< Back to S. 1360 (111th Congress, 2009–2010)

Text of the Civil Rights Tax Relief Act of 2009

This bill was introduced on June 25, 2009, in a previous session of Congress, but was not enacted. The text of the bill below is as of Jun 25, 2009 (Introduced).

Source: GPO

II

111th CONGRESS

1st Session

S. 1360

IN THE SENATE OF THE UNITED STATES

June 25, 2009

(for himself and Ms. Collins) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to exclude from gross income amounts received on account of claims based on certain unlawful discrimination and to allow income averaging for backpay and frontpay awards received on account of such claims, and for other purposes.

1.

Short title

This Act may be cited as the Civil Rights Tax Relief Act of 2009.

2.

Exclusion from gross income for amounts received on account of certain unlawful discrimination

(a)

In general

Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to items specifically excluded from gross income) is amended by inserting after section 139C the following new section:

139D.

Amounts received on account of certain unlawful discrimination

(a)

In general

(1)

Exclusion

Gross income does not include amounts received by a claimant (whether by suit or agreement and whether as lump sums or periodic payments) on account of a claim of unlawful discrimination.

(2)

Amounts covered

For purposes of paragraph (1), the term amounts does not include—

(A)

backpay or frontpay, as defined in section 1302(b),

(B)

punitive damages, or

(C)

such amounts allowed as a deduction under this chapter.

(b)

Unlawful discrimination defined

For purposes of this section, the term unlawful discrimination has the meaning given such term by section 62(e).

.

(b)

Clerical amendment

The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 139C the following new item:

Sec. 139D. Amounts received on account of certain unlawful discrimination.

.

(c)

Effective date

The amendments made by this section shall apply to amounts received in taxable years beginning after December 31, 2009.

3.

Limitation on tax based on income averaging for backpay and frontpay received on account of certain unlawful employment discrimination

(a)

In general

Part I of subchapter Q of chapter 1 of the Internal Revenue Code of 1986 (relating to income averaging) is amended by adding at the end the following new section:

1302.

Income from backpay and frontpay received on account of certain unlawful employment discrimination

(a)

General rule

If employment discrimination backpay or frontpay is received by a taxpayer during a taxable year, the tax imposed by this chapter for such taxable year shall not exceed the sum of—

(1)

the tax which would be so imposed if—

(A)

no amount of such backpay or frontpay were included in gross income for such year, and

(B)

no deduction were allowed for such year for expenses (otherwise allowable as a deduction to the taxpayer for such year) in connection with making or prosecuting any claim of unlawful employment discrimination by or on behalf of the taxpayer, plus

(2)

the product of—

(A)

the number of years in the backpay period and frontpay period, and

(B)

the amount by which the tax determined under paragraph (1) would increase if the amount on which such tax is determined were increased by the average annual net backpay and frontpay amount.

(b)

Definitions

For purposes of this section—

(1)

Employment discrimination backpay or frontpay

The term employment discrimination backpay or frontpay means backpay or frontpay receivable (whether as lump sums or periodic payments) on account of a claim of unlawful employment discrimination.

(2)

Unlawful employment discrimination

The term unlawful employment discrimination has the meaning provided the term unlawful discrimination in section 139D(b).

(3)

Backpay and frontpay

The terms backpay and frontpay mean amounts includible in gross income in the taxable year—

(A)

as compensation which is attributable—

(i)

in the case of backpay, to services performed, or that would have been performed but for a claimed violation of law, as an employee, former employee, or prospective employee before such taxable year for the taxpayer’s employer, former employer, or prospective employer; and

(ii)

in the case of frontpay, to employment that would have been performed but for a claimed violation of law, in a taxable year or taxable years following the taxable year; and

(B)

which are—

(i)

ordered, recommended, or approved by any governmental entity to satisfy a claim for a violation of law, or

(ii)

received from the settlement of such a claim.

(4)

Backpay period

The term backpay period means the period during which services are performed (or would have been performed) to which backpay is attributable. If such period is not equal to a whole number of taxable years, such period shall be increased to the next highest number of whole taxable years.

(5)

Frontpay period

The term frontpay period means the period of foregone employment to which frontpay is attributable. If such period is not equal to a whole number of taxable years, such period shall be increased to the next highest number of whole taxable years.

(6)

Average annual net backpay and frontpay amount

The term average annual net backpay and frontpay amount means the amount equal to—

(A)

the excess of—

(i)

employment discrimination backpay and frontpay, over

(ii)

the amount of deductions that would have been allowable but for subsection (a)(1)(B), divided by

(B)

the number of years in the backpay period and frontpay period.

.

(b)

Clerical amendment

The table of sections for part I of subchapter Q of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 1301 the following new item:

Sec. 1302. Income from backpay and frontpay received on account of certain unlawful employment discrimination.

.

(c)

Effective date

The amendments made by this section shall apply to amounts received in taxable years beginning after December 31, 2009.

4.

Income averaging for backpay and frontpay received on account of certain unlawful employment discrimination not to increase alternative minimum tax liability

(a)

In general

Section 55(c) of the Internal Revenue Code of 1986 (defining regular tax) is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following:

(3)

Coordination with income averaging for amounts received on account of employment discrimination

Solely for purposes of this section, section 1302 (relating to averaging of income from backpay or frontpay received on account of certain unlawful employment discrimination) shall not apply in computing the regular tax.

.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2009.