Bill Introduced to Remove Taxes for Civil Sexual Harassment Settlements

According to a report from CBS 12 News, a Florida lawmaker has introduced a reform bill that seeks to remove federal taxes for civil sexual assault settlements. Congresswoman Lois Frankel (D-FL 22nd District) is a lead sponsor of the proposed legislation. Here, our Miami civil sexual assault claims attorney provides an overview of the law and the proposal from a key state lawmaker.

Background: Sexual Misconduct Settlements Taxed Without Proof of Physical Harm 

As a starting point, it is useful to understand how settlements are taxed by the Internal Revenue Service (IRS). A personal injury settlement is (generally) not taxable. The compensation is designed to make the victim “whole”—meaning putting them in the position that they would have been in had no accident ever happened. Here is the issue for sexual misconduct victims:

• Under current IRS rules, the damages received from a sexual harassment or sexual assault claim is taxable unless they are attributed to physical injuries or another physical ailment. In other words, if a settlement for sexual harassment does not include compensation for physical harm, the amount received is generally subject to income tax by the IRS.

 Lawmakers Introduce Tax Fairness for Survivors Act 

Congresswoman Lois Frankel is one of the lead sponsors of a bill to change the way our tax law works for sexual harassment and sexual assault settlements. She recently introduced the Tax Fairness for Survivors Act into Congress. It is a bipartisan proposal. The lead co-sponsor is Congresswoman Claudia Tenney (R-NY-24). As drafted, the legislation seeks to amend the tax treatment of settlements, awards, and judgments for survivors of sexual harassment and assault. As noted above, current law holds that a settlement/judgment for sexual abuse victims is taxable unless linked to a physical injury. The bill would make the compensation tax exempt. As explained by the co-sponsors, the Tax Fairness for Survivors Act seeks to recognize non-physical trauma and fix the unfairness of taxing compensation for such harrowing experiences​.

Bill has Bipartisan Support, Must Still Clear Hurdles to Become Law 

The Tax Fairness for Survivors Act is not yet law. Though, it does have some significant bipartisan support in congress. Still, there are a number of different legislative hurdles that must be cleared before the bill can be finalized into law. The process includes committee reviews, potential amendments, and votes in both the House of Representatives and the United States Senate. Only then would it go to the President’s desk for signing. To be sure, the bipartisan backing increases the chances for legislative success, but it certainly does not guarantee passage.

 Consult With Our West Palm Beach Civil Sexual Assault Lawyer Today

At Pike & Lustig, LLP, our West Palm Beach civil sexual assault attorney is compassionate, experienced, and committed to fighting for justice. Have questions about your rights? We can help. Contact us today for a free, confidential consultation. With offices in Miami and West Palm Beach, we represent sexual assault victims in the civil claims process throughout South Florida.

Source:

cbs12.com/news/local/new-bill-to-end-taxation-on-sexual-harassment-victims-florida-august-23-2024