Section 1 Short title
This Act may be cited as the “Tax Fairness for Survivors Act”.
Tax Fairness for Survivors Act
A BILL
To amend the Internal Revenue Code of 1986 to exclude from gross income any judgments, awards, and settlements with respect to sexual assault or sexual harassment claims, and for other purposes.
Sec. 2 Exempting from Federal income taxation payments allocable to sexual assault or sexual harassment claims
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—Gross income shall not include any amount received as a judgment, award, or settlement (including back pay, front pay, punitive damages, or any payments made in connection with a release of claims or to resolve, settle, or litigate claims), whether by lump sum or periodic payments, from—
“(1) a dispute involving 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 dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, State, or local law, including common law claims permitted under 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, such as compensation for services performed.”
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.”
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.”
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.”
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.”
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:
Effective date— The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.