1.This Act may be cited as the
Civil Rights Tax Relief Act of
2011
.
2.Exclusion from
gross income for amounts received on account of certain unlawful
discrimination
(a)Part III of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 (relating to items specifically excluded from gross
income) is amended by inserting before section 140 the following new
section:
139F.Amounts
received on account of certain unlawful discrimination
(a)
(1)Gross
income does not include amounts received by a claimant (whether by suit or
agreement and whether as lump sums or periodic payments) on account of a claim
of unlawful discrimination.
(2)For purposes of paragraph (1), the term
amounts does not include—
(A)backpay or
frontpay, as defined in section 1302(b),
(B)punitive damages,
or
(C)such amounts
allowed as a deduction under this chapter.
(b)Unlawful
discrimination definedFor purposes of this section, the term
unlawful discrimination has the meaning given such term by section
62(e).
.
(b)The table of sections for part III of subchapter B of
chapter 1 of the Internal Revenue Code of 1986 is amended by inserting before
the item relating to section 140 the following new item:
Sec. 139F. Amounts received on account of
certain unlawful
discrimination.
.
(c)The amendments made by this section shall apply to amounts
received in taxable years beginning after December 31, 2011.
3.Limitation on
tax based on income averaging for backpay and frontpay received on account of
certain unlawful employment discrimination
(a)Part I of subchapter Q of chapter 1 of the Internal
Revenue Code of 1986 (relating to income averaging) is amended by adding at the
end the following new section:
1302.Income from
backpay and frontpay received on account of certain unlawful employment
discrimination
(a)If employment discrimination backpay or frontpay is received
by a taxpayer during a taxable year, the tax imposed by this chapter for such
taxable year shall not exceed the sum of—
(1)the tax which
would be so imposed if—
(A)no amount of such
backpay or frontpay were included in gross income for such year, and
(B)no 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 employment discrimination by or on behalf of the taxpayer, plus
(2)the product
of—
(A)the number of
years in the backpay period and frontpay period, and
(B)the 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.
(b)For
purposes of this section—
(1)Employment
discrimination backpay or frontpayThe term 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)Unlawful
employment discriminationThe term unlawful employment
discrimination has the meaning provided the term unlawful
discrimination in section 62(e).
(3)The terms backpay and frontpay
mean amounts includible in gross income in the taxable year—
(A)as compensation
which is attributable—
(i)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
(ii)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
(B)which are—
(i)ordered,
recommended, or approved by any governmental entity to satisfy a claim for a
violation of law, or
(ii)received from
the settlement of such a claim.
(4)The term 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.
(5)The term 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.
(6)Average annual
net backpay and frontpay amountThe term average annual net
backpay and frontpay amount means the amount equal to—
(A)the excess
of—
(i)employment
discrimination backpay and frontpay, over
(ii)the amount of
deductions that would have been allowable but for subsection (a)(1)(B), divided
by
(B)the number of
years in the backpay period and frontpay
period.
.
(b)The table of sections for part I of subchapter Q of
chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after
section 1301 the following new item:
Sec. 1302. Income from backpay and
frontpay received on account of certain unlawful employment
discrimination.
.
(c)The amendments made by this section shall apply to amounts
received in taxable years beginning after December 31, 2011.
4.Income averaging
for backpay and frontpay received on account of certain unlawful employment
discrimination not to increase alternative minimum tax liability
(a)Section 55(c) of the Internal Revenue Code of 1986
(defining regular tax) is amended by redesignating paragraph (3) as paragraph
(4) and by inserting after paragraph (2) the following:
(3)Coordination
with income averaging for amounts received on account of employment
discriminationSolely for purposes of this section, section 1302
(relating to averaging of income from backpay or frontpay received on account
of certain unlawful employment discrimination) shall not apply in computing the
regular
tax.
.
(b)The amendment made by this section shall apply to taxable
years beginning after December 31, 2011.