Taxes. The second thing in the oft-quoted sardonic/cynical short list of things that are certain in this life. If and when the settlement of an employment discrimination claim is discussed, consideration must be given to the tax implication of any such settlement, both to the payor employer and payee employee. (For this purpose a tax…Read More Employment Settlement Subject to Taxation; Did Not Qualify For Section 104(a)(2) “Personal Physical Injuries or Physical Sickness” Exclusion
Today, November 3, 2020, is (among other things) “National Sandwich Day.” Popularized in 18th century England by the 4th Earl of Sandwich, the sandwich has become a staple of the American lunch and an integral part of American pop culture. You may be wondering why I put the word “sandwich” in quotation marks in the…Read More Happy National “Sandwich” Day!
The IRS has addressed and clarified an ambiguity in a recently-enacted tax law that relates to deductions of attorney fees in sexual harassment cases, where a nondisclosure agreement is in play. Section 162(q) of the Internal Revenue Code provides: (q) Payments related to sexual harassment and sexual abuse No deduction shall be allowed under this…Read More IRS Clarifies Ambiguity in New Deduction Section Relating to Confidential Settlements in Sexual Harassment Cases
Buried within the Tax Cuts and Jobs Act (signed into law on Dec. 22, 2017) is a provision, at Sec. 13307, titled “Denial of Deduction for Settlements Subject to Nondisclosure Agreements Paid in Connection With Sexual Harassment or Sexual Abuse”. This section amends Internal Revenue Code (26 U.S.C.) 162 by adding a new section, section 162(q),…Read More Sexual Harassment Settlements Affected By New Tax Law
In Noel v. New York State Off. of Mental Health Cent. New York Psychiatric Ctr., 10-3483-CV, 2012 WL 3764527 [2d Cir. Aug. 31, 2012], the Second Circuit held that back pay and front pay awards under Title VII of the Civil Rights Act of 1964 are “wages” subject to mandatory tax withholding. From the Court’s…Read More Second Circuit Holds That Title VII Back and Front Pay Awards Are “Wages” Subject to Tax Withholding