PART 157—EXCISE TAX ON STRUCTURED SETTLEMENT FACTORING TRANSACTIONS Authority: 26 U.S.C. 7805. Section 157.6001-1 also issued under 26 U.S.C. 6001; Section 157.6011-1 also issued under 26 U.S.C. 6011; Section 157.6061-1 also issued under 26 U.S.C. 6061; Section 157.6071-1 also issued under 26 U.S.C. 6071; Section 157.6081-1 also issued under 26 U.S.C. 6081(a); Section 157.6091-1 also issued under 26 U.S.C. 6091; Section 157.6060-1 also issued under 26 U.S.C. 6060(a); Section 157.6109-1 also issued under 26 U.S.C. 6109(a); Section 157.6109-2 also issued under 26 U.S.C. 6109(a); Section 157.6161-1 also issued under 26 U.S.C. 6161; Section 157.6695-1 also issued under 26 U.S.C. 6695(b). Source: T.D. 9134, 69 FR 41193, July 8, 2004, unless otherwise noted. Subpart A—Tax on Structured Settlement Factoring Transactions § 157.5891-1 Imposition of excise tax on structured settlement factoring transactions. (a) In general. (b) Exceptions for certain approved transactions In general. (2) Qualified order dispositive. (c) Definitions Applicable state statute (i) A statute that is enacted by the state in which the payee of the structured settlement is domiciled and provides for the entry of an order, judgment, or decree described in paragraph (c)(4)(i) of this section; or (ii) If there is no such statute, a statute that— (A) Is enacted by the state in which either the party to the structured settlement (including an assignee under a qualified assignment under section 130) or the person issuing the funding asset for the structured settlement is domiciled or has its principal place of business; and (B) Provides for the entry of such an order, judgment, or decree. (2) Applicable state court (3) Factoring discount (i) The aggregate undiscounted amount of structured settlement payments being acquired in the structured settlement factoring transaction; over (ii) The total amount actually paid by the acquirer to the person from whom such structured settlement payments are acquired. (4) Qualified order (i) Finds that the transfer of structured settlement payment rights does not contravene any Federal or state statute, or the order of any court or responsible administrative authority, and is in the best interest of the payee, taking into account the welfare and support of the payee's dependents; and (ii) Is issued under the authority of an applicable state statute by an applicable state court, or is issued by the responsible administrative authority (if any) which has exclusive jurisdiction over the underlying action or proceeding which was resolved by means of the structured settlement. (5) Responsible administrative authority (6) State (7) Structured settlement (i) That is established by— (A) Suit or agreement for the periodic payment of damages excludable from the gross income of the recipient under section 104(a)(2); or (B) Agreement for the periodic payment of compensation under any workers' compensation law excludable from the gross income of the recipient under section 104(a)(1); and (ii) Under which the periodic payments are— (A) Of the character described in section 130(c)(2)(A) and (B); and (B) Payable by a person who is a party to the suit or agreement or to the workers' compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130. (8) Structured settlement factoring transaction (i) The creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution in the absence of any action to redirect the structured settlement payments to such institution (or agent or successor thereof) or otherwise to enforce such blanket security interest as against the structured settlement payment rights; or (ii) A subsequent transfer of structured settlement payment rights acquired in a structured settlement factoring transaction. (9) Structured settlement payment rights (d) Coordination with other provisions of the Internal Revenue Code In general. (2) No withholding of tax. (e) Effective dates. see See Subpart B—Procedure and Administration § 157.6001-1 Records, statements, and special returns. (a) In general. (b) Notice by the IRS requiring returns, statements, or the keeping of records. (c) Retention of records. § 157.6011-1 General requirement of return, statement, or list. Every person liable for tax under section 5891 must file a return with respect to the tax in accordance with the forms and instructions provided by the Internal Revenue Service. § 157.6060-1 Reporting requirements for tax return preparers. (a) In general. (b) Effective/applicability date. [T.D. 9436, 73 FR 78462, Dec. 22, 2008] § 157.6061-1 Signing of returns and other documents. Any return, statement, or other document required to be made with respect to a tax imposed by chapter 55 (Structured Settlement Factoring Transactions) of the Internal Revenue Code or the regulations under chapter 55 must be signed by the person required to file the return, statement, or other document, or by the persons required or duly authorized to sign in accordance with the regulations, forms, or instructions prescribed with respect to such return, statement, or document. An individual's signature on such return, statement, or other document shall be prima facie evidence that the individual is authorized to sign the return, statement, or other document. § 157.6065-1 Verification of returns. If a return, statement, or other document made under the provisions of chapter 55 (Structured Settlement Factoring Transactions) or of subtitle F of the Internal Revenue Code, or the regulations under those provisions with respect to any tax imposed by chapter 55, or the form and instructions issued with respect to such return, statement, or other document, requires that it shall contain or be verified by a written declaration that it is made under the penalties of perjury, it must be so verified by the person or persons required to sign such return, statement, or other document. In addition, any other statement or document submitted under any provision of chapter 55 or subtitle F, or the regulations under those provisions, with respect to any tax imposed by chapter 55 may be required to contain or be verified by written declaration that it is made under the penalties of perjury. § 157.6071-1 Time for filing returns. (a) In general. (b) Returns relating to structured settlement payment rights received before February 19, 2003. § 157.6081-1 Automatic extension of time for filing a return due under chapter 55. (a) In general. (b) Requirements. (1) Submit a complete application on Form 7004, “Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns,” or in any other manner prescribed by the Commissioner; (2) File the application on or before the date prescribed for filing the return with the Internal Revenue Service office designated in the application's instructions; and (3) Remit the amount of the properly estimated unpaid tax liability on or before the date prescribed for payment. (c) No extension of time for the payment of tax. (d) Termination of automatic extension. (e) Penalties. (f) Effective/applicability dates. [T.D. 9407, 73 FR 37370, July 1, 2008] § 157.6091-1 Place for filing returns. The return required by § 157.6011-1 (relating to returns of tax with respect to structured settlement factoring transactions) must be filed at the place specified in the forms and instructions provided by the Internal Revenue Service. § 157.6107-1 Tax return preparer must furnish copy of return or claim for refund to taxpayer and must retain a copy or record. (a) In general. (b) Effective/applicability date. [T.D. 9436, 73 FR 78462, Dec. 22, 2008] § 157.6109-1 Tax return preparers furnishing identifying numbers for returns or claims for refund. (a) In general. (b) Effective/applicability date. [T.D. 9436, 73 FR 78462, Dec. 22, 2008] § 157.6151-1 Time and place for paying of tax shown on returns. The tax under chapter 55 (Structured Settlement Factoring Transactions) of the Internal Revenue Code shown on any return must, without assessment or notice and demand, be paid at the time and place specified in the forms and instructions provided by the Internal Revenue Service. For provisions relating to the time and place for filing such return, see § 157.6071-1 and § 157.6091-1. For provisions relating to the extension of time for paying the tax, see § 157.6161-1. § 157.6161-1 Extension of time for paying tax. (a) In general Tax shown or required to be shown on return. (2) Extension of time for filing distinguished. (b) Certain rules relating to extension of time for paying income tax to apply. § 157.6165-1 Bonds where time to pay tax has been extended. If an extension of time for payment is granted under section 6161, the Internal Revenue Service may, if it deems necessary, require a bond for the payment, in accordance with the terms of the extension, of the amount with respect to which the extension is granted. However, the bond shall not exceed double the amount with respect to which the extension is granted. For provisions relating to the form of bonds, see the regulations under section 7101 contained in part 301 (Regulations on Procedure and Administration) of this chapter. § 157.6694-1 Section 6694 penalties applicable to tax return preparer. (a) In general. (b) Effective/applicability date. [T.D. 9436, 73 FR 78462, Dec. 22, 2008] § 157.6694-2 Penalties for understatement due to an unreasonable position. (a) In general. (b) Effective/applicability date. [T.D. 9436, 73 FR 78462, Dec. 22, 2008] § 157.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct. (a) In general. (b) Effective/applicability date. [T.D. 9436, 73 FR 78462, Dec. 22, 2008] § 157.6694-4 Extension of period of collection when preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters. (a) In general. (b) Effective/applicability date. [T.D. 9436, 73 FR 78462, Dec. 22, 2008] § 157.6695-1 Other assessable penalties with respect to the preparation of tax returns or claims for refund for other persons. (a) In general. (b) Effective/applicability date. [T.D. 9436, 73 FR 78463, Dec. 22, 2008] § 157.6696-1 Claims for credit or refund by tax return preparers. (a) In general. (b) Effective/applicability date. [T.D. 9436, 73 FR 78463, Dec. 22, 2008] § 157.7701-1 Tax return preparer. (a) In general. (b) Effective/applicability date. [T.D. 9436, 73 FR 78463, Dec. 22, 2008]