Comprehensive reforms are needed to address how third-party litigation funding (TPLF) operates within the federal tax and court system, according to the U.S. Chamber of Commerce Institute for Legal Reform (ILR), citing national security concerns and unfair competitive advantages for foreign investors.
Current tax loopholes allow foreign funders to profit from American lawsuits while avoiding U.S. taxes, ILR contends in a recent blog post outlining calls for reform.
“TPLF brings up some big questions about transparency, fairness, and even national security,” according to ILR. “Furthermore, the way the federal tax system currently treats these high-paying ‘investments’ only makes things worse, creating a loophole that lets foreign funders avoid paying U.S. taxes on their litigation profits—all while contributing to out-of-control tort costs and potentially endangering national interests. It’s time for Congress to step in and fix this mess.”
