Senator James Lankford (R-OK) joined Senators John Cornyn (R-TX) and Ron Wyden (D-OR) to introduce the Human Trafficking Survivor Tax Relief Act, which would exempt civil damages, restitution, and other monetary awards given to human trafficking survivors from federal income taxes. It would also codify current Internal Revenue Service (IRS) guidance that makes restitution payments made to survivors in criminal cases free from federal income taxes.
"Americans who survive the abhorrence of human trafficking have already had to overcome great trials," said Lankford. "They should not be penalized by disparities or discrepancies in the US tax code. This bill relieves that uncertainty and provides clarity that survivors of human trafficking do not have to pay federal income taxes on damages they are awarded, whether through civil or criminal cases."
"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," said Cornyn. "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 face many hurdles in securing justice against their abusers," said Wyden. "This legislation exempts critical financial relief from federal taxes, ensuring survivors have resources to rebuild their lives."
They are joined by Senators Tom Carper (D-DE), Rob Portman (R-OH), Tim Scott (R-SC), Kyrsten Sinema (D-AZ), and Roger Wicker (R-MS) as cosponsors of the Human Trafficking Survivor Tax Relief Act.
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 through IRS Notice 2012-12, and civil damages, which are not. Often, human trafficking survivors' only recourse to pursue justice against traffickers is through civil litigation. Finally, the bill codifies IRS Notice 2012-12, ensuring that restitution payments made in criminal case remain tax-free.
The Human Trafficking Survivor Tax Relief Act is supported by the Freedom Network USA, the Polaris Project, & Rights4Girls. Other organizations who have supported past efforts include the End Child Pornography and Trafficking (ECPAT), the National Association to Protect Children, the Coalition Against Trafficking in Women (CATW), Shared Hope International, the National Children's Alliance, Freedom Network USA, the Alliance to End Slavery and Trafficking (ATEST), and the Coalition to Abolish Slavery & Trafficking (CAST).