Bill > A3942

Introduced Session

This bill provides the victim of certain unlawful discrimination or unlawful retaliation with a gross income tax exclusion for attorney's fees and costs received in connection with claims or actions for that discrimination or retaliation. The bill does not affect the current system for determining how New Jersey eventually taxes those fees and costs to the attorneys. In 2004, Congress enacted the Civil Rights Tax Relief Act as part of the American Jobs Creation Act of 2004. The Civil Rights Tax Relief Act was designed to eliminate the double taxation of attorney's fees and costs at the federal level to both the attorney who is ultimately paid the fees and the victims of discrimination or retaliation. The Act accomplished that goal by allowing the victim to take an above-the-line deduction for the recovery or payment of attorney's fees and costs recovered in connection with any action or claim of unlawful discrimination or retaliation. See 26 U.S.C. s.62(a)(20)-(21). That law did not affect the federal taxation of the attorney's fees to the attorneys. New Jersey law was not amended when Congress enacted the Civil Rights Tax Relief Act in 2004. As a result, the attorney's fees and costs that victims of unlawful discrimination or retaliation receive in connection with such claims are taxable to both the law firm that is ultimately paid the fees and the victim at the State level, although the victim never actually receives the fees. The terms "attorney's fees" and "costs" should be liberally construed to include all expenditures for the victim to be made whole under the law, including, but not limited to, attorney's fees, paralegal fees, court costs, litigation expenses, and expenses for experts and consultants.

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Tony Bucco (R)*, 

Introduced, Referred to Assembly Judiciary Committee (on 05/10/2018)