Legislature(2003 - 2004)
04/14/2003 01:01 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 64-PURCHASE OF STRUCTURED SETTLEMENTS CHAIR SEEKINS announced HB 64 to be up for consideration. MR. PAUL LABOLLE, staff to Representative Foster, said HB 64 sets up state oversight to the transfer of structured settlements. There are three primary reasons to do this. One is consumer protection. In this state, we've had factoring companies acquiring structured settlements from payees at discounted rates as low as 20 cents on the dollar. Once that happens, on top of that, they now have to pay tax, whereas as a structured settlement in and of itself is a tax free settlement. What this does is move you into the next reason, which is the good of the state. Structured settlements are primarily set up to keep a disabled person who can't work in a flow of income so that they do not become a burden on the state. If the transfer is made and they run out of money, that person now becomes a burden on the state and the second reason that this is good for the state is many of these structured settlements are written in a way that makes them non transferable and currently we have transfers happening that are technically legal, but there is no state oversight. So, nobody is watching what is happening. The third reason is that it conforms to federal tax law, which came out last year and imposes a 40 percent prohibitive tax on structured settlement transfers unless they are approved by a qualified order, which is issued by a state. SENATOR OGAN asked for an example of a structured settlement. MR. LABOLLE replied that in most cases, they are a personal injury settlement, like from a car crash. SENATOR OGAN asked if some operators are preying on people. MR. LABOLLE replied they have a lot of anecdotal evidence of that, but that is not happening currently because of the federal tax law, which has effectively put a halt on any transfers because of the 40 percent tax on the discounted value. SENATOR OGAN asked why there is no fiscal note. MR. LABOLLE explained there is a zero fiscal note because the Alaska State Court does not anticipate there to be enough to justify a cost and the numbers would be absorbed into the normal workload. CHAIR SEEKINS said he believes the legislation has merit. SENATOR THERRIAULT asked if the federal law prohibiting any transfers was in place until the state stepped in. MR. LABOLLE replied that is correct and referenced the Tax Law in Chapter 55 of Public Law 107-134, Section (a). SENATOR THERRIAULT motioned to pass CSHB 64(JUD) from committee with attached fiscal notes. There was no objection and it was so ordered.
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