| 1 | 1 | | 84R2717 SCL-D |
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| 2 | 2 | | By: Wu H.B. No. 419 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to federal income tax liability for certain damages |
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| 8 | 8 | | awarded in certain civil actions. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Chapter 41, Civil Practice and Remedies Code, is |
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| 11 | 11 | | amended by adding Section 41.015 to read as follows: |
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| 12 | 12 | | Sec. 41.015. FEDERAL INCOME TAX LIABILITY FOR CERTAIN |
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| 13 | 13 | | DAMAGES. If compensatory damages awarded to a claimant for loss of |
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| 14 | 14 | | earnings, loss of earning capacity, loss of contributions of a |
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| 15 | 15 | | pecuniary value, or loss of inheritance are reduced for federal |
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| 16 | 16 | | income tax payments or liability as described by Section 18.091(a) |
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| 17 | 17 | | and are awarded based on a finding or instruction that a recovery |
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| 18 | 18 | | for those damages is not subject to federal income tax, and if the |
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| 19 | 19 | | claimant is later determined to be liable for federal income tax on |
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| 20 | 20 | | that recovery, a defendant found liable for those damages must pay |
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| 21 | 21 | | the claimant an amount sufficient to satisfy the claimant's federal |
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| 22 | 22 | | income tax liability for that recovery. |
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| 23 | 23 | | SECTION 2. The change in law made by this Act applies only |
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| 24 | 24 | | to an action that commences on or after the effective date of this |
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| 25 | 25 | | Act. An action that commences before the effective date of this Act |
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| 26 | 26 | | is governed by the law applicable to the action immediately before |
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| 27 | 27 | | the effective date of this Act, and that law is continued in effect |
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| 28 | 28 | | for that purpose. |
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| 29 | 29 | | SECTION 3. This Act takes effect immediately if it receives |
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| 30 | 30 | | a vote of two-thirds of all the members elected to each house, as |
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| 31 | 31 | | provided by Section 39, Article III, Texas Constitution. If this |
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| 32 | 32 | | Act does not receive the vote necessary for immediate effect, this |
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| 33 | 33 | | Act takes effect September 1, 2015. |
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