IFS obtains a private letter ruling on taxable claims, non-qualifed business.

In some welcome news for the structured settlement market, the IFS group, Integrated Financial Settlements, announced last week that they had obtained a private letter ruling from the IRS on the use of a Non-Qualified annuity and assigment to resolve an employment claim. To those of us who do a lot of non-qualifed annuity work, this is big news. To those of you who don't do a lot, it probably comes as a surprise that this is the first PRL on taxable damage cases.

As many of us know, Allstate has always been the industry leader in Non-Qualified annuity work and has pioneered over the years the use of non-qualifed assignments on environmental cases, wrongful termination, defamation, sexual discrimination and other taxable damage cases. A lot of that work took place under the watchful eye and guidance of then Allstate employee John McColluch, who created a lot of the concepts and programs on taxable cases that many people take for granted. It is no surprise then that IFS getting this private letter ruling occurred a year or so after John left Allstate and went to work for IFS. John now holds the position of Vice President of Market development for EPS, one of the IFS companies, and he co-authored the private letter ruling on structuring taxable damage cases and using a non-qualified assignment to transfer liability for future payments. 

As I've been saying on this blog and my various talks around the country, the single biggest area of opportunity for the structured settlement industry is taxable damage cases. We have done a multitude of podcasts on this issue, largely on molestation cases, which are taxable, environmental cases, wrongful termination and age discrimination and other work place torts and in each case we have extolled the virtue of structuring these awards. Now with this PLR maybe some of the timid sheep of the structured settlement markets who refuse to develop non-qualified annuity contracts and assignments for use in taxable cases will get off the fence and start offering these to broker and attorneys. Really, other then Allstate, Prudential and to a lesser degree Aviva have been working to grow this area and the life markets now need to get off their hands and go after this area of business. I really wish the life markets would stop sitting on their wallets and spend the money to develop products, ideas and markets, or spring for the cost of the PLR's, necessary to grow new annuity concepts and markets. It's one of the ironies of our business that brokers like IFS, or in my case Wahlstrom & Associates and The Settlement Channel, are the companies spending large sums of money to grow the business when we have billion dollar life companies sitting nervously on the side line and wondering why the business doesn't grow.

We will be having John McColluch on Speaking of Settlements later this month to discuss this in greater detail. In the mean time you can read the IFS press release by clicking here to get a little more back ground.