Whether or not annuity payments are taxed when sold to a structured settlement buyer depends on the nature of the annuity. In most cases, such a transfer is tax exempt under current Internal Revenue laws.
This said, there are many different kinds of annuities, and these are different from the kind of structured settlements that one may receive from a successful lawsuit or a large insurance settlement. An annuity may come from some type of monetary account or a life insurance policy. Annuities from a 401(k) or other retirement account are taxed as soon as you start drawing out the money at retirement, though they are tax-deferred while the worker is making contributions.
Keep in mind that unlike a structured settlement from a lawsuit, an annuity is an investment vehicle that the beneficiary contributes to over time, building a cash reserve from which s/he can receive regular payments later on (a good example is a life insurance policy).
There may or may not be tax penalties if you sell an annuity for cash. A great deal depends on the nature and source of the annuity, whether you are the original owner or received it as a gift or legacy. If you have questions about the tax liability associated with selling an annuity, it is strongly recommended that you consult with a tax attorney or CPA prior to contacting CBC.
CBC Settlement Funding can provide you with a lump sum cash payout for all or part of your annuity, provided you have the legal right to receive these payments and are legally competent to enter into a contract. We do not however offer tax advice.