Austin News

July 12, 2024

WASHINGTON – U.S. Senator John Cornyn (R-TX), Senate Finance Committee Chairman Ron Wyden (D-OR), and Senators James Lankford (R-OK) and Kyrsten Sinema (I-AZ) have announced the Senate's passage of their Human Trafficking Survivor Tax Relief Act. The legislation exempts civil damages, restitution, and other monetary awards given to human trafficking survivors from federal income taxes. It also codifies current Internal Revenue Service (IRS) guidance that makes restitution payments to survivors in criminal cases tax-free.

“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.”

“Human trafficking survivors have been through true horrors, and the last thing they need is a big tax bill right when they’re trying to get back normal lives,” said Sen. Wyden. “This legislation will make it easier for survivors to pursue justice against their abusers and rebuild their lives by exempting critical financial relief from federal taxes. I’m all in to get this bill over the finish line.”

“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. I applaud Senate passage of this bill as it supports 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 survivors deserve our support as they rebuild their lives,” said Sen. Sinema. “It is common sense and the right thing to protect these individuals from harmful federal taxes.”

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 provides parity between criminal restitution, which is tax-exempt through IRS Notice 2012-12, and civil damages, which are not.

The Human Trafficking Survivor Tax Relief Act has garnered support from organizations such as Freedom Network USA, Polaris Project, Rights4Girls, End Child Pornography and Trafficking (ECPAT), National Association to Protect Children, Coalition Against Trafficking in Women (CATW), Shared Hope International, National Children’s Alliance, Alliance to End Slavery and Trafficking (ATEST), and Coalition to Abolish Slavery & Trafficking (CAST).