[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 557 Introduced in Senate (IS)]
108th CONGRESS
1st Session
S. 557
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.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 6, 2003
Ms. Collins (for herself, Mr. Grassley, Mr. Bingaman, Mr. Cochran, Mr.
Daschle, Mr. Sarbanes, and Mr. Smith) 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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Civil Rights Tax Relief Act of
2003''.
SEC. 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 redesignating section 140 as section
140A and by inserting after section 139 the following new section:
``SEC. 140. 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), or
``(B) punitive damages.
``(b) Unlawful Discrimination Defined.--For purposes of this
section, the term `unlawful discrimination' means an act that is
unlawful under any of the following:
``(1) Section 302 of the Civil Rights Act of 1991 (2 U.S.C.
1202).
``(2) Section 201, 202, 203, 204, 205, 206, or 207 of the
Congressional Accountability Act of 1995 (2 U.S.C. 1311, 1312,
1313, 1314, 1315, 1316, or 1317).
``(3) The National Labor Relations Act (29 U.S.C. 151 et
seq.).
``(4) The Fair Labor Standards Act of 1938 (29 U.S.C. 201
et seq.).
``(5) Section 4 or 15 of the Age Discrimination in
Employment Act of 1967 (29 U.S.C. 623 or 633a).
``(6) Section 501 or 504 of the Rehabilitation Act of 1973
(29 U.S.C. 791 or 794).
``(7) Section 510 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1140).
``(8) Title IX of the Education Amendments of 1972 (29
U.S.C. 1681 et seq.).
``(9) The Employee Polygraph Protection Act of 1988 (29
U.S.C. 201 et seq.).
``(10) The Worker Adjustment and Retraining Notification
Act (29 U.S.C. 2102 et seq.).
``(11) Section 105 of the Family and Medical Leave Act of
1993 (29 U.S.C. 2615).
``(12) Chapter 43 of title 38, United States Code (relating
to employment and reemployment rights of members of the
uniformed services).
``(13) Section 1977, 1979, or 1980 of the Revised Statutes
(42 U.S.C. 1981, 1983, or 1985).
``(14) Section 703, 704, or 717 of the Civil Rights Act of
1964 (42 U.S.C. 2000e-2, 2000e-3, or 2000e-16).
``(15) Section 804, 805, 806, 808, or 818 of the Fair
Housing Act (42 U.S.C. 3604, 3605, 3606, 3608, or 3617).
``(16) Section 102, 202, 302, or 503 of the Americans with
Disabilities Act of 1990 (42 U.S.C. 12112, 12132, 12182, or
12203).
``(17) Any provision of Federal law (popularly known as
whistleblower protection provisions) prohibiting the discharge
of an employee, the discrimination against an employee, or any
other form of retaliation or reprisal against an employee for
asserting rights or taking other actions permitted under
Federal law.
``(18) Any provision of State or local law, or common law
claims permitted under Federal, State, or local law--
``(A) providing for the enforcement of civil
rights, or
``(B) regulating any aspect of the employment
relationship, including prohibiting the discharge of an
employee, the discrimination against an employee, or
any other form of retaliation or reprisal against an
employee for asserting rights or taking other actions
permitted by law.''.
(b) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 of such Code is amended by striking the last
item and inserting the following:
``Sec. 140. Amounts received on account
of certain unlawful
discrimination.
``Sec. 140. Cross references to other
Acts.''
(c) Effective Date.--The amendments made by this section shall
apply to damages received in taxable years beginning after December 31,
2000.
SEC. 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:
``SEC. 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 140(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 such Code is amended by inserting after
section 1301 the following new item:
``Sec. 1302. Income from backpay or
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,
2000.
SEC. 3. 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 (2) as
paragraph (3) and by inserting after paragraph (1) the following:
``(2) 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, 2000.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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