A provision tucked into the U.S. House Democratic budget bill would put taxpayers on the hook to cover costs associated with personal injury lawsuits – a major win for the Trial Bar if it passes.
As noted in a Legal Newsline article, the bill as drafted would “alter IRS rules allowing trial lawyers to deduct the expense of expert witnesses, discovery and depositions up front in contingency fee cases.” Currently, those expenses can only be written off if a case is lost.
According to a Wall Street Journal editorial, this tax break could cost taxpayers $2.5 billion over a decade. By shifting the upfront costs to taxpayers, this move is likely to prompt an increase in the number of frivolous lawsuits that are filed, further straining an already taxed civil justice system.
The Trial Bar has long advocated for this IRS rule change. Previous attempts to alter the rule via the Department of Treasury during the Clinton administration, as well as through legislation in 2008, have failed.