As the world grapples with the economic impact of the spreading coronavirus, the Trump Administration is mulling over whether to seek another round of tax cuts. Given the extreme polarization in Congress, it remains to be seen whether the Democrats and Republicans will be able to agree on any tax measure in this election year.
But despite the polarization in Washington, there is one federal tax cut that has already started to attract bi-partisan support among legislators from both major parties, in California. Legislators in Sacramento are joining forces to call on Congress to end the unfair double-taxation that is hitting consumers who prevail against corporate lawbreakers.
Importantly, such legislation would restore tax deductions for California consumers who are victimized, fight back in court or arbitration, and win settlements or verdicts in their favor. Currently they are receiving IRS income tax forms (Form 1099s) from defendants such as out-of-state debt collectors, banks, and auto manufacturers, attributing their attorney’s fees to them as income – while at the same time, their attorneys also receive IRS Form 1099s and are paying income taxes on the same amounts.
Fremont Senator Bob Wieckowski is championing Senate Joint Resolution 13, calling on Congress to rectify the inadvertent error in federal tax law enacted in 2017 that led to this weird situation. While it’s true the national debt is higher than just about anyone thinks is good, double-taxing consumers who were victimized and won their legal cases for their attorney’s fees isn’t really a fair or effective way to make up the shortfall.
That’s something just about everyone could agree upon.