Congressman Steven Horsford Introduces Legislation to Protect Consumers Holding Corporations Accountable in the Courts | Congressman Steven Horsford
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Congressman Steven Horsford Introduces Legislation to Protect Consumers Holding Corporations Accountable in the Courts

June 11, 2020

Washington, D.C. -- Today, Congressman Steven Horsford (NV-04) and Congressman Hank Johnson (GA-04) introduced the End Double Taxation of Successful Consumer Claims Act to protect American consumers' right to sue corporations for fraud. The legislation will help ensure that consumers who win fraud causes are not liable for taxes on funds awarded to their attorney and end the practice of requiring consumers who win their cases to pay income taxes on the funds that courts award them.

"It is my duty as a Member of Congress to ensure that the American people, and those I represent in Nevada, are not deterred from seeking justice in the wake of predatory consumer fraud, and credit and debt collection tactics, that have run rampant during the COVID-19 pandemic," Congressman Horsford said. "This bill will empower the American people to pursue legal action against corporations and their abusive tactics without fear of a tax penalty that could financially burden them if they win. Nevadans, and all American consumers, deserve the right to protection from exploitative practices and the ability to seek damages in the aftermath."

A provision in the U.S. tax code, which was made worse by the 2017 Republican tax bill, unfairly taxes consumers who sue corporations or companies for abuse or fraud on the legal judgments they win. Plaintiffs who sue companies for consumer fraud and win their cases are currently awarded money in damages and additional money to pay attorneys' fees. 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 attorney's 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 to pay federal income taxes on money awarded to pay attorneys' fees. The sponsors of this bill hope to include it in a future pandemic relief effort to ensure any victims of unfair or deceptive practices are able to have access to the court system to obtain redress.

Supporting organizations of this legislation include Americans Advancing Justice, Americans for Financial Reform, Center for Justice & Democracy, Consumer Action, Consumers for Auto Reliability and Safety, Consumer Federation of America, National Association of Consumer Advocates, National Consumer Law Center (on behalf of its low income clients), National Consumers League, Public Citizen, Public Justice, U.S. PIRG.

The legislation was introduced in the Senate by Senator Catherine Cortez Masto (D-NV), and is supported by Senators Chris Van Hollen (D-MD), Jeff Merkley (D-OH), Richard Blumenthal (D-CT), Cory Booker (D-NJ), Edward Markey (D-MA), and Kamala Harris (D-CA).

Issues:Economy