Tax Fairness for Survivors Act
Officially: “Tax Fairness for Survivors Act” Read the full text
What it does
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1Short title
This section would allow this Act to be referred to as the "Tax Fairness for Survivors Act."
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1. Short title This Act may be cited as the Tax Fairness for Survivors Act .
2Exempting from Federal income taxation payments allocable to sexual assault or sexual harassment claims
This section would add a new section 139J to the Internal Revenue Code. Under the new section, an individual's gross income would not include any amount received as a judgment, award, or settlement, including back pay, front pay, punitive damages, reimbursement of attorney's fees, or any payments made in connection with a release of claims or to resolve or settle claims, whether paid as a lump sum or in periodic payments, when the amount comes from either: (1) a claim in which the individual was the victim of an alleged nonconsensual sexual act or sexual contact, as those terms are defined in section 2246 of title 18 of the United States Code, or under similar Tribal, State, or local law, including cases where the victim lacked the capacity to consent, or (2) a claim involving conduct alleged to be sexual harassment of the individual under applicable Federal, Tribal, State, or local law. The section would require the Secretary of the Treasury to issue regulations or other guidance needed to carry out this exclusion, including guidance to distinguish the excluded amounts from other amounts received as part of the same judgment, award, or settlement. The section would also amend other parts of the tax code so that any amount excludable from gross income under new section 139J would not count as wages for Social Security payroll tax purposes, would not count as compensation for railroad retirement tax purposes, would not count as wages for federal unemployment tax purposes, and would not count as wages subject to federal income tax withholding. It would add a listing for the new section 139J to the Internal Revenue Code's table of sections for part III of subchapter B of chapter 1. These amendments would apply to taxable years beginning after the date this Act is enacted.
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2. Exempting from Federal income taxation payments allocable to sexual assault or sexual harassment claims (a) In general Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting before section 140 the following new section: 139J. Amounts received as judgments, awards, and settlements with respect to sexual assault or sexual harassment claims (a) In general In the case of an individual, gross income shall not include any amount received as a judgment, award, or settlement (including back pay, front pay, punitive damages, reimbursement of attorney's fees, or any payments made in connection with a release of claims or to resolve or settle claims), whether by lump sum or periodic payments, from— (1) a claim involving such individual as the victim of an alleged nonconsensual sexual act or sexual contact, as such terms are defined in section 2246 of title 18, United States Code, or similar applicable Tribal, State, or local law, including when the victim lacks capacity to consent, or (2) a claim involving conduct that is alleged to constitute sexual harassment of such individual under applicable Federal, Tribal, State, or local law. (b) Regulations and guidance The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this section, including regulations or other guidance to distinguish amounts received in connection with a claim described in subsection (a) from other amounts received as part of a judgment, award, or settlement. . (b) Social security taxes Section 3121(a) of such Code is amended by striking or at the end of paragraph (22), by striking the period at the end of paragraph (23) and inserting ; or , and by inserting after paragraph (23) the following new paragraph: (24) any amount received which is excludable from the gross income of the employee under section 139J. . (c) Railroad retirement tax Section 3231(e) of such Code is amended by adding at the end the following new paragraph: (13) Amounts received as judgments, awards, and settlements with respect to sexual assault or sexual harassment claims The term compensation shall not include any amount received which is excludable from the gross income of the employee under section 139J. . (d) Unemployment taxes Section 3306(b) of such Code is amended by striking or at the end of paragraph (19), by striking the period at the end of paragraph (20) and inserting ; or , and by inserting after paragraph (20) the following new paragraph: (21) any amount received which is excludable from the gross income of the employee under section 139J. . (e) Wage withholding Section 3401 of such Code is amended by striking or at the end of paragraph (22), by striking the period at the end of paragraph (23) and inserting , or , and by inserting after paragraph (23) the following new paragraph: (24) any amount received which is excludable from the gross income of the employee under section 139J. . (f) Clerical amendment The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting before the item relating to section 140 the following new item: Sec. 139J. Amounts received as judgments, awards, and settlements with respect to sexual assault or sexual harassment claims. . (g) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Where it is
In the Senate.