Wrongly Imprisoned Individuals Taxed on Monetary Awards May be Entitled to Refund

Posted on February 08, 2016

The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) included a provision that provides an exclusion from gross income for certain monetary awards received by wrongly incarcerated individuals.

People that were wrongly incarcerated and received a monetary award stemming from the wrongful incarceration typically had to pay income tax on the award. The PATH Act of 2015 allows taxpayers to exclude the monetary award for being wrongly incarcerated from gross income.

Further, the PATH Act includes a 1-year waiver of the refund statute of limitation which gives affected individuals until December 18, 2016, to claim a refund on these monetary awards for years in which a refund would otherwise have been barred by the refund statute of limitation.

If you are aware of someone who was wrongly incarcerated and received a monetary award as a result of the wrongful incarceration, you may be entitled to a refund. Contact us, we can help.