Updated: Jul 30
Wrongful Convictions Tax Relief Act - Now All Damages Are Tax Free.
After years of effort we are pleased to report that pursuant to the just enacted "Wrongful Convictions Tax Relief Act" - All Damages In Wrongful Incarceration Cases Are Now Tax Free!
The recently passed “Tax Extender Package” included the Wrongful Convictions Tax Relief Act. With this act, which amends the Internal Revenue Code by creating new Code Section 139F, individuals who were wrongfully incarcerated and recover monetary damages can now exclude all damages from taxation. Prior to this act being passed, such individuals who suffered physical
injuries and/or physical illness during their incarceration could exclude damages for their physical injuries and illness, provided they sought such relief in their complaints and could substantiate via infirmary/hospital/medical records that such injuries and/or illness occurred.
What does this mean for you and your client? In brief, the new tax code provision eliminates the need to prove that your client was physically injured while wrongfully incarcerated. It also potentially avoids issues of allocation between different types of damages.
One important CAUTION is in order. Until congress amends Code Section 130 to allow for Qualified Assignments of damages paid under Section 139F, we will still have to base structured settlements with Section 130(c) Qualified Assignments on physical injuries or illness under the personal physical injury exclusion from taxes found in Section 104(a)(2). Non-Qualified Assignments, however, can be used without further congressional action. “Buy and Hold” annuities (where defendant makes no assignment at all) may also be utilized provided the life insurers in the structured settlement industry are willing to issue annuities in Section 139F cases without an assignment
Creative Capital - The Authority in Utilizing Structured Settlements in Wrongful Incarceration Cases
After a wrongful incarceration, individuals are faced with numerous re-entry challenges including how to prepare for and secure their future after receiving a settlement.
A leader in the industry for over 30 years, your Creative Capital team has extensive experience in wrongful incarceration cases and is here to assist you and your clients by ensuring a tailor made future periodic payment plan is designed to provide financial security for your clients and their loved ones.
When an individual has been wrongfully incarcerated there is no way to give them back the time they have lost, but with the Creative Capital team on their side, we can ensure that their future is secure. At no cost to you or your client, our team of legal and Structured Settlement experts is here to answer your questions and assist on any Wrongful Conviction/Wrongful Incarceration cases you have.