HR 3512

This bill, the Tackling Predatory Litigation Funding Act, aims to regulate litigation funding by imposing a significant tax on profits generated by third parties who provide financing for lawsuits. Specifically, it creates a new tax on ‘qualified litigation proceeds’ – essentially, the gains from litigation funded through agreements – calculated as the sum of the highest federal tax rate and 3.8 percentage points. The bill also establishes rules for withholding and reporting this tax, impacting entities involved in litigation financing agreements and clarifying definitions related to these agreements.