Survivor Justice Tax Prevention Act

The old rule stated that damages would automatically be treated as on account of a sexual act if the judgment or agreement said so. The new rule instead provides that such a statement is 'credible evidence' under IRC section 7491(a) and that the taxpayer has met the burden-of-proof requirements of section 7491(a)(2). This shifts from an automatic qualification to an evidentiary standard, which is somewhat less protective for taxpayers.

The definition of qualifying sexual act or sexual contact now explicitly includes the phrase 'whether or not there are medical records or observable injuries of such act or contact,' making it clear that no documentation of physical harm is required to qualify for the tax exclusion.

The effective date provision was changed from applying to 'judgments' to applying to 'decisions.' This broadens coverage beyond court judgments to potentially include arbitration awards, administrative decisions, and other non-judicial determinations of damages.

A new subsection (d) provides that no inference may be drawn from the sexual violence exclusion amendment with respect to whether 'personal physical injuries or physical sickness' in section 104(a)(2) includes injuries without medical records or observable injuries. This is a protective clause to prevent the new provision from being read as expanding or narrowing the existing physical injury exclusion.

Fixed a typo: 'supercedes' corrected to 'supersedes' in the effective date special rule for agreements.