Smucker, Moore Introduce Bipartisan Survivor Justice Tax Prevention Act

Under current law and practice of the Internal Revenue Service (IRS), payments for damages awarded on account of personal physical injuries or physical sickness are exempt from gross income for federal income tax purposes. In implementing the requirement of a "physical injury" the IRS has imposed a standard that the victim must show visible physical conditions such as bruising, cuts or bleeding for the settlement to qualify for tax-free treatment. The observable harm standard can be especially difficult to meet and unfair in circumstances of sexual assault or sexual contact where such physical injuries may not be visible or have healed.

Representatives Smucker and Moore's legislation narrowly expands current law to help survivors of sexual assault or unwanted sexual contact by tying the IRS tax exemption to the definitions of sexual act and sexual contact in federal criminal code.

"This legislation provides certainty for survivors of sexual assault and ensures that monetary settlements are exempt from federal income tax. I encourage my colleagues to stand with survivors by supporting this narrowly tailored legislation. I want to thank Rep. Gwen Moore for joining me in introducing this legislation," said Rep. Lloyd Smucker (PA-11).

The legislation is supported by a number of organizations who are calling for the legislation to be passed without delay.

"On behalf of the thousands of courageous survivors of gender-based violence that the YWCA network supports each year, I applaud Representatives Lloyd Smucker and Gwen Moore for championing this legislation to provide certainty to all victims of sexual violence that monetary settlements are exempt from federal income tax," said YWCA USA CEO Margaret Mitchell. "We stand with survivors in all their steps of healing and this thoughtful and bipartisan bill is a helpful step."

"On behalf of the members of the American Association of Settlement Consultants (AASC), whose professional efforts protect injured parties' long term financial interests, we are grateful for the leadership of Reps. Smucker and Moore in advancing the commonsense and bipartisan Survivor Justice Tax Prevention Act. Their efforts to support survivors are deserving of praise. We call on their colleagues to support this legislation which should be advanced without delay," said AASC President Joanna Wynes and AASC President-Elect Louis Masry.

"As a survivor and advocate, I've seen firsthand how civil judgments provide a rare form of justice that can help survivors reclaim some control over their lives and begin to heal," said Grace French, founder and president of the Army of Survivors. "But taxing these settlements forces survivors to give back part of what they sacrificed so much to attain. This legislation will allow us to receive full settlements, unencumbered by tax burdens that devalue the painful journey to justice. It's a crucial step in helping survivors move forward with dignity, knowing they have the financial support they deserve."

"Sexual assault and unwanted sexual contact are pervasive, devastating problems in our country and it can be extremely challenging to seek justice," said MomsRising Elyssa Schmier, Vice President of Government Relations. "Those who do so successfully, and win the settlements they deserve, should not have those settlements taxed simply because their injuries are not visible or observable. That's an unacceptable, harmful double standard that we must end. So America's moms thank Representatives Gwen Moore (D-WI) and Lloyd Smucker (R-PA) for championing the Survivor Justice Tax Prevention Act, and urge Congress to pass it quickly."

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