There are two tax questions here and they are routinely mixed up. The first is whether the payments you receive are taxable, which turns on what the settlement was for. The second is what selling them does, which is where a federal excise tax enters and where this site is careful to point at an adviser rather than answer.
The payments themselves
Where a structured settlement resolves a claim for personal physical injury or physical sickness, the periodic payments are generally received free of federal income tax, and that favourable treatment is a large part of why structures are used at all. Settlements for other kinds of claim - employment, punitive damages, interest - are treated differently. Which category yours falls into is a question about your own settlement documents and one an adviser should read rather than a website.
The excise that applies to the buyer
a federal excise tax falls on a person who acquires structured settlement payment rights in a factoring transaction unless the transfer is approved in advance in a qualified order, and the section is quoted in full on the United States row of the record. That charge falls on the buyer rather than on you, but it is the reason every buyer insists on the court process, and it is worth knowing that the incentive runs that way.
What a Texas court has to find
Texas puts the requirement in the form of an effectiveness rule rather than a penalty. No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee unless the transfer has been approved in advance in a final court order based on express findings by the court. Those findings include the best interest of the payee, taking into account the welfare and support of the payee's dependents, and that the payee was advised in writing to seek independent professional advice.
Questions people ask about are structured settlements taxable
Does a court really have to approve this?
Yes, in every state. The federal exception in 26 U.S.C. 5891(b) applies only where the transfer was approved in advance in a qualified order finding it is in the best interest of the payee, taking into account the welfare and support of the payee's dependents.
What is the single biggest variable in the price?
The discount rate, and after that how far in the future the payments fall due. The reported range across the market is between 9% and 18%.
Do you take a share of what I get?
No. Buyers pay a flat fee for the enquiry itself, never a share of the discount and never anything contingent on a transfer completing.