Bill Introduced to Exempt Trafficking Survivors’ Restitution from Federal Taxes
by John Cornyn on January 18, 2019 at 8:57 AM
This week, Senate Finance Committee Ranking Member Ron Wyden (D-OR) and I introduced the Human Trafficking Survivor Tax Relief Act (S. 169), which would exempt civil damages, restitution, and other monetary awards given to human trafficking survivors from federal income taxes.
Survivors of human trafficking often have to relive their abuses when they pursue justice. This legislation provides relief to survivors without the fear of being penalized or audited. It would also allow survivors who go through civil proceedings to receive the same treatment as those compensated through the criminal justice system. The last thing survivors should expect is to get stuck with a bill from the IRS.
“Human trafficking survivors are faced with unfair and unnecessary obstacles when trying to seek justice against their abusers,” said Sen. Wyden.“This legislation ends tax penalties on survivors, which will help them afford the legal costs of punishing individuals who have committed such heinous crimes. I’m proud to be a part of this bipartisan measure and will continue to fight this form of modern-day slavery.”
Senators Tom Carper (D-DE), Rob Portman (R-OH), Amy Klobuchar (D-MN), and Shelley Moore Capito (R-WV) joined as original cosponsors of the Human Trafficking Survivor Tax Relief Act. Representatives Brad Schneider (D-IL-10), Kenny Marchant (R-TX-24), Terri Sewell (D-AL-07), and Jason Smith (R-MO-08) introduced similar legislation in the U.S. House of Representatives.
Under the Internal Revenue Code, civil damages awarded to human trafficking victims are considered taxable income. This legislation would exempt civil damages from federal income taxes, allowing survivors to file their taxes without worry of penalties or fees for not reporting awarded damages as income. It also would provide parity between criminal restitution, which is tax-exempt, and civil damages, which are not. Often, human trafficking survivors’ only recourse to pursue justice against traffickers is through civil litigation.
The Human Trafficking Survivor Tax Relief Act is supported by End Child Pornography and Trafficking (ECPAT), the National Association to Protect Children, the Coalition Against Trafficking in Women (CATW), Rights4Girls, Shared Hope International, the National Children’s Alliance, the Polaris Project, Freedom Network USA, the Alliance to End Slavery and Trafficking (ATEST), and the Coalition to Abolish Slavery & Trafficking (CAST).