WASHINGTON – U.S. Senators John Cornyn (R-TX), Ron Wyden (D-OR), James Lankford (R-OK) and Raphael Warnock (D-GA) and U.S. Representatives Jodey Arrington (TX-19) and Brad Schneider (IL-10) today introduced 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:

“Texans who have been exploited, coerced, or forced into involuntary sexual acts or labor should not have to pay taxes on the payments awarded to them after enduring such a horrific crime,” said Sen. Cornyn. “Providing these survivors with tax-relief is one small step we can take to alleviate some of the burden on their journey to healing.”

“The survivors of human trafficking have been to hell and back, and the last thing they need as they rebuild their lives is a giant tax bill,” said Sen. Wyden. “Our legislation is about providing basic fairness for survivors of trafficking and ensuring that our tax code isn’t penalizing them for pursuing justice through what’s often the only means available.”

“Human trafficking survivors often face a long path to getting the closure and justice they deserve,” said Sen. Lankford. “As they heal, they shouldn’t be punished by the US tax code. This bill will support survivors by making sure that damages awarded, whether through civil or criminal cases, are exempt from federal income tax. This lets those who suffered at the hands of traffickers focus on recovery instead of bureaucracy.”

“Human trafficking is one of the most horrendous and inhumane things we continue to face in modern society,” said Senator Reverend Warnock. “I am proud join this legislation to ease the lifelong financial burdens that so many of these victims face. Although money cannot return what has already been taken, it can usher in new opportunities for victims of these heinous crimes.”

“There is no amount of compensation that can remedy the many horrors that victims of human trafficking have to endure. As we work to eradicate this heinous crime, we should ensure these victims aren’t burdened with tax penalties and reporting requirements when they receive civil damages or restitution,” said Chairman Arrington. “The bipartisan Human Trafficking Survivor Tax Relief Act will solve this injustice and help survivors of modern-day slavery rebuild their lives.”

“We must do everything in our power to help survivors of human trafficking reclaim their lives,” said Rep. Schneider. “This is why I am proud to help lead the Human Trafficking Survivor Tax Relief Act, which would eliminate deferral income tax on restitution payments to human trafficking survivors and end the discrepancy that treats criminal and civil payments to trafficking survivors differently. No survivor should be burdened for seeking justice. Our compassion, and our action, must have no limits.”

Background:

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 endorsed by the Freedom Network USA and Rights4Girls.