House Report 119-599 - SURVIVOR JUSTICE TAX PREVENTION ACT

[House Report 119-599]
[From the U.S. Government Publishing Office]

119th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 119-599
======================================================================

SURVIVOR JUSTICE TAX PREVENTION ACT

_______

April 9, 2026.--Committed to the Committee of the Whole House on the
State of
the Union and ordered to be printed

_______

Mr. Smith of Missouri, from the Committee on Ways and Means,
submitted the following

R E P O R T

[To accompany H.R. 2347]

The Committee on Ways and Means, to whom was referred the
bill (H.R. 2347) to amend the Internal Revenue Code of 1986 to
exclude from gross income any damages, other than punitive
damages, received on account of any sexual acts or sexual
contact, having considered the same, reports favorably thereon
with an amendment and recommends that the bill as amended do
pass.

CONTENTS

Page
I. SUMMARY AND BACKGROUND............................................2
A. Purpose and Summary................................. 2
B. Background and Need for Legislation................. 3
C. Legislative History................................. 3
D. Designated Hearing.................................. 3
II. EXPLANATION OF THE BILL...........................................3
A. Taxation of Compensation for Injuries or Sickness... 3
III.VOTE OF THE COMMITTEE.............................................5

IV. BUDGET EFFECTS OF THE BILL........................................6
A. Committee Estimate of Budgetary Effects............. 6
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 6
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 6
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE........6
A. Committee Oversight Findings and Recommendations.... 6
B. Statement of General Performance Goals and
Objectives......................................... 6
C. Applicability of House Rule XXI, Clause 5(b)........ 7
D. Information Relating to Unfunded Mandates........... 7
E. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 7
F. Duplication of Federal Programs..................... 7
G. Tax Complexity Analysis............................. 7
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.............8

The amendment is as follows:
Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Survivor Justice Tax Prevention Act''.

SEC. 2. EXCLUSION FROM GROSS INCOME OF ANY DAMAGES, OTHER THAN PUNITIVE
DAMAGES, RECEIVED ON ACCOUNT OF SEXUAL ACTS OR
SEXUAL CONTACT.

(a) In General.--Section 104(a)(2) of the Internal Revenue Code of
1986 is amended by striking ``on account of personal physical injuries
or physical sickness;'' and inserting ``on account of--
``(A) personal physical injuries or physical
sickness, or
``(B) any sexual act (as defined in paragraph (2) of
section 2246 of title 18, United States Code, as in
effect on the date of the enactment of this
subparagraph) or sexual contact (as defined in
paragraph (3) of such section, as so in effect),
whether or not there are medical records or observable
injuries of such act or contact;''.
(b) Burden of Proof With Respect to Whether Damages Are on Account of
Sexual Act or Sexual Contact.--Section 104 of such Code is amended by
redesignating subsection (d) as subsection (e) and by inserting after
subsection (c) the following new subsection:
``(d) Burden of Proof With Respect to Whether Damages Are on Account
of Sexual Act or Sexual Contact.--For purposes of subsection (a)(2), if
a decision or agreement states that any damages received therefrom are
on account of a sexual act or sexual contact referred to in subsection
(a)(2)(B)--
``(1) such statement shall be treated as credible evidence
that such damages are so on account for purposes of section
7491(a), and
``(2) the taxpayer shall be treated as having met the
requirements of section 7491(a)(2) with respect to the issue of
whether such damages are so on account.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to amounts received pursuant to decisions made, and
agreements entered into, after the date of the enactment of
this Act.
(2) Special rule for decisions.--For purposes of paragraph
(1), a decision shall be treated as made after the date of the
enactment of this Act if the first payment pursuant to such
decision is received after such date.
(3) Special rule for agreements.--For purposes of paragraph
(1), an agreement shall not be treated as entered into after
the date of the enactment of this Act if such agreement
replaces, supersedes, or revises an agreement entered into on
or before such date.
(d) No Inference With Respect to Effect of Medical Records or
Observable Injuries on Determinations With Respect to Personal Physical
Injuries or Physical Sickness.--No inference may be drawn from the
amendment made by subsection (a) (or from section 104(a)(2)(B) of the
Internal Revenue Code of 1986, as amended by subsection (a)) with
respect to whether the term ``personal physical injuries or physical
sickness'' as used in section 104(a)(2) of such Code includes injuries
or sickness with respect to which there are no medical records or
observable injuries.
(e) Promotion of Public Awareness of Exclusion.--The Secretary of the
Treasury (or the Secretary's delegate), in consultation with the
Department of Justice Office on Violence Against Women and other
relevant Federal agencies, shall conduct a program to promote public
awareness of the exclusion from gross income provided by section
104(a)(2)(B) of the Internal Revenue Code of 1986, as amended by this
section.

I. SUMMARY AND BACKGROUND

A. Purpose and Summary

The bill, H.R. 2347, the ``Survivor Justice Tax Prevention
Act,'' as amended, was ordered reported by the Committee on
Ways and Means on March 25, 2026.
The Survivor Justice Tax Prevention Act (the ``Act'')
provides an exclusion from income for damages (other than
punitive damages) received on account of any sexual act or
sexual contact, as such terms are defined in 18 U.S.C. section
2246. For purposes of the exclusion from gross income, any
sexual act or sexual contact is so defined whether or not there
are medical records or observable injuries of such act or
contact. The Act provides that if a decision or agreement
states that damages received therefrom are on account of a
sexual act or sexual contact, such statement suffices to shift
the burden of proof in any court proceeding to the Secretary of
the Treasury (the ``Secretary'') as to whether such damages are
so on account. The Act requires the Secretary to establish a
program to promote public awareness of the Act's exclusion from
gross income for damages received on account of a sexual act or
sexual contact.

B. Background and Need for Legislation

A top priority of the Ways and Means Committee has been
listening to the concerns of American workers and families and
developing policy solutions to help. Without this legislation,
victims of sexual assault may be denied tax relief on damages
they receive in connection with the assault because the
statutory language is too narrow to capture all such cases.
This bipartisan legislation ensures that victims of sexual
assault are eligible for a tax exclusion for the damages they
receive.

C. Legislative History

Background

H.R. 2347 was introduced on March 25, 2025, and was
referred to the Committee on Ways and Means.

Committee Hearings

On January 22, 2025, the Committee held a Full Committee
Member Day Hearing on matters within the Committee's
jurisdiction.

Committee Action

The Committee on Ways and Means marked up H.R. 2347, on
March 25, 2026, and ordered the bill, as amended, favorably
reported (with a quorum being present).

D. Designated Hearing

Pursuant to clause 3(c)(6) of rule XIII, the following
hearings were used to develop and consider H.R. 2347:
On January 22, 2025, the Committee held a Full Committee
Member Day Hearing on matters within the Committee's
jurisdiction.

II. EXPLANATION OF THE BILL

A. Taxation of Compensation for Injuries or Sickness

PRESENT LAW

Gross income means ``income from whatever source derived''
except for certain items specifically exempted or excluded by
statute.\1\ Gross income excludes certain items of compensation
received by an individual on account of injury or sickness.
Except in the case of amounts attributable to (and not in
excess of) deductions allowed under section 213 (relating to
certain medical expenses) for any prior taxable year, gross
income does not include any amount of damages (other than
punitive damages) received on account of personal physical
injuries or physical sickness, whether by suit or agreement and
whether as lump sums or as periodic payments.\2\ The Internal
Revenue Service (``IRS'') has interpreted ``personal physical
injuries'' to mean physical contacts resulting in observable
bodily harm.\3\ For purposes of this exclusion, emotional
distress is not considered a physical injury or physical
sickness.\4\ However, because the exclusion applies to all
damages received on account of physical injury or physical
sickness, the exclusion applies to any damages received based
on a claim of emotional distress that is attributable to a
physical injury or physical sickness.\5\ In addition, the
exclusion is explicitly allowed for damages received not in
excess of the amount paid for medical care attributable to
emotional distress--that is, the amount paid (1) for the
diagnosis, cure, mitigation, treatment, or prevention of
disease, or for the purpose of affecting any structure or
function of the body; and (2) for transportation primarily for
and essential to the medical care just described.\6\
---------------------------------------------------------------------------
\1\Sec. 61.
\2\Sec. 104(a)(2).
\3\See, e.g., PLR 200041022, July 17, 2000 (``The term `personal
physical injuries' is not defined in either Section 104(a)(2) or the
legislative history . . . However, we believe that direct unwanted or
uninvited physical contacts resulting in observable bodily harms such
as bruises, cuts, swelling, and bleeding are personal physical injuries
under Section 104(a)(2).'').
\4\The term ``emotional distress'' is intended to include physical
symptoms which may result from such emotional distress. See Joint
Committee on Taxation, General Explanation of Tax Legislation Enacted
in the 104th Congress (JCS-12-96), December 1996, p. 224. This document
can be found on the Joint Committee on Taxation website at www.jct.gov.
\5\Ibid.
\6\Sec. 104(a) (flush language).
---------------------------------------------------------------------------

REASONS FOR CHANGE

The Committee believes that damages paid to a victim of
sexual assault should be excludable from income regardless of
whether such assault results in an observable injury, and
regardless of whether there are medical records associated with
the assault. The Committee believes that any agreement or
decision providing that damages are on account of sexual
assault should serve as credible evidence in establishing the
exclusion from income.

EXPLANATION OF PROVISION

The provision excludes from income damages (other than
punitive damages) received on account of any sexual act\7\ or
sexual contact.\8\ For purposes of the exclusion from gross
income, any sexual act or sexual contact is so defined whether
or not there are medical records or observable injuries of such
act or contact. No inference may be drawn with respect to
whether the term ``personal physical injuries or physical
sickness'' as presently used in section 104(a)(2) includes
injuries or sickness with respect to which there are no medical
records or observable injuries.
---------------------------------------------------------------------------
\7\``Sexual act'' is defined as in 18 U.S.C. sec. 2246(2) to mean:
(1) contact between the penis and the vulva or the penis and the anus
(and for these purposes contact involving the penis occurs upon
penetration, however slight); (2) contact between the mouth and the
penis, the mouth and the vulva, or the mouth and the anus; (3) the
penetration, however slight, of the anal or genital opening of another
by a hand or finger or by any object, with an intent to abuse,
humiliate, harass, degrade, or arouse or gratify the sexual desire of
any person; or (4) the intentional touching, not through the clothing,
of the genitalia of another person who has not attained the age of 16
years with an intent to abuse, humiliate, harass, degrade, or arouse or
gratify the sexual desire of any person.
\8\``Sexual contact'' is defined as in 18 U.S.C. sec. 2246(3) to
mean the intentional touching, either directly or through the clothing,
of the genitalia, anus, groin, breast, inner thigh, or buttocks of any
person with an intent to abuse, humiliate, harass, degrade, or arouse
or gratify the sexual desire of any person.
---------------------------------------------------------------------------
The provision provides that for purposes of the exclusion
from gross income, if a decision or agreement states that any
damages received therefrom are on account of a sexual act or
sexual contact, such statement suffices to shift the burden of
proof in any court proceeding to the Secretary of the Treasury
as to whether such damages are so on account.
The proposal requires the Secretary of the Treasury (or the
Secretary's delegate), in consultation with the Department of
Justice Office on Violence Against Women and other relevant
Federal agencies, to establish a program to promote public
awareness of the proposal's exclusion from gross income for
damages received on account of a sexual act or sexual contact.

EFFECTIVE DATE

The provision is effective for amounts received pursuant to
judgments made, and agreements entered into, after the date of
enactment.\9\
---------------------------------------------------------------------------
\9\A judgment shall be treated as made after the date of enactment
if the first payment pursuant to such judgment is received after such
date. An agreement shall not be treated as entered into after the date
of enactment if such agreement replaces, supersedes, or revises an
agreement entered into on or before such date.
---------------------------------------------------------------------------

III. VOTE OF THE COMMITTEE

In compliance with the Rules of the House of
Representatives, the following statement is made concerning the
vote of the Committee on Ways and Means during the markup
consideration of H.R. 2347, the ``Survivor Justice Tax
Prevention Act,'' on March 25, 2026.
H.R. 2347 was ordered favorably reported to the House of
Representatives as amended by a roll call vote of 41 yeas to 0
nays (with a quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO)................ X ......... ......... Mr. Neal........ X ......... .........
Mr. Buchanan.................. X ......... ......... Mr. Doggett..... X ......... .........
Mr. Smith (NE)................ X ......... ......... Mr. Thompson.... X ......... .........
Mr. Kelly..................... X ......... ......... Mr. Larson...... X ......... .........
Mr. Schweikert................ X ......... ......... Mr. Davis....... X ......... .........
Mr. LaHood.................... X ......... ......... Ms. Sanchez..... X ......... .........
Mr. Arrington................. ........ ......... ......... Ms. Sewell...... X ......... .........
Mr. Estes..................... X ......... ......... Ms. DelBene..... X ......... .........
Mr. Smucker................... X ......... ......... Ms. Chu......... X ......... .........
Mr. Hern...................... X ......... ......... Ms. Moore (WI).. X ......... .........
Mrs. Miller (WV).............. X ......... ......... Mr. Boyle....... X ......... .........
Dr. Murphy.................... X ......... ......... Mr. Beyer....... ........ ......... .........
Mr. Kustoff................... X ......... ......... Mr. Evans....... X ......... .........
Mr. Fitzpatrick............... X ......... ......... Mr. Schneider... X ......... .........
Mr. Steube.................... X ......... ......... Mr. Panetta..... X ......... .........
Ms. Tenney.................... X ......... ......... Mr. Gomez....... ........ ......... .........
Mrs. Fischbach................ X ......... ......... Mr. Horsford.... X ......... .........
Mr. Moore (UT)................ X ......... ......... Ms. Plaskett.... X ......... .........
Ms. Van Duyne................. X ......... ......... Mr. Suozzi...... X ......... .........
Mr. Feenstra.................. X ......... .........
Ms. Malliotakis............... X ......... .........
Mr. Carey..................... ........ ......... .........
Mr. Yakym..................... X ......... .........
Mr. Miller (OH)............... X ......... .........
Mr. Bean...................... X ......... .........
Mr. Moran..................... X ......... .........
----------------------------------------------------------------------------------------------------------------

IV. BUDGET EFFECTS OF THE BILL

A. Committee Estimate of Budgetary Effects

In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 2347 as
reported.
The staff of the Joint Committee on Taxation estimates that
the bill as amended has the following effect on Federal fiscal
year budget receipts:

FISCAL YEARS
[Millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2026-31 2026-36
--------------------------------------------------------------------------------------------------------------------------------------------------------
-3.................................................... -7 -8 -8 -8 -8 -9 -9 -9 -10 -10 -42 -89
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details may not add to totals due to rounding. The date of enactment is assumed to be April 30, 2026.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority

In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority.

C. Cost Estimate Prepared by the Congressional Budget Office

The Congressional Budget Act of 1974, as amended stipulates
that revenue estimates provided by the staff of the Joint
Committee on Taxation (``JCT'') will be the official estimates
for all tax legislation considered by Congress. As such CBO
incorporates these estimates into its cost estimates of the
effects of the legislation. The estimates for the revenue
provisions of H.R. 2347, the ``Survivor Justice Tax Prevention
Act'', as reported were provided by JCT (see Part IV, A).

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

A. Committee Oversight Findings and Recommendations

With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives, the Committee made findings and
recommendations that are reflected in this report.

B. Statement of General Performance Goals and Objectives

With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill does not authorize funding, so no statement of general
performance goals and objectives is required.

C. Applicability of House Rule XXI, Clause 5(b)

Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the bill, and states that the bill does not
provide such a Federal income tax rate increase.

D. Information Relating to Unfunded Mandates

This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.

E. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits

With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.

F. Duplication of Federal Programs

In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).

G. Tax Complexity Analysis

Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the
staff of the Joint Committee on Taxation (in consultation with
the Internal Revenue Service and the Treasury Department) to
provide a tax complexity analysis. The complexity analysis is
required for all legislation reported by the Senate Committee
on Finance, the House Committee on Ways and Means, or any
committee of conference if the legislation includes a provision
that directly or indirectly amends the Internal Revenue Code
and has widespread applicability to individuals or small
businesses.
The staff of the Joint Committee on Taxation has determined
that there are no provisions that are of widespread
applicability to individuals or small businesses.

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows.

Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):

INTERNAL REVENUE CODE OF 1986

* * * * * * *
Subtitle A--Income Taxes

* * * * * * *

CHAPTER 1--NORMAL TAXES AND SURTAXES

* * * * * * *

Subchapter B--COMPUTATION OF TAXABLE INCOME

* * * * * * *

PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME

* * * * * * *

SEC. 104. COMPENSATION FOR INJURIES OR SICKNESS.

(a) In General.--Except in the case of amounts attributable
to (and not in excess of) deductions allowed under section 213
(relating to medical, etc., expenses) for any prior taxable
year, gross income does not include--
(1) amounts received under workmen's compensation
acts as compensation for personal injuries or sickness;
(2) the amount of any damages (other than punitive
damages) received (whether by suit or agreement and
whether as lump sums or as periodic payments) [on
account of personal physical injuries or physical
sickness;] on account of--
(A) personal physical injuries or physical
sickness, or
(B) any sexual act (as defined in paragraph
(2) of section 2246 of title 18, United States
Code, as in effect on the date of the enactment
of this subparagraph) or sexual contact (as
defined in paragraph (3) of such section, as so
in effect), whether or not there are medical
records or observable injuries of such act or
contact;
(3) amounts received through accident or health
insurance (or through an arrangement having the effect
of accident or health insurance) for personal injuries
or sickness (other than amounts received by an
employee, to the extent such amounts (A) are
attributable to contributions by the employer which
were not includible in the gross income of the
employee, or (B) are paid by the employer);
(4) amounts received as a pension, annuity, or
similar allowance for personal injuries or sickness
resulting from active service in the armed forces of
any country or in the Coast and Geodetic Survey or the
Public Health Service, or as a disability annuity
payable under the provisions of section 808 of the
Foreign Service Act of 1980;
(5) amounts received by an individual as disability
income attributable to injuries incurred as a direct
result of a terroristic or military action (as defined
in section 692(c)(2)); and
(6) amounts received pursuant to--
(A) section 1201 of the Omnibus Crime Control
and Safe Streets Act of 1968 (42 U.S.C. 3796);
or
(B) a program established under the laws of
any State which provides monetary compensation
for surviving dependents of a public safety
officer who has died as the direct and
proximate result of a personal injury sustained
in the line of duty,
except that subparagraph (B) shall not apply to any
amounts that would have been payable if death of the
public safety officer had occurred other than as the
direct and proximate result of a personal injury
sustained in the line of duty.
For purposes of paragraph (3), in the case of an individual who
is, or has been, an employee within the meaning of section
401(c)(1) (relating to self-employed individuals),
contributions made on behalf of such individual while he was
such an employee to a trust described in section 401(a) which
is exempt from tax under section 501(a), or under a plan
described in section 403(a), shall, to the extent allowed as
deductions under section 404, be treated as contributions by
the employer which were not includible in the gross income of
the employee. For purposes of paragraph (2), emotional distress
shall not be treated as a physical injury or physical sickness.
The preceding sentence shall not apply to an amount of damages
not in excess of the amount paid for medical care (described in
subparagraph (A) or (B) of section 213(d)(1)) attributable to
emotional distress.
(b) Termination of Application of Subsection (a)(4) in
Certain Cases.--
(1) In general.--Subsection (a)(4) shall not apply in
the case of any individual who is not described in
paragraph (2).
(2) Individuals to whom subsection (a)(4) continues
to apply.--An individual is described in this paragraph
if--
(A) on or before September 24, 1975, he was
entitled to receive any amount described in
subsection (a)(4),
(B) on September 24, 1975, he was a member of
any organization (or reserve component thereof)
referred to in subsection (a)(4) or under a
binding written commitment to become such a
member,
(C) he receives an amount described in
subsection (a)(4) by reason of a combat-related
injury, or
(D) on application therefor, he would be
entitled to receive disability compensation
from the Department of Veterans Affairs.
(3) Special rules for combat-related injuries.--For
purposes of this subsection, the term ``combat-related
injury'' means personal injury or sickness--
(A) which is incurred--
(i) as a direct result of armed
conflict,
(ii) while engaged in extrahazardous
service, or
(iii) under conditions simulating
war; or
(B) which is caused by an instrumentality of
war.
In the case of an individual who is not described in
subparagraph (A) or (B) of paragraph (2), except as
provided in paragraph (4), the only amounts taken into
account under subsection (a)(4) shall be the amounts
which he receives by reason of a combat-related injury.
(4) Amount excluded to be not less than veterans'
disability compensation.--In the case of any individual
described in paragraph (2), the amounts excludable
under subsection (a)(4) for any period with respect to
any individual shall not be less than the maximum
amount which such individual, on application therefor,
would be entitled to receive as disability compensation
from the Veterans' Administration.
(c) Application of Prior Law in Certain Cases.--The phrase
``(other than punitive damages)'' shall not apply to punitive
damages awarded in a civil action--
(1) which is a wrongful death action, and
(2) with respect to which applicable State law (as in
effect on September 13, 1995 and without regard to any
modification after such date) provides, or has been
construed to provide by a court of competent
jurisdiction pursuant to a decision issued on or before
September 13, 1995, that only punitive damages may be
awarded in such an action.
This subsection shall cease to apply to any civil action filed
on or after the first date on which the applicable State law
ceases to provide (or is no longer construed to provide) the
treatment described in paragraph (2).
(d) Burden of Proof With Respect to Whether Damages are on
Account of Sexual Act or Sexual Contact.--For purposes of
subsection (a)(2), if a decision or agreement states that any
damages received therefrom are on account of a sexual act or
sexual contact referred to in subsection (a)(2)(B)--
(1) such statement shall be treated as credible
evidence that such damages are so on account for
purposes of section 7491(a), and
(2) the taxpayer shall be treated as having met the
requirements of section 7491(a)(2) with respect to the
issue of whether such damages are so on account.
[(d)] (e) Cross References.--
(1) For exclusion from employee's gross
income of employer contributions to accident
and health plans, see section 106.
(2) For exclusion of part of disability
retirement pay from the application of
subsection (a)(4) of this section, see section
1403 of title 10, United States Code (relating
to career compensation laws).

* * * * * * *

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