Official Summaries

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.  

Current Full Text

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 467 Introduced in Senate (IS)]

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119th CONGRESS
  1st Session
                                 S. 467

 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.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             February 6 (legislative day, February 5), 2025

 Ms. Cortez Masto (for herself, Mrs. Murray, Mrs. Shaheen, Mr. Kaine, 
 Mr. Bennet, and Mr. Booker) introduced the following bill; which was 
          read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``End Double Taxation of Successful 
Consumer Claims Act''.

SEC. 2. ABOVE-THE-LINE DEDUCTION FOR ATTORNEY FEES AND COSTS IN 
              CONNECTION WITH CONSUMER CLAIM AWARDS.

    (a) In General.--The first sentence of paragraph (20) of section 
62(a) of the Internal Revenue Code of 1986 is amended by inserting ``or 
a claim of a consumer protection violation (as defined in subsection 
(f))'' after ``section 1862(b)(3)(A) of the Social Security Act (42 
U.S.C. 1395y(b)(3)(A))''.
    (b) Consumer Protection Violation Defined.--Section 62 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subsection:
    ``(f) Consumer Protection Violation Defined.--For purposes of 
subsection (a)(20), the term `consumer protection violation' means an 
act that is unlawful under any of the following:
            ``(1) Section 987 of title 10, United States Code.
            ``(2) Section 6, 8, or 9 of the Real Estate Settlement 
        Procedures Act of 1974 (12 U.S.C. 2605, 2607, or 2608).
            ``(3) The Expedited Funds Availability Act (12 U.S.C. 4001 
        et seq.).
            ``(4) The Homeowners Protection Act of 1998 (12 U.S.C. 4901 
        et seq.).
            ``(5) The Truth in Lending Act (15 U.S.C. 1601 et seq.).
            ``(6) The Credit Repair Organizations Act (15 U.S.C. 1679 
        et seq.).
            ``(7) The Fair Credit Reporting Act (15 U.S.C. 1681 et 
        seq.).
            ``(8) The Equal Credit Opportunity Act (15 U.S.C. 1691 et 
        seq.).
            ``(9) The Fair Debt Collection Practices Act (15 U.S.C. 
        1692 et seq.).
            ``(10) The Electronic Fund Transfer Act (15 U.S.C. 1693 et 
        seq.).
            ``(11) The Interstate Land Sales Full Disclosure Act (15 
        U.S.C. 1701 et seq.).
            ``(12) The Consumer Product Safety Act (15 U.S.C. 2051 et 
        seq.).
            ``(13) The Magnuson-Moss Warranty-Federal Trade Commission 
        Improvement Act (15 U.S.C. 2301 et seq.).
            ``(14) The Servicemembers Civil Relief Act (50 U.S.C. 3901 
        et seq.).
            ``(15) Any provision of Federal law prohibiting unfair or 
        deceptive trade or credit practices.
            ``(16) Any provision of Federal, State, or local law, or 
        common law claims permitted under Federal, State, or local 
        law--
                    ``(A) providing for the enforcement of consumer 
                protection, or
                    ``(B) regulating any aspect of consumer 
                transactions, including claims for unfair, deceptive, 
                or abusive trade or credit practices, or for other 
                actions that cause harm to an individual by a seller or 
                provider of property, services, securities or other 
                investments, money, or credit for personal, family, or 
                household use.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to attorney fees and court costs paid during taxable years ending 
after the date of the enactment of this Act with respect to any 
judgment or settlement occurring during such taxable years.
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