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A bill to amend the Internal Revenue Code of 1986 to allow an above-the-line deduction for attorney fees and costs in connection with consumer claim awards.
2/11/2025, 11:56 AM
Summary of Bill S 467
Currently, individuals who receive consumer claim awards are not able to deduct the attorney fees and costs they incur in the process. This bill seeks to change that by allowing for an above-the-line deduction, meaning that individuals can deduct these expenses from their gross income before calculating their adjusted gross income.
The bill is designed to provide relief to consumers who have been wronged by companies or individuals and have had to seek legal assistance to receive compensation. By allowing for these deductions, the bill aims to make it easier for individuals to seek justice and hold wrongdoers accountable without facing a heavy financial burden. Overall, Bill 119 s 467 is a bipartisan effort to provide tax relief to consumers who have been harmed and to ensure that they are able to fully benefit from any awards they receive. It is a step towards promoting fairness and justice in the legal system and protecting the rights of consumers.
Congressional Summary of S 467
End Double Taxation of Successful Consumer Claims Act
This bill allows an above-the-line tax deduction for court costs and attorney’s fees awarded to an individual as part of a settlement or judgment for a claim related to certain consumer protection violations, subject to limitations. (An above-the-line deduction is subtracted from gross income to calculate adjusted gross income.)
Under current law, court costs and attorney’s fees awarded to an individual as part of a settlement or judgment are included in the individual’s gross income, even if such attorney’s fees are contingent upon the outcome of the claim or paid directly to the individual’s attorney. (Some exceptions apply.) However, under current law, an above-the-line tax deduction is allowed for court costs and attorney’s fees awarded in connection with certain employment and civil rights discrimination claims.
This bill expands the above-the-line tax deduction for court costs and attorney’s fees paid in connection with certain discrimination claims to include court costs and attorney’s fees awarded as part of a settlement or judgment in a claim for
- unfair, deceptive, or abusive trade or credit practices;
- harm to an individual by a seller or provider of property, services, securities or other investments, money, or credit; or
- certain other consumer protection violations.
The deduction is allowed to the extent that such amounts are includible in the individual's gross income.
