H.R. 2884 -a bill titled "Victims of Terrorism Tax Relief Act of 2001" that President Bush signed into law on January 22,2002 -now provides 100% tax exemption for the recipients who must sell their structured settlement payments to address unanticipated financial needs.

As we have detailed elsewhere in a document titled Will I be taxed if I have to sell my structured settlement due to hardship?, this bill does require the recipients to conclusively demonstrate to the court that they are indeed faced with significant unanticipated hardships that would justify them to consider trading off their periodic payments revenue stream in lieu of a lump sum payment.

The term Structured Settlement usually means an arrangement 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; an agreement for the periodic payment of compensation under any workers' compensation act that is excludable from the gross income of the recipient under section 104(a)(1).

The term Periodic Payments usually refers to payments that are of the character described in subparagraphs (A) and (B) of section 130(c)(2), and 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.