With all the sexual harassment cases in the news these days, it’s time to talk about something closely related: the new tax law.
I know, there doesn’t seem to be any connection. But there is.
One of the main reasons so many of these harassment cases get settled out of court is that it’s cheaper to pay off the alleged victim than to hire lawyers. And usually, the terms of these settlements are kept confidential because the parties don’t want the public going through their dirty laundry or dirty e-mails.
And those payments have always been tax deductible as a business expense.
So, essentially, taxpayers were generously footing the bill for that wrongdoing and didn’t even get a chance to know what they were paying for.
Well, offenders can’t remain anonymous anymore — at least not if they want to deduct the cost of the settlement from their taxes.
Why? Section 13307 of the Tax Cuts and Jobs Act of 2017, that’s why. Don’t bother to look it up; I have it right here. It’s badly written, as any law is supposed to be, but here’s the actual wording.
SEC. 13307. DENIAL OF DEDUCTION FOR SETTLEMENTS SUBJECT TO NONDISCLOSURE AGREEMENTS PAID IN CONNECTION WITH SEXUAL HARASSMENT OR SEXUAL ABUSE.
It’s pretty self-explanatory.
If you don’t let us know the details of the settlement, lawmakers are saying, foot the bill yourself.
So, if a harasser wanted to quietly to settle with a cash payment to a victim, under the new tax law, he’d have to do it without a confidentiality agreement in order to deduct the payment on his taxes.
As it is, the two women weren’t allowed to talk about their alleged trysts. And whoever paid them off got to write it off on his taxes.
Of course, there are still ways of getting around this.
Anyway, who says taxes are boring? I think it was me.



