# Survivor Justice Tax Prevention Act

When someone wins a lawsuit or reaches a settlement after experiencing sexual abuse or assault, they receive money as compensation for what happened to them. Right now, the federal government treats some of that money as taxable income, meaning survivors have to pay federal income taxes on their settlement or judgment. This bill changes that by making most settlement and lawsuit payments from sexual abuse cases tax-free.

Here's what matters in practice: if a survivor receives $100,000 in damages from a sexual assault case, they currently might owe thousands of dollars in federal taxes on that money. Under this bill, they wouldn't have to pay federal income tax on that $100,000. The only exception is "punitive damages"—the extra money a court sometimes awards specifically to punish a wrongdoer for particularly bad behavior. Those would still be taxable. This means survivors keep more of the money they receive and don't face a tax bill on top of their trauma.

The bill also makes it easier for survivors to claim this tax break. Currently, the IRS can demand medical records or other proof that sexual abuse actually occurred. The bill says the IRS cannot reject a claim just because there are no medical records. If a court judgment or settlement agreement states the money is for sexual abuse or assault, that's enough. This protects survivors' privacy and recognizes that many sexual assaults go unreported to doctors or hospitals.

The bill applies to any settlements or court judgments finalized after it becomes law, and the Treasury Department is directed to inform the public about this new tax benefit so survivors actually know they can use it.