Special Tax Cut for Trial Lawyers?

[chanel]

Obama is on the verge of giving them a special interest tax break worth $1.6 billion. Legal Newsline reported yesterday that John Bowman, top lobbyist for the American Association for Justice, told a private briefing that Obama's Internal Revenue Service will soon unilaterally cut their taxes without congressional approval.

The tax break would allow plaintiffs' attorneys to deduct litigation costs in the same year that they bring contingency lawsuits. Currently, such costs are considered loans to clients, deductible only if and when a case is lost. The loan arrangement exists because most states consider it unethical or even illegal for lawyers to fund their clients' lawsuits directly.

Last year, the group's then-chief lobbyist (and now CEO) Linda Lipsen said Democrats in Congress might push the provision through by sneaking it into unrelated legislation. This already-underhanded strategy appears to have failed, and so a supportive Obama administration may simply bypass Congress. It is unconscionable that "spread-the-wealth" Obama should force taxpaying plumbers, waiters and bus drivers across America to shoulder up to 40 percent of the cost of wealthy trial lawyers' litigation with this tax break. Worse, the tax break provides an effective reduction in lawsuit expenses, freeing up lawyers to file more suits that have less probability of success.

The White House declined comment on this issue, referring us instead to the Treasury Department, which also declined comment. But the White House must answer for its actions.

Read more at the Washington Examiner: No special tax cuts for wealthy trial lawyers | Washington Examiner

Every day it's something sleazier...

 

[editec]

The tax break would allow plaintiffs' attorneys to deduct litigation costs in the same year that they bring contingency lawsuits. Currently, such costs are considered loans to clients, deductible only if and when a case is lost. The loan arrangement exists because most states consider it unethical or even illegal for lawyers to fund their clients' lawsuits directly.

Yup.

Sounds sleazy to me, too.

Since lawyers are in the business of suing and taking a share of the outcome, they ought to acknowledge that that is what they are really doing.

In that case, they ought to be able to write off REAL expenses (but not their own fees) as legitimate business expenses in the year those expenses are incurred.

Now if they were taking a free up front, the formula would change, naturally.

But the way it works now where lawyers take a percentage of the settlement, lawyers are really more like CO plantiffs of the suit.