AAJ: Treat Trial Attorneys Like Other Small Businesses; Bipartisan Legislation Will Clarify IRS Tax Code

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For Immediate Release: August 6, 2009

Contact: Ray De Lorenzi
202-965-3500, ext. 369

AAJ: Treat Trial Attorneys Like Other Small Businesses; Bipartisan Legislation Will Clarify IRS Tax Code

The following is a statement from American Association for Justice Senior VP of Public Affairs Linda Lipsen:

“The American Association for Justice strongly supports bipartisan legislation that will correct inequities regarding trial attorney expenses.  Recently, there has been inaccurate and purposefully misleading reporting regarding this legislation.

“The tax legislation will treat the trial attorney profession like every other small business in this country, allowing them to deduct their expenses in the year incurred.  Currently, trial attorneys pay all case costs from their own pocket when representing Americans that cannot afford exorbitant hourly fees.  These attorneys must wait to deduct their expenses until the case concludes. This legislation will allow the IRS to treat this profession as every other small business.

“The bill merely changes the timing of the deduction to when the expenses are paid – it would not in any way increase the amount of the deduction.
“In 1995, the 9th Circuit Court of Appeals ruled that attorneys could take the deduction in the year the expense incurred, but the IRS has not adopted this position.  Therefore, the law is hopelessly muddled, and that is why this legislation is needed.

“The original ‘reporting’ on this legislation came last week from a U.S. Chamber Institute for Legal Reform-owned (ILR) publication called Legalnewsline.com.  Legalnewsline.com is advocacy disguised as journalism, while ILR is a corporate front group dedicated to undermining the civil justice system.

“The comments cited in the story were taken totally out of context, without regard for the totality of the conversation the reporter tried to hear while apparently lurking in a doorway of a closed meeting.  The bill described by Legalnewsline.com and today’s Washington Times editorial is not a nefarious ‘special tax break’ that they claim it is. 

“This tax bill has very solid bipartisan support and makes a sound change to currently muddled IRS policy and conflicting court rulings.”

As the world's largest trial bar, the American Association for Justice (formerly known as the Association of Trial Lawyers of America) works to make sure people have a fair chance to receive justice through the legal system when they are injured by the negligence or misconduct of others—even when it means taking on the most powerful corporations. Visit http://www.justice.org/newsroom.

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