According to a recent change in the IRS tax code , "no deduction is allowed under section 162 for any settlement or payment related to sexual harassment or sexual abuse if it is subject to a non-disclosure agreement." That is IRS speak for unless a victim of sexual harassment is willing to go public, they are subject to income tax. As a general rule, personal injury settlements are not taxable.
Why is Congress and the IRS so interested in outing victims of sexual harassment and abuse? It goes back to an old ruling that only settlements involving physical injuries are tax free. So the IRS only gives a break to those whose sexual abuse includes physical injury and only if this physical injury is made clear in the settlement. Adding extra insult is that the victims must also pay tax on the portion of the settlement that goes to the attorneys. Leave it to the IRS to tax people for money they didn't receive.
A Conscious Conservative believes that Congress should change this code. So far, no bills to attempt the change have gotten any traction at all. Codes like this are just more proof of why the income tax is an arbitrary and barbaric form of taxation. I guess the "evil 1%" includes victims of sexual abuse who get large settlements.
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