S. 584

119 S584 IS: Tax Fairness for Survivors Act
 U.S. Senate
 2025-02-13
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 EN
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 II  119th CONGRESS  1st Session  S. 584  IN THE SENATE OF THE UNITED STATES   February 13, 2025   Mrs. Gillibrand  (for herself and  Mrs. Blackburn ) introduced the following bill; which was read twice and referred to the  Committee on Finance    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.
1.
Short title
This Act may be cited as the   Tax Fairness for Survivors Act  .
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.