HR2347-119

What This Bill Does

The Survivor Justice Tax Prevention Act amends Internal Revenue Code section 104(a)(2) so survivors do not owe federal income tax on nonpunitive damages received because of sexual acts or sexual contact as defined in federal criminal law. The exclusion applies whether or not medical records or observable injuries exist. If a court decision or settlement agreement states that damages are on account of sexual act or sexual contact, that statement is credible evidence, and the taxpayer is treated as satisfying a procedural requirement for burden-of-proof shifting. The bill applies to amounts received under decisions made and agreements entered after enactment, with special timing rules for first payments and replacement agreements. It states that the amendment creates no inference about whether personal physical injuries or sickness include injuries without medical records. Treasury must promote public awareness of the exclusion in consultation with the Department of Justice Office on Violence Against Women and other agencies.

Who Benefits and How

Survivors receiving civil damages for sexual assault or sexual contact benefit because nonpunitive damages become excluded from federal gross income. Survivors without medical records or observable injuries benefit because the exclusion does not depend on that documentation. Plaintiffs and settlement recipients gain credible-evidence treatment when a judgment or agreement states the damages are tied to sexual acts or sexual contact. Victim advocates benefit from Treasury public-awareness work that can help survivors and attorneys identify the tax exclusion. Tax preparers and attorneys gain clearer statutory language for reporting covered damages.

Who Bears the Burden and How

The Internal Revenue Service and Treasury Department must administer the exclusion, issue awareness materials, and coordinate with the Department of Justice Office on Violence Against Women and other agencies. Federal revenue bears a cost because covered damages are not taxed as gross income. Defendants and settlement drafters may face pressure to specify whether damages are on account of sexual acts or sexual contact. Tax examiners must treat qualifying decision or agreement language as credible evidence. Agencies involved in public awareness must coordinate outreach to survivors, attorneys, and tax professionals.

Key Provisions

• Amends IRC section 104(a)(2) to exclude nonpunitive damages received on account of sexual acts or sexual contact.
• Provides that the exclusion applies whether or not medical records or observable injuries exist.
• Treats qualifying judgment or settlement language as credible evidence for the taxpayer.
• Applies the exclusion to amounts received under post-enactment decisions and agreements with special timing rules.
• Provides no inference about other personal physical injury or sickness tax rules.
• Directs Treasury to promote public awareness in consultation with the Justice Department Office on Violence Against Women and other agencies.