News & Events

News & Events

10.28.2004

New Tax Legislation Can Significantly Improve the Ability of Employers to Settle Employment Discrimination Cases

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A new federal tax bill, the American Jobs Creation Act of 2004 (“AJCA”) (H.R. 4520), was signed into law on October 22, 2004. This new law contains a provision of particular interest to employers. Found in Section 703 of the AJCA, captioned “Civil Rights Tax Relief” and codified in Section 62(a)(19) of the Internal Revenue Code, the provision changes the tax treatment of settlements and awards in employment discrimination cases by allowing an offsetting “above the line” deduction for the attorney fees and costs recovered by a plaintiff and included in his or her gross income. View full article (PDF).