Law360 Quotes James Salles: Tax Bill's Legal Fee Provision May Burden Attorneys
Some attorneys are reeling from a provision inserted in the House and Senate’s tax plans that would effectively erase a Ninth Circuit decision allowing attorneys to deduct expenses advanced to clients in contingent-fee cases, potentially placing a burden on practitioners and affecting the availability of legal services.
The Joint Committee on Taxation has estimated that the change in the tax treatment of legal fees would raise some $500 million in revenue over 10 years. That may account for why the provision is included in the legislation, according to James E. Salles, a [M]ember of Caplin & Drysdale, Chtd.
“The bottom line is that I suspect Congress is just looking for a short-term revenue raiser," Salles said. “Someone just thought that they’d raise a little revenue and create a uniform national rule and short-circuit gritty factual issues.”
Salles said the impact of the timing issue was likely to be relatively limited, but if he were a plaintiffs lawyer in California, he would not want that portion of the bill to pass.
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Excerpt taken from the article “Tax Bill’s Legal Fee Provision May Burden Attorneys” by Amy Lee Rosen for Law360.