Congress added a new section to the Internal Revenue Code as part of the Tax Cuts and Jobs Act. The new section prohibits companies from deducting costs related to sexual assault and sexual harassment settlements that are subject to nondisclosure agreements.

The new law provides: 

PAYMENTS RELATED TO SEXUAL HARASSMENT AND SEXUAL ABUSE.—No deduction shall be allowed under this chapter for—

“(1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or

“(2) attorney's fees related to such a settlement or payment.”

The law previously allowed such payments to be deducted.