September 01, 2015

Civil Justice Tax Fairness Act

Bipartisan legislation supported by the ABA was introduced Sept. 17 in both the House and Senate that would promote tax fairness in the treatment of civil rights and employment cases by excluding non-economic damages from gross income and eliminating the taxation for lump-sum recoveries at artificially high rates. Unlike victims of personal injury, victims who prevail on civil rights and employment-related claims must pay taxes on non-economic damages and are required to pay taxes on potentially many years of income in one year when they receive lump sum payment settlements. S. 3550 − introduced by Sens. Susan Collins (R-Maine) and Ben Cardin (D-Md.) − and H.R. 2059 − introduced by Reps. John Lewis (D-Ga) and Jim Sensenbrenner (R-Wis.) − address this discrimination. The legislation, knows as the Civil Justice Tax Fairness Act, would treat non-economic damages in discrimination cases in the same manner as comparable damages in personal injury cases and allow income averaging for discrimination victims who receive settlements or awards of several years of frontpay or backpay in one year. The ABA, which has urged enactment of similar legislation for more than a decade, maintains that current tax laws penalize victims of discrimination under all federal, state and local laws that provide for the enforcement of civil rights or regulate the employment relationship. The proposal is supported by an array of organizations, including the National Employment Lawyers Association, the Association of Corporate Counsel, the Leadership Conference on Civil and Human Rights, and AARP.Bipartisan legislation supported by the ABA was introduced Sept. 17 in both the House and Senate that would promote tax fairness in the treatment of civil rights and employment cases by excluding non-economic damages from gross income and eliminating the taxation for lump-sum recoveries at artificially high rates. Unlike victims of personal injury, victims who prevail on civil rights and employment-related claims must pay taxes on non-economic damages and are required to pay taxes on potentially many years of income in one year when they receive lump sum payment settlements. S. 3550 − introduced by Sens. Susan Collins (R-Maine) and Ben Cardin (D-Md.) − and H.R. 2059 − introduced by Reps. John Lewis (D-Ga) and Jim Sensenbrenner (R-Wis.) − address this discrimination. The legislation, knows as the Civil Justice Tax Fairness Act, would treat non-economic damages in discrimination cases in the same manner as comparable damages in personal injury cases and allow income averaging for discrimination victims who receive settlements or awards of several years of frontpay or backpay in one year. The ABA, which has urged enactment of similar legislation for more than a decade, maintains that current tax laws penalize victims of discrimination under all federal, state and local laws that provide for the enforcement of civil rights or regulate the employment relationship. The proposal is supported by an array of organizations, including the National Employment Lawyers Association, the Association of Corporate Counsel, the Leadership Conference on Civil and Human Rights, and AARP.

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