This bill changes the federal tax code to make most payments (damages) people receive because of a sexual act or sexual contact not taxable. It excludes from gross income any damages received on account of those sexual acts or contact, except for punitive damages. The bill uses the definitions of "sexual act" and "sexual contact" from 18 U.S.C. section 2246. It says damages count as on account of a sexual act or contact if the court judgment or settlement agreement says so. The bill also says a lack of medical records cannot be used to deny that the damages were for a sexual act or contact. The rule applies to judgments and agreements made after the law takes effect, with special timing rules for first payments and replacement agreements. The Treasury Secretary must run a public awareness program, working with the Justice Department office on violence against women and other federal agencies.
If you receive a judgment or settlement that pays you money because of a sexual act or sexual contact, those non-punitive damages would not have to be reported as taxable income, provided the judgment or agreement states the damages are for that reason. Punitive damages are still taxable. A court order or settlement that says the payment is for sexual act/contact is treated as sufficient proof, and the bill prevents taxing authorities from denying the tax exclusion just because there are no medical records. The rule applies to judgments and agreements made after the law goes into effect, with special rules about first payments and replacement agreements.
No publicly available information on the federal budgetary cost or revenue effects of this bill. The bill does require the Treasury Secretary (or delegate), in consultation with the Department of Justice Office on Violence Against Women and other agencies, to run a public awareness program about the tax exclusion, which could involve administrative costs, but no cost details are provided in the text.
No publicly available information.
No publicly available information.