On the Point of Law blog, Carter Wood notes that last month, Sen. Arlen Specter (pictured) introduced S. 437, a bill that would amend the Internal Revenue Code to allow attorneys a tax deduction in the current taxable year for reimbursable expenses and court costs which they pay or incur in connection with contingency fee cases.
From Wood’s perspective, “this another run at legislation that Ways & Means Chairman Charlie Rangel tried to include in the energy and tax extenders bill last year (Section 311 in H.R. 6049), and it’s a straight-forward giveaway to trial lawyers.”
Last May, a Wall Street Journal editorial labeled Rangel’s bill “The Bill Lerach Tax Cut,” and stated:
The provision would allow plaintiffs lawyers to deduct the up-front expenses of pursuing contingency-fee lawsuits, even in cases where the lawyer is expecting to be reimbursed for these expenses. The IRS currently considers these costs a loan from the lawyer to his client, and like other taxpayers, the lawyer can only deduct the loan if it isn’t paid back.