Overview – Federal/Pennsylvania Differences

Federal courts have held that there are no provisions in either Title VII of the Civil Rights Act of 1964 or the Age Discrimination in Employment Act of 1967 ("ADEA") that provide compensatory damages for pain and suffering or for emotional distress. Refer to Supreme Court Decision in United States v. Burke, 112 S.Ct. 1867, 119 L.Ed.2d 34 (1992); Commissioner v. Schlieier, 515 U.S. 323 (1995). For federal income tax purposes, one could not exclude the settlement proceeds unless he could demonstrate that the award represents “damages received on account of personal injury or sickness.” 26 U.S.C. §104(a)(2).