Civil Rights Tax Fairness Act of 2001
Bill 14-329

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A BILL IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

To amend Title 47 of the District of Columbia Official Code to exclude from gross income amounts received on account of unlawful discrimination and to allow income averaging for backpay and frontpay awards received on account of claims arising from unlawful discrimination.

BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this act may be cited as the "Civil Rights Tax Fairness Act of 2001 ".

Sec. 2. Title 47 of the District of Columbia Official Code is amended as follows:

(a) Section 47-1803.2 is amended by adding a new subparagraph (Q) to read as follows:

"(Q) The amount received by a claimant, excluding backpay, frontpay, or punitive damages, whether by suit or agreement and whether as lump sums or periodic payments, on account of a claim of unlawful discrimination.".

"(a) GENERAL RULE - If employment discrimination backpay or frontpay is received during a taxable year, the tax imposed for such taxable year shall not exceed the sum of the tax which would be so imposed if no:

"(1) Amount of backpay or frontpay were included in gross income for such year; and

"(2) Deduction were allowed for such year for expenses (otherwise allowable as a deduction to the taxpayer for such year) in connection with making or prosecuting any claim of unlawful discrimination by or on behalf of the taxpayer, plus the product of the:

"(i) Number of years in the backpay period and frontpay period, and

"(ii) Amount by which the tax determined under paragraph (1) would increase if the amount on which such tax is determined were increased by the average annual net backpay and frontpay amount.

"(1) "Employment discrimination backpay or frontpay" means backpay or frontpay receivable (whether as lump sums or periodic payments) on account of a claim of unlawful employment discrimination.

"(2) "Backpay" and "Frontpay" mean amounts includible in gross income in the taxable year as compensation which is attributable:

"(A) In the case of backpay, to services performed, or that would have been performed but for a claimed violation of law, as an employee, former employee, or prospective employee before such taxable year for the taxpayer's employer, former employer, or prospective employer, and

"(B) In the case of frontpay, to employment that would have been performed but for a claimed violation of law, in a taxable year or taxable years following the taxable year, and which are:

"(i) Ordered, recommended, or approved by any government entity to satisfy a claim for violation of law; or

"(ii) Received from the settlement of such a claim.

"(3) "Backpay period" means the period during which services are performed (or would have been performed) to which backpay is attributable. If such period is not equal to a whole number of taxable years, such period shall be increased to the next highest number of whole taxable years.

"(4) "Frontpay period" means the period of foregone employment to which frontpay is attributable. If such period is not equal to a whole number of taxable years, such period shall be increased to the next highest number of whole taxable years.

"(5)"Average annual net backpay and frontpay amount" means the amount equal to the excess of employment discrimination backpay and frontpay, over the amount of deductions that would have been allowable but for subsection (a)(1)(B) divided by the number of years in the backpay period and frontpay period.

Sec. 4. Fiscal impact statement.

The Council adopts the fiscal impact statement in the committee report as the fiscal impact statement required by section 602(c)(3) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(3)).

Sec. 5. This act shall take effect following approval by the Mayor (or in the event of veto by the Mayor, action by the Council to override the veto), approval by the Financial Responsibility and Management Assistance Authority as provided in section 203(a) of the District of Columbia Financial Responsibility and Management Assistance Act of 1995, approved April 17, 1995 (109 Stat. 116; D.C. Official Code §47-392.03(a)), a 30-day period of Congressional review as provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved  December 24, 1973 (87 Stat. 813; D.C. Official Code §1-206.02(c)(1)), and publication in the District of Columbia Register.