U.S. Senator Catherine Cortez Masto (D-Nev.) re-introduced legislation to protect American consumers who sue corporations for fraud. The End Double Taxation of Successful Consumer Claims Act will help ensure that people who win fraud cases receive the full amount of the damages they are awarded, rather than being unfairly taxed on fees awarded to their attorneys.
“Since my time as Nevada’s Attorney General, I’ve been working to defend the Silver State’s consumers from fraud. The pandemic has only increased the potential for predatory or reckless companies to harm the public. We want consumers who are defrauded to be able to hold bad actors accountable, but current tax laws end up protecting massive corporations instead of consumers. This bill will help level the playing field when it comes to corporate accountability, and I’ll keep working to end abuse by corporations and protect ordinary Nevadans.”
A provision in the U.S. tax code, which was made worse by the 2017 Republican tax bill, unfairly penalizes consumers who sue corporations or companies for abuse or fraud. Plaintiffs who win their cases often receive money for both damages to them and fees for their lawyers. But the tax code makes plaintiffs pay income tax on the full amount awarded by a court, even though the plaintiffs personally receive only damages, not the attorneys’ fees. Many consumer fraud cases award only small amounts in damages, and if the consumer is taxed for the total amount, the taxes they owe could end up exceeding the amount they are personally awarded. The End Double Taxation of Successful Consumer Claims Act will ensure that consumers are not liable for federal income taxes on money awarded to their attorneys.
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