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