The Treasury Department is rumored to be on the verge of reversing a long-standing policy which did not help personal injury attorneys. The status quo: litigation expenses in contingency agreements are not deductible. Litigation expenses in contingency agreements are considered loans advanced to the plaintiff. Of course, if the plaintiff loses, the loan is not repaid. Then, the attorney can write off the “bad loan.”

If the Treasury Department changes its mind, litigation expenses, such as fees paid to experts, court costs, filing fees, and the like would be deductible in the year those expenses were paid.

Interestingly, legislators in the U.S. Senate and House of Representatives have tried to introduce bills that would provide trial attorneys with a statutory tax deduction for litigation costs in contingency fees cases. The result: an absence of support to even hold hearings on the issue, much less formal consideration by either chamber.

In a time when consideration is being given to raising taxes for some or all, it is ironic that one group seems poised to get a lucky break – plaintiff’s attorneys.