This proposed tax plan modification would deny companies deductions on sexual harassment settlements


An amendment to the tax reform bill working its method by Congress would deny companies the flexibility to put in writing off sexual harassment settlements as enterprise bills.

The Senate tax invoice, handed by the Senate Finance Committee Thursday, contains an modification that claims companies can not deduct settlements, payouts, lawyer charges or different bills associated to sexual harassment or sexual abuse, if such funds are topic to a nondisclosure settlement.

The modification was proposed by New Jersey Democratic Senator Bob Menendez.

The proposal might have an effect on sexual harassment settlements in a few methods. Companies would now not be allowed to put in writing off authorized settlements, fines and different bills related to sexual assault and harassment as “extraordinary and obligatory enterprise bills.” And by denying these deductions, the modification would make it costlier for firms to cowl up misconduct.

“Proper now an organization can secretly settle allegations of sexual harassment within the office, silencing the sufferer and making it tougher for different victims to return ahead to hunt justice,” wrote Juan Pachon, spokesperson for Menendez, in an e-mail to CNNMoney. “So as to add insult to damage, these similar firms can really take a tax break for these payouts. Senator Menendez believes it is improper for firms who fail to guard their workers from sexual harassment to have the ability to write it off as an ‘extraordinary enterprise expense.”

The same modification to the Home tax invoice was proposed by Colorado Republican Consultant Ken Buck earlier this week, however was not included within the remaining model of the Home invoice handed by your entire Home on Thursday.

“As Congress rethinks our tax code, we have to rethink the way in which we deal with Hollywood by eliminating the enterprise expense deduction for hush cash related to sexual assault and sexual harassment instances,” Buck wrote in a press release Tuesday.

Related: The words we use to describe sexual harassment

The proposed modification would create transparency, in keeping with Lauren Chief-Chivee, CEO and co-founder of All in Collectively, a non-partisan girls’s group. Chief-Chivee applauded the modification’s give attention to non-disclosure agreements, which advocates say play a key position in masking up incidents of sexual harassment.

However, she says, tax deductions is not going to unravel a number of the major issues plaguing harassment victims.

“At this level, something we will do to carry establishments accountable [helps],” she says. However “it does not change a number of the core points, round secrecy and reporting. I would like to see firms are required, as an example, of their annual experiences to checklist any settlement, make public any settlement or conduct-based settlement.”

Daniel Hemel, assistant professor of regulation on the College of Chicago regulation faculty, says the modification’s particular point out of non-disclosure agreements appears meant to disincentivize them — a transfer that stops in need of banning their use altogether.

“It is a fairly gentle punishment if you happen to’re making an attempt to discourage closed agreements,” he says. “I might consider this as largely symbolic laws, however not completely so. It might change the way in which that some subset of sexual harassment instances are dealt with. However look, if an employer has a really sturdy desire for a closed settlement, then the tax deduction is unlikely to persuade them to have an open settlement.”

CNNMoney (New York) First revealed November 17, 2017: three:26 PM ET





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