Tackling Predatory Litigation Funding Act

[Congressional Bills 119th Congress] [From the U.S. Government Publishing Office] [H.R. 3512 Introduced in House (IH)] <DOC> 119th CONGRESS 1st Session H. R. 3512 To amend the Internal Revenue Code of 1986 to establish a tax on income from litigation which is received by third-party entities that provided financing for such litigation. _______________________________________________________________________ IN THE HOUSE OF REPRESENTATIVES May 20, 2025 Mr. Hern of Oklahoma (for himself and Mr. Feenstra) introduced the following bill; which was referred to the Committee on Ways and Means _______________________________________________________________________ A BILL To amend the Internal Revenue Code of 1986 to establish a tax on income from litigation which is received by third-party entities that provided financing for such litigation. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Tackling Predatory Litigation Funding Act''. SEC. 2. LITIGATION FINANCING. (a) In General.--Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter: ``CHAPTER 50B--LITIGATION FINANCING ``Sec. 5000E-1. Tax imposed. ``Sec. 5000E-2. Definitions. ``Sec. 5000E-3. Special rules. ``SEC. 5000E-1. TAX IMPOSED. ``(a) In General.--A tax is hereby imposed for each taxable year in an amount equal to the applicable percentage of any qualified litigation proceeds received by a covered party. ``(b) Applicable Percentage.--For purposes of subsection (a), with respect to any taxable year, the applicable percentage shall be the amount (expressed as a percentage) equal to the sum of-- ``(1) the highest rate of tax imposed by section 1 for such taxable year, plus ``(2) 3.8 percentage points. ``(c) Application of Tax for Pass-Thru Entities.--In the case of a covered party that is a partnership, S corporation, or other pass-thru entity, the tax i