The End Double Taxation of Successful Civil Claims Act.
If the End Double Taxation of Successful Civil Claims Act is enacted, it would potentially reform federal tax policy by allowing taxpayers to deduct attorney fees and court costs in all relevant civil claims, not merely specific types as currently permitted. This change could restore financial equity for those who allege actionable claims and succeed in court, protecting their rights and enhancing the consumer protection landscape. Currently, many plaintiffs find themselves in a worse financial position post-settlement due to the implications of the TCJA.
Senate Joint Resolution No. 13, introduced by Senator Wieckowski and coauthored by several other senators and assembly members, addresses concerns regarding the taxation of successful civil claims under federal tax law. The resolution urges Congress to enact the End Double Taxation of Successful Civil Claims Act, which aims to eliminate the double taxation imposed on attorney fees and court costs related to these claims. The Tax Cuts and Jobs Act of 2017 introduced significant changes to how settlements and judgments are taxed, leading to plaintiff attorneys and their clients facing hefty tax bills on what are termed phantom income.
Notably, the resolution highlights that double taxation on attorney fees discourages plaintiffs from pursuing legitimate claims against fraudulent or hazardous conduct, which could strategically undermine public safety and consumer rights. While supporters view this measure as an essential equity issue for claimants, critics may argue against the implications of tax regulation adjustments and potential revenue impacts on the federal government. Ultimately, this resolution aims to advocate for a fairer tax outcome, thus fostering a more robust civil justice system.