H.R. 2347 — Survivor Justice Tax Prevention Act, as amended
Executive Summary
The Survivor Justice Tax Prevention Act amends the Internal Revenue Code to explicitly exclude civil damages (excluding punitive damages) awarded for sexual abuse or sexual contact from a taxpayer's gross income. Under current IRS interpretation, settlement damages are generally taxable unless the victim can prove 'observable bodily harm,' creating a traumatic burden of proof for survivors of sexual abuse where physical injuries may not be documented or visible. This bill removes that requirement, shifts the burden of proof in favor of the taxpayer if a settlement explicitly cites sexual abuse, and mandates a public awareness campaign by the Treasury and DOJ to ensure survivors know their tax rights.
Arguments For
- Argument 1: Corrects a widely criticized IRS interpretation that taxes settlements for sexual abuse unless the victim can prove 'observable bodily harm,' preventing the tax code from re-traumatizing survivors.
- Argument 2: Highly bipartisan appeal; provides members with a clear, compassionate legislative win that supports survivors of institutional abuse and harassment without creating massive new federal spending programs.
Likely Supporters
Arguments Against
- Argument 1: Could create a tax loophole where plaintiffs and defendants in non-physical injury lawsuits (e.g., general hostile work environment, emotional distress) strategically classify settlements as 'sexual contact' to avoid taxation.
- Argument 2: Reduces federal tax revenues marginally by exempting a specific class of legal settlements from gross income.
Likely Opponents
📋 Key Provisions
- Amends IRC Sec. 104(a)(2) to exclude damages received on account of a sexual act or sexual contact from gross income.
- Clarifies that the tax exclusion applies regardless of whether there are medical records or observable physical injuries.
- Establishes that if a settlement agreement or decision states damages are for sexual abuse, it serves as credible evidence, shifting the burden of proof to the IRS under Section 7491(a).
- Directs the Treasury Secretary and DOJ Office on Violence Against Women to conduct a public awareness campaign regarding this tax exclusion.
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Verification Guide
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Excludes damages for sexual acts or contact from gross income.
"any sexual act (as defined in para"
Applies whether or not there are medical records or observable injuries.
"so in effect), whether or not there are medical"
Shifts burden of proof if agreement states damages are for sexual acts.
"such statement shall be treated as credible"
Mandates public awareness campaign by Treasury and DOJ.
"Federal agencies, shall conduct a program to promote"