A provision in the Tax Cuts and Jobs Tax Act will increase the “after-tax cost” for companies to settle “sexual harassment” or “sexual abuse” claims if they wish to maintain a “nondisclosure agreement” of the details. The law will disallow a business deduction for the amounts paid to settle such claims (including attorneys’ fees) if the settlement contains a nondisclosure agreement. This provision addresses the use of nondisclosure agreement terms to possibly prevent public disclosure of sexual harassment allegations or reports.
