Litigation Finance Tax Fight Heads for Second Round, Tillis Says

Sen. Thom Tillis (R-N.C.) says that he is not giving up on a bill taxing the litigation finance industry.

Despite the last-minute failure this summer of his controversial litigation finance bill that would’ve added a 41% tax on investors, Tillis will continue to push for a new version.

“We’re going to go after it,” he said during a Bloomberg Government roundtable on Monday.

In April, Tillis introduced the Tackling Predatory Litigation Funding Act, which would impose the tax on profits earned by third-party entities that finance civil litigation. The bill describes the tax as being equal to the highest individual rate, 37%, plus an additional 3.8%. The bill was included in Senate Republicans’ version of President Trump’s “big, beautiful” bill in June. The tax was eventually removed from the bill by the senate parliamentarian.

Tillis, who is not seeking reelection and will end his term next year, said the reason for the bill is that there needs to be equitable tax treatment across the board and because it’s “silly” that investors in lawsuits have better tax treatment than the victims who receive an award.

The suggested inclusion of the bill in the reconciliation package caused an uproar in the funding space and prompted a blitz of lobbying from the industry trade group the International Legal Finance Association and funders. Tillis said he took notice and was surprised by how they mobilized.

“I think some of the players that didn’t want to see a change in the tax treatment did an extraordinarily good job of walking all over the Hill over the past couple of months,” he said.

“I was impressed with the sheer amount of money,” he added. “You couldn’t throw a rock and not hit a contract lobbyist who hadn’t been engaged to fight this evil, equitable tax treatment bill that Tillis had.”