Civil Rights Tax Relief Act


Amends the Internal Revenue Code to allow for non-economic damages received for an unlawful employment discrimination claim to be excluded from gross income, income averaging of back pay and front pay received from such claims, and an exemption to the alternative minimum tax (AMT) for any tax benefit resulting from the income averaging of amounts recieved from an unlawful employment


H.R. 3195 was referred to the House Committee on Ways and Means. S.1781 was read twice and referred to the Committee on Finance. (Died)

Our Position: Support

Lawsuits involving employment and civil rights laws are often difficult to settle because of the inequitable tax treatment of settlements and awards in these cases as required by current law. Parties in these lawsuits must take into account prior to settlement: 1) the tax an employee must pay on damages for non-economic harm that he or she suffered (e.g., due to egregious sexual harassment); and 2) the tax on lump sum recoveries for multiple years of back pay, which are unfairly taxed entirely in the year of receipt. The Act would address these inequities.