Congress to Look at 3rd Party Litigation Bill

North Carolina Sen. Thom Tillis has introduced the Tackling Predatory Litigation Funding Act in the U.S. Senate. If passed, Tillis’ bill will put a 40.8% tax on the profits earned by third-party entities financing civil litigation.

“Predatory litigation financing allows outside funders, including foreign entities, to profit off our legal system, driving up costs and delaying justice,” Senator Tillis said. “This legislation will bring much-needed transparency and accountability by taxing these profits and deterring abusive practices that undermine the integrity of our courts.”

Oklahoma Rep. Kevin Hern of Oklahoma has introduced companion legislation in the U.S. House of Representatives.

“Foreign entities shouldn't be allowed to meddle tax-free in the American legal system. Frivolous lawsuits have gotten out of control in recent years, largely because of these third-party funders fueling a market that is ballooning,” Hern said in a statement about his bill. “Taxing these third-party entities will limit unmeritorious lawsuits and provide economic relief to the middle class.”

Tillis’ post on his senatorial website explaining the dangers of third-party lawsuits said, “This highly questionable practice adds tremendous costs to U.S. consumers by encouraging and needlessly extending litigation. It is also arguably violative of several common law principles that seek to prevent profit-seeking and abusive practices in the tort system.”

He points out that these uninterested parties are gambling on the outcome of litigation, and it remains “hidden in the shadows” because no disclosure is required. Currently, about $15 billion is set for third-party litigation financing this year alone. For the company leading the third-party pack, that’s a 355% increase in spending.

Many of the companies financing third-party suits are off shore and not impacted by U.S. taxes.

The following organizations have expressed support for a congressional fix for this tax loophole: American Consumer Institute, 60 Plus Association, Advancing American Freedom, American Association of Senior Citizens, Americans for Tax Reform, Center for Individual Freedom, Citizens Against Lawsuit Abuse, Consumer Action for a Strong Economy, Consumer Choice Center, Council for National Policy Action, Frontiers of Freedom, Heartland Impact, Institute for Liberty, Less Government, National Taxpayers Union, Taxpayers Protection Alliance, Heartland Institute, and the James Madison Institute.

Source link: Thom Tillis — https://bit.ly/4kEe8w7