Rep. Ellison Introduces the Fair Tax Treatment for Consumer-Plaintiffs Act
Rep. Keith Ellison (D-MN) introduced the Fair Tax Treatment for Consumer-Plaintiffs Act (H.R. 3583) today. This bill would end the disincentive that deters many people from filing civil claims – such as complaints of consumer fraud – out of fear that they will end up paying more in taxes than they could gain from winning a judgment in their favor.
“I’ve heard too many stories of defrauded consumers who bring cases to court in order to claim their rights, only to be hit hard by taxes on money they never even see and risk losing access to benefits like the Earned Income Tax Credit or housing assistance – all after winning a claim against fraudsters,” said Rep. Keith Ellison. “My bill makes sure that our tax code does not set up an unfair situation in which people lose out financially when they stand up to fraudulent business practices.”
“This bill will fix a peculiarity in the tax code that has the severely unfair effect of penalizing defrauded consumers for holding law-breaking businesses accountable in court,” said John Goolsby, a consumer rights attorney based in St. Paul, Minnesota. “Under current law, consumers who bravely stand up to illegal business practices and win their court cases are at risk of owing more in taxes than they get from the case. They could thus lose by winning. If this bill becomes law, it will provide relief from the unfair tax burden on consumers who successfully take bad businesses to court. By thus removing a barrier to holding law-breaking businesses accountable, this law will also help make sure that businesses that want to play by the rules are not at a competitive disadvantage in the marketplace.”
“When consumers defend their own rights in court, they play a crucial role in showing businesses everywhere that they are not beyond the reach of the law. Thus, such cases really end up serving the broader public interest,” said Ira Rheingold, Executive Director of the National Association of Consumer Advocates (NACA). “By introducing this bill, Rep. Ellison is taking an important step to ensure that consumers are not penalized for seeking to hold businesses accountable for their actions.”