Tackling the "Tackling Predatory Litigation Funding Act"

Commercial legal finance levels the playing field for individuals and businesses, providing capital to pursue meritorious claims and protect intellectual property rights. It allows businesses – large and small – to invest in economic development, innovation, and job creation in local communities, rather than expend limited resources on litigation.

• S. 1821/H.R. 3512 would create an unprecedented and punitive 40.8% minimum taxation rate for legal finance transactions. This proposal would inhibit access to justice by devaluing and limiting investment in addition to inviting other politically-motivated taxation targeting industries and groups for ideological reasons.
• The bill would harm investors, which include tax-exempt pension plans, foundations, and religious organizations. It could also negatively affect the ability to invest in a broad range of businesses, including those with affirmative litigation claims, distressed/insolvent companies and affiliated bankruptcy trustees, law firms, and insurer subrogees.
• The bill would allow for double taxation of partnerships by taxing income at both the entity and shareholder level, violating fundamental principles of pass-through taxation. This would complicate the ability of partnerships and the IRS to allocate income, losses, and credits among partners.

Key Provisions and Their Consequences