Employers should be aware of the wide-reaching implications of the “Harvey Weinstein” provision, inspired by the “#MeToo” movement sweeping the nation. The provision, Section 162(q), provides that “No deduction shall be allowed under this chapter for – (1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement or payment.” In sum, the provision forces employers to choose between including a nondisclosure agreement provision in a settlement agreement or taking the cost of the settlement as an ordinary business expense deduction on its tax return. Because the provision is so new, the IRS has not yet issued any guidance on its meaning. In fact, the provision poses more questions than it provides answers.
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Home Perspectives New Tax Bill Includes Novel “Harvey Weinstein” Provision to Prevent Sexual Harassment
On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, with the goal of completely revamping the tax code. In addition to changing many basic facets of tax law, the bill also includes a provision in keeping with the times: a “Harvey Weinstein” provision intended to use tax policy to root out and eliminate sexual harassment in the workplace.
Reed Smith’s Luke Debevec and Casey Ryan recognized as ‘Pennsylvania Trailblazers’ by The Legal Intelligencer
26 November 2019