Sexual harassment tax law

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This site uses cookies to store information on your computer. Some are essential to make our site work; others help us improve the user experience. By using the site, you consent to the placement of these cookies. Among the many changes to the Code is a provision regarding fees associated with sexual harassment settlements if the settlements include a nondisclosure agreement. The implications of this change in law are significant, perhaps even for individual taxpayers. Unlike many of the changes to individual tax in the TCJA, this disallowance is permanent.
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Taxation of sexual harassment settlements post-TCJA

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A foolish sexual harassment provision in the tax law - Washington Times

With the help of two of my colleagues, Steven Nofziger and Miriam Korngold, we will do this in a series of bite-size blog posts. Our goal is to not only review the technical elements of the new law, but to offer practical insights that will be helpful to tax practitioners and their clients. Many of the provisions of the TCJA have already received significant attention by the media. Rather than start our multi-part series with any of those provisions, we decided to commence the journey with a discussion about a rather obscure provision of the new law.
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Know Your Rights at Work

By Paul S. Drizner and Michael D. Seyfarth Synopsis: The new Tax Act prohibits employers from deducting payments to individuals alleging sexual harassment or sexual abuse if the settlement or payment requires the Claimant to execute a nondisclosure agreement. The MeToo movement continues to have a significant impact on all employers, forcing human resource professionals to review their protocols for preventing, reporting and investigating sexual harassment claims.
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Some employers may attempt to structure a settlement to avoid language indicating the underlying cause of the suit or claim to avoid the classification of the settlement as a one containing sexual harassment or sexual abuse allegations. Further, the prohibition against the tax deduction would apply even if the sexual harassment complaint is a parallel claim to, say, a racial or religious discrimination claim. The new law also fails to address situations where the alleged perpetrator is terminated and a severance agreement is executed.
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