Tackling Predatory Litigation Funding Act
Analysis under review: This bill has generated analysis that may be too generic or incomplete. Clause-level evidence remains available below.
Summary
What This Bill Does
The bill defines short title naming the Act as the Tackling Predatory Litigation Funding Act, amends the Internal Revenue Code to impose a new tax on qualified litigation proceeds received by covered parties at the highest individual rate plus 3.8 percentage points, applied at the entity level for pass-through, and creates tax imposed equal to the applicable percentage (highest individual rate plus 3.8 percentage points) on qualified litigation proceeds, applied at entity level for partnerships and S corporations. It relies on definition changes, tax rate changes, reporting requirements, and compliance mandates. The main policy areas are Finance and Foreign Policy.
Who Benefits and How
Defendants in funded lawsuits could see lower costs.
Who Bears the Burden and How
Third-party litigation funders could face higher costs, Law firms handling funded litigation would take on compliance duties, and Hedge funds with litigation portfolios could face higher costs.
Key Provisions
- Defines short title naming the Act as the Tackling Predatory Litigation Funding Act.
- Amends the Internal Revenue Code to impose a new tax on qualified litigation proceeds received by covered parties at the highest individual rate plus 3.8 percentage points, applied at the entity level for pass-through...
- Creates tax imposed equal to the applicable percentage (highest individual rate plus 3.8 percentage points) on qualified litigation proceeds, applied at entity level for partnerships and S corporations.
- Defines definitions of civil action, covered party, litigation financing agreement, and qualified litigation proceeds; includes anti-netting provision and prohibition on excluding sovereign immunity and personal injury...
- Requires withholding requirements on litigation proceeds at 50% of the applicable percentage; makes withholding agents liable for withheld tax; allows credits for amounts withheld against final tax liability.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
The bill defines short title naming the Act as the Tackling Predatory Litigation Funding Act, amends the Internal Revenue Code to impose a new tax on qualified litigation proceeds received by covered parties at the highest individual rate plus 3.8 percentage points, applied at the entity level for pass-through, and creates tax imposed equal to the applicable percentage (highest individual rate plus 3.8 percentage points) on qualified litigation proceeds, applied at entity level for partnerships and S corporations.
Key Policy Areas
Finance, Foreign Policy
Primary Purpose
The bill defines short title naming the Act as the Tackling Predatory Litigation Funding Act, amends the Internal Revenue Code to impose a new tax on qualified litigation proceeds received by covered parties at the highest individual rate plus 3.8 percentage points, applied at the entity level for pass-through, and creates tax imposed equal to the applicable percentage (highest individual rate plus 3.8 percentage points) on qualified litigation proceeds, applied at entity level for partnerships and S corporations.
Policy Domains
Section 2 - Litigation financing
Identified Gains
- Defendants in funded lawsuits
Identified Costs
- Third-party litigation funders
- Law firms handling funded litigation
- Hedge funds with litigation portfolios
- Sovereign wealth funds
- Named parties in funded civil actions
Sponsors
Legislative Progress
In CommitteeIntroduced in Senate
Mr. Tillis introduced the following bill; which was read twice …
Read twice and referred to the Committee on Finance.
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Defendants in funded lawsuits, Law firms handling funded litigation, Named parties in funded civil actions
Positive-direction: Defendants in funded lawsuits
Negative-direction: Law firms handling funded litigation, Named parties in funded civil actions, Plaintiffs relying on litigation financing
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_secretary"
- → Secretary of the Treasury
Key Definitions
Terms defined in this bill
Any civil action, administrative proceeding, claim, or cause of action
Any third party to a civil action that receives funds pursuant to a litigation financing agreement and is not an attorney representing a party
Written agreement whereby a third party provides funds to a named party or law firm and creates a direct or collateralized interest in the proceeds
Realized gains, net income, or other profit from litigation financing agreements, with no netting or exclusions allowed
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology