (e.g. discrimination, wrongful imprisonment and sexual abuse where no physical injury was proven) nor does it apply to punitive damages. In these cases, tax will be applied when payments are made. Nevertheless, all structured settlements grow on a tax-deferred basis, meaning that the earnings made from their investment accumulates and compounds tax-free. In most cases, the tax status of the structured settlement is preserved after a sale. This is providing the correct legal process has been observed and there have been no changes to the agreement.