§139F — Title 26 Internal Revenue Code | U.S. Code

Summary

If you were wrongly put in prison and later receive money for it — civil damages, restitution, or another monetary award — you do not pay federal income tax on that money. You count as wrongfully incarcerated if you were convicted of a crime, served some or all of a prison sentence for it, and were then pardoned or granted clemency or amnesty because you were innocent, or your conviction was reversed or vacated and the charges were dismissed or you were found not guilty at a new trial. The rule covers any federal or state criminal offense, including offenses arising from the same course of conduct.

Title 26, §139F

Internal Revenue Code — Source: USLM XML via OLRC

(a)In the case of any wrongfully incarcerated individual, gross income shall not include any civil damages, restitution, or other monetary award (including compensatory or statutory damages and restitution imposed in a criminal matter) relating to the incarceration of such individual for the covered offense for which such individual was convicted.

(b)For purposes of this section, the term “wrongfully incarcerated individual” means an individual—

(1)who was convicted of a covered offense,

(2)who served all or part of a sentence of imprisonment relating to that covered offense, and

(3)(A)who was pardoned, granted clemency, or granted amnesty for that covered offense because that individual was innocent of that covered offense, or

(B)(i)for whom the judgment of conviction for that covered offense was reversed or vacated, and

(ii)for whom the indictment, information, or other accusatory instrument for that covered offense was dismissed or who was found not guilty at a new trial after the judgment of conviction for that covered offense was reversed or vacated.

(c)For purposes of this section, the term “covered offense” means any criminal offense under Federal or State law, and includes any criminal offense arising from the same course of conduct as that criminal offense.

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 114–113, div. Q, title III, § 304(c), Dec. 18, 2015, 129 Stat. 3088, provided that: “The

Amendments

made by this section [enacting this section] shall apply to taxable years beginning before, on, or after the date of the enactment of this Act [Dec. 18, 2015].” Waiver of Limitations Pub. L. 114–113, div. Q, title III, § 304(d), Dec. 18, 2015, 129 Stat. 3088, as amended by Pub. L. 115–123, div. D, title II, § 41103(a), Feb. 9, 2018, 132 Stat. 155, provided that: “If the credit or refund of any overpayment of tax resulting from the application of this Act [probably means this section, enacting this section and provisions set out as a note above] to a period before the date of enactment of this Act [Dec. 18, 2015] is prevented as of such date by the operation of any law or rule of law (including res judicata), such credit or refund may nevertheless be allowed or made if the claim therefor is filed before the close of the 3-year period beginning on the date of the enactment of this Act.” [Pub. L. 115–123, div. D, title II, § 41103(b), Feb. 9, 2018, 132 Stat. 155, provided that: “The amendment made by this section [amending section 304(d) of Pub. L. 114–113, set out above] shall take effect on the date of the enactment of this Act [Feb. 9, 2018].” ]

§139F Certain Amounts Received by Wrongfully Incarcerated Individuals