Bipartisan federal bill would exempt exoneree compensation from taxes

Laws in 22 states provide compensation for people proven innocent after serving time in prison for crimes they didn’t commit, but federal tax is unclear on whether the federal government can take some of that money back. A bill introduced yesterday by New York Senator Chuck Schumer (and co-sponsored by Kansas Senator Sam Brownback) would clarify the law to exempt exonerees from paying federal income tax on compensation for a wrongful conviction. The public owes a debt to these people wronged by the justice system, Schumer said, and this bill can help make amends after the criminal justice system makes a major error.

Seven months after his release from prison in 2001, after serving 15 years for a rape he did not commit, David Pope received $385,000 in compensation from the State of Texas and set out to rebuild his life: He rented an apartment, bought a car, helped his mother pay bills and traveled overseas for the first time.

The money did not last long, but being broke is not the only problem Mr. Pope, 46, has grappled with since his exoneration. He said the Internal Revenue Service has notified him that he owes $90,000 in federal taxes on the compensation he received for his wrongful conviction, but he has no idea how he is going to settle the debt.

“I didn’t know I had to pay taxes over it until the government started sending me letters,” said Mr. Pope, who has struggled to find a steady job.

Read the full story here

. (New York Times, 12/07/07)

In addition to supporting this bill, the Innocence Project is working to pass compensation laws in the 28 states that currently lack them. Is yours one?

Check out our interactive map to find out

.

Compensation laws in

California

,

Massachusetts

and

Vermont

all explicity exempt exoneree compensation from state income tax.