Civil Rights Tax Relief Act introduced in House and Senate

Representatives John Lewis (D-GA) and James Sensenbrenner (R-WI) introduced the Civil Rights Tax Relief Act in 2009. This bill would provide that compensatory damages awarded in whistleblower and other cases would be excluded from the definition of “income” for income tax purposes, just as other personal injuries are excluded. The Civil Rights Tax Relief Act will also permit whistleblowers and civil rights plaintiffs to pay taxes based on the tax rates of the years the wages would have been earned but for the unlawful discrimination.

They have now reintroduced this bill as the Civil Rights Tax Relief Act of 2011, H.R. 3195. Last week, Senators Jeff Bingaman (D-NM) and Susan Collins (R-ME) introduced a companion bill, S. 1781.

This bill has positive outcomes for both employers and employees. The CRTRA will help employers by reducing the costs of employment and civil rights litigation by enabling more cases to be settled before trial. This will free up valuable court time for other cases. It also helps the employees by not requiring that they pay taxes on non-economic damages.

"The reintroduction of the CRTRA in both the House and the Senate is an excellent development and a great opportunity for Congress to level the playing field for employment plaintiffs who have to deal with illegal discrimination and pay higher taxes on their settlements or awards. We laud all the sponsors and look forward to making the CRTRA law," stated Bruce A. Fredrickson, who guided advocacy for the CRTRA on behalf of the National Employment Lawyers Association (NELA).

This bill failed to pass in the last session of Congress, but has the potential to pass this time around if enough people contact their representatives to advocate for it!

Intern Sravani Nichanamatlu wrote this blog entry.

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