A qualified settlement fund (QSF) is defined under 26 U.S.C. 468B, as a fund, account or trust that meets all three of the following criteria:
a) Established pursuant to an order of a governmental authority and subject to continuing jurisdiction of that authority;
b) Established to resolve any and all claims resulting from an event (or related events) that gave rise to the claim(s); and
c) Defined as a trust under applicable state law or the assets of the fund are segregated from the other assets of the transferor/ defendant.
QSFs are subject to tax at the same rate as the maximum allow-able tax for trusts.The Settlement Fund Administrator pays taxes quarterly and files the annual income tax return for the fund.
