The Business, Entrepreneurship & Tax Law Review


Shane Rader


The Tax Cuts and Jobs Act has been hailed by many as both a significant and sensible tax reform. It lowered the U.S.’s notoriously high corporate tax rates while also providing a tax break for many individual Americans. Although this tax reform has its benefits, this article discusses a troubling provision that has not garnered much attention. This particular provision, incorporated into the Internal Revenue Code as § 162(q), does not allow the deduction of settlement or attorneys’ fees in sexual harassment cases when a settlement is subject to a nondisclosure agreement. Although the intention of this reform was to protect victims of sexual harassment, the statutory language actually harms victims in a number of ways. Congress has recognized some of these issues, but unfortunately it does not understand the full scope of the problem. This ultimately leaves victims in harm’s way as efforts to correct the legislation have stalled. This article addresses the three significant problems with § 162(q) and proposes potential solutions.

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