Menendez Calls on GOP to Fix its Tax Bill to Protect Victims of Workplace Sexual Misconduct

Menendez Calls on GOP to Fix its Tax Bill to Protect Victims of Workplace Sexual Misconduct


WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Finance Committee that sets federal tax policy, today announced that he plans to introduce legislation to fix an egregious error by Republicans in their recently-passed tax bill that failed to accurately reflect the legislative intent of an amendment the Senator proposed to end the ability of businesses to deduct sexual misconduct settlements from their taxes, and better protect victims of workplace sexual misconduct. 

“Corporations should not be allowed to write-off workplace sexual misconduct as a normal cost of doing business when it is far from normal.  That is why I was proud to offer an amendment to the GOP tax bill that would both protect victims of sexual misconduct while ending the practice of taxpayers subsidizing the bad behavior of corporations or executives,” said Sen. Menendez.  “However, it has come to my attention that when the final bill was written, language was inserted that does not reflect my legislative intent, at best has led to confusion, and at worst will inadvertently lead to sexual misconduct victims being further victimized.  This is outrageous and maddening, and what inevitably can occur when members are forced to vote on haphazardly rushed legislation before even getting a chance to read it.”

The Menendez amendment was intended to be a small, but meaningful step towards Congress fully addressing the issue of sexual misconduct and protecting victims under our nation’s laws.

During the Finance Committee mark-up of the GOP tax bill, Sen. Menendez offered the amendment with the following conceptual language that clearly stated its intent was directed at business—not individual—tax deductions: “This amendment would end the ability to deduct as a business expense any settlement, payout, or attorney fees related to nondisclosed settlements for sexual harassment or abuse from corporate or personal income tax.  So if there is a nondisclosure agreement under which a corporation pays out a settlement there can be no tax deduction.”

However, without consulting Sen. Menendez or his office, the Republican committee staff chose to incorporate the Menendez amendment into its so-called manager’s package, which was then quickly voted on and adopted by the Committee along a strict party-line vote only an hour after it was first released to Democrats for review. 

While the Menendez amendment was designed to be limited to Section 162 of the IRS Code, which addresses trade and business tax deductions, the bill writers erroneously included the clause “this chapter” that some experts have said effectively broadens the scope of the measure to encompass victims of sexual misconduct, forcing them to pay taxes on settlement awards used to pay legal fees and other ancillary costs.

In recognition of this egregious error that is in direct conflict with his stated legislative intent, Sen. Menendez intends to introduce legislation should Republicans fail to act to correct their mistake and crystalize protections for victims of sexual misconduct.