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U.S. Treasury Department in Washington. Credit: Mike Scarcella/ALM

The tax proposal on Capitol Hill takes aim at the recent wave of workplace scandals with a provision that would prevent businesses from deducting settlements, payouts and legal fees related to sexual harassment or abuse allegations that are part of any nondisclosure agreement.

Such payments are deductible under current tax law. The proposal would make it more expensive for an employer to use a settlement, which could be written off as a business expense, as a way to address a sexual harassment or abuse case. Such settlements came under the spotlight amid high-profile cases of harassment, including Fox News host Bill O’Reilly and Hollywood producer Harvey Weinstein.

The amendment, filed by Sen. Robert Menendez, D-New Jersey, is part of a response from legislators to sexual harassment stories that have exposed powerful men and made companies rethink their policies to prevent such misconduct.


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The U.S. House was set to vote Wednesday after Senate action earlier in the day. The Senate version still included the provision ending deductions for sexual harassment settlements and legal fees.

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