Pryce Civil Rights Tax Relief Included in Jobs Bill

House Votes in Favor of Initiative Eliminating Double
Taxation of Attorney Fees and Costs

WASHINGTON, D.C. - Individuals who are awarded damages in civil rights, discrimination, and false claim act court cases will benefit from an initiative championed by Congresswoman Deborah Pryce (R-Upper Arlington) that eliminates the unfair double taxation of attorney fees and costs.

The Civil Rights Tax Relief provision, included in the American Jobs Creation Act that passed the U.S. House of Representatives Thursday, is based on legislation first introduced by Pryce four years ago.

The bill helps corrects an inequity in our tax law that requires the double taxation of attorney fees and costs in civil rights, discrimination, and false claim act cases.  The problem arises in these cases because fees paid constitute taxable income to both the client and the attorney representing the client.  As a result, the fees and costs are taxed twice and the claimant is unfairly taxed on money never received. In some discrimination cases, the victims actually owe more in taxes than the damage award itself.

"We have scored a victory for tax fairness and sound tax policy,” said Pryce. “This is an issue I have been working on for a number of years.  I am proud to say today we are putting a permanent provision in law that will protect people who risk their health and safety to help the government identify and prosecute fraud, and others who fight to protect their civil rights."

The U.S. Chamber of Commerce, the AARP, and the Ohio State Bar Association, among others, strongly support the civil rights tax relief provision because it promotes fair and prompt settlements, and helps reduce costly litigation.