Bill Text: CA SJR13 | 2019-2020 | Regular Session | Introduced

California Senate Joint Resolution 13 (Prior Session Legislation)

Introduced

Bill Title: The End Double Taxation of Successful Civil Claims Act.

Spectrum: Moderate Partisan Bill (Democrat 5-1)

Status: (Introduced - Dead) 2020-03-05 - Re-referred to Com. on GOV. & F. [SJR13 Detail]

Download: California-2019-SJR13-Introduced.html

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Joint Resolution

No. 13

Introduced by Senator Wieckowski
(Coauthors: Senators Dodd, Hertzberg, and Jackson)
(Coauthors: Assembly Members Mark Stone and Voepel)

February 21, 2020

Relative to the End Double Taxation of Successful Civil Claims Act.

LEGISLATIVE COUNSEL'S DIGEST

SJR 13, as introduced, Wieckowski. The End Double Taxation of Successful Civil Claims Act.

Existing federal law allows deductions from gross income for attorney fees and court costs in connection with an action involving a claim of specified provisions. The End Double Taxation of Successful Civil Claims Act would allow deductions from gross income for attorney fees and court costs in connection with any action.

This measure would urge the Congress and the President of the United States to enact the End Double Taxation of Successful Civil Claims Act.

Fiscal Committee: NO

WHEREAS, The Tax Cuts and Jobs Act (“TCJA”) made significant changes to federal tax law by amending the Internal Revenue Code; and

WHEREAS, Specifically, the TCJA changes how meritorious lawsuit settlements and judgments are treated for federal income tax purposes; and

WHEREAS, Before enactment of the TCJA, a portion of settlements and judgments were attributed to nontaxable income and, therefore, not taxed, and the taxable portions of the settlements and judgments attributed to attorney fees and costs were deductible; and

WHEREAS, Now, pursuant to federal tax law provisions amended by the TCJA, miscellaneous itemized deductions are prohibited and meritorious plaintiffs are taxed on attorney fees and costs as “phantom income”; and

WHEREAS, The attorneys of those meritorious plaintiffs are also required to pay federal income taxes on those same attorney fees and costs, resulting in double taxation of these fees and costs; and

WHEREAS, The unjust outcome leaves many meritorious plaintiffs with a tax bill that puts them in a worse financial position than before they brought their successful claim; and

WHEREAS, Double taxation on “phantom income” discourages California citizens from exercising their constitutional and statutory rights to hold people accountable for fraudulent or dangerous conduct, undermining the effectiveness of our consumer protection laws and the safety of our community; now, therefore, be it

Resolved by the Senate and the Assembly of the State of California, jointly, That the Legislature supports the End Double Taxation of Successful Civil Claims Act; and be it further

Resolved, That the Legislature urges the United States Congress to enact the End Double Taxation of Successful Civil Claims Act in order to ensure equitable federal tax policy; and be it further

Resolved, That the Secretary of the Senate transmit copies of this resolution to the President of the United States, to the Speaker of the House of Representatives, to the Majority Leader of the Senate, and to each Senator and Representative from California in the Congress of the United States.