H.R. 1306 — Tax Fairness for Survivors Act

This section provides the short title of the Act as the “Tax Fairness for Survivors Act.”

This section exempts from federal income tax amounts received as judgments, awards, and settlements for sexual assault or sexual harassment claims, including backpay, frontpay, punitive damages, attorney’s fees, and payments made to resolve or settle claims. It adds new section 139J to the Internal Revenue Code of 1986 to exclude from gross income amounts received by an individual in connection with (1) a claim involving the individual as the victim of an alleged nonconsensual sexual act or sexual contact, as defined under 18 U.S.C. § 2246 or similar applicable Tribal, State, or local law, including when the victim lacks capacity to consent, or (2) a claim involving conduct alleged to constitute sexual harassment under applicable Federal, Tribal, State, or local law. It also directs the Secretary of the Treasury to issue regulations and guidance to distinguish covered amounts from other payments. The section further conforms the Social Security tax, Railroad Retirement Tax Act, Federal Unemployment Tax Act, and wage withholding rules to the new exclusion by adding amounts excludable under section 139J to the list of payments not treated as wages or compensation under 26 U.S.C. §§ 3121, 3231, 3306, and 3401. The amendments apply to taxable years beginning after the date of enactment.