A small contingent of special interests has spent months spreading lies about the Tackling Predatory Litigation Funding Act (TPLF Act), legislation designed to close the tax loophole on profits for undisclosed lawsuit funders. They are using underhanded tactics to confuse members of Congress and key policy influencers to block the most meaningful federal victory on tort reform in decades.
There’s a lot the opposition does not want you to know. Here’s the truth about the legislation and those special interests fueling the misinformation machine.
Truth #1
The legislation protects conservative organizations involved in public interest litigation.
The Act provides an exemption intended for “public interest” litigation designed to use the U.S. court system to correct injustices or prevent government overreach, not for using the court system solely for profit. Regular donations to non-profit organizations, dues, standard investments, or contributions to legal defense or general litigation funds, are not scoped into this bill. In addition, conservative groups that employ recoverable grants and similar funding mechanisms to allow litigation funders to “recycle” or reuse funds – be it to sue hospitals or “woke” corporations – would not be subject to the legislation currently before Congress.
Truth #2
This debate is about ensuring lawsuit funders pay the same tax rate as the victims themselves.
If a company violates civil rights or betrays shareholder trust, it should be held accountable — “woke” or not. But these lawsuits represent a tiny fraction of America’s legal landscape. Instead, the proposed tax is levied solely on the third-party funders and does not create a new tax on actual plaintiffs or their attorneys, nor would it limit traditional law firm financing or disrupt post-judgement financing arrangements. For “conservative” investors seeking massive profits and nuclear verdicts to enrich themselves, the fact remains that no matter how meritorious that lawsuit might be, those uninvolved investors should not receive better tax treatment than the victims themselves.
Truth #3
The bill fixes serious tax policy issues in the current tax code that incentivize secret foreigners to gamble on the outcome of U.S. cases against American businesses.
The reality is that the bill addresses a fundamental problem in the U.S. code: litigation funding is NOT a capital asset. Operating loans, contingency fee arrangements, and gambling winnings are all taxed at the ordinary income rate, while secret profits from litigation financing get preferential tax treatment. If you are a foreign funder, you pay no U.S. taxes at all. These loopholes and inconsistencies in the U.S. tax code must be fixed to put America First.
Truth #4
The bill protects donor privacy for conservative organizations.
The TPLF Act is a tax policy bill, not disclosure legislation. The bill does not require any non-profit – whether charitable or advocacy-oriented, 501(c)(3) or 501(c)(4) organization – to disclose its donors, under any scenario. These organizations, many of which rely on donor-supported legal strategies to protect fundamental freedoms, would see no change in how they operate or fundraise if this bill passes.
Truth #5
The legislation is pro-consumer and supports President Trump’s America First agenda.
Passing the TPLF Act would be a critical policy win for Congress, the Trump Administration, and anyone who wants to focus on lowering costs for the middle class and working families. By ending the tax-free siphoning of billions of dollars out of the U.S. economy, this bill would reduce the costs for American consumers. A new study found that third-party funded litigation costs the average American household $607 per year.
Truth #6
Defeating the TPLF Act would be a boon to the Trial Bar and its congressional allies.
Opposing closing the litigation tax loophole supports the Trial Bar, whose fundraising strengthens political forces that oppose conservative judges, while increasing costs for consumers and businesses by normalizing profit-driven litigation. It is important for conservatives to remember that more than 90% of political donations from the Trial Bar and litigation funders go to Democrats and progressive causes.
Truth #7
The legislation takes dead aim at foreign funders who are using U.S. courts to enrich themselves, weaken America’s businesses and the economy, and advance liberal agendas.
Most litigation investors aren’t interested in advancing specific causes. They make investment decisions based on perceived profit potential, and they are willing to invest substantial amounts in anti-conservative climate, DEI, and ESG cases. Large litigation investors often back pro-ESG litigation, including Therium and Woodsford. Another funder, Omni Bridgeway, performs “ESG screening” on its investments as a requirement for funding partners. It is also “investigating the establishment of an ESG fund.”
Truth #8
The bill enjoys widespread conservative support in Congress and throughout the Conservative Movement.
The legislation now enjoys more than 20 Republican sponsors and co-sponsors in the House and Senate. Real conservative organizations understand that they would not be harmed at all by the Act – that’s why so many, like Americans for Tax Reform, National Taxpayers Union, and 16 other groups support closing the litigation tax loophole. They support Congress confronting these Leftist and anti-American activists by eliminating capital gains treatment for all investors in litigation, because this kind of investing does not deserve preferential treatment.
Truth #9
Opponents of closing the litigation tax loophole are merely front groups for one or two powerful conservative funders, who are apparently suing U.S. businesses for profit.
Virtually no conservative cause litigation is funded for profit and, therefore, would not be impacted by the TPLF Act. Some conservative organizations have been told this bill would hurt them, but that is because a small handful of self-interested groups – often one-person shops – are spreading lies about litigation tax reform efforts to hide the fact that they are involved in suing U.S. companies for profit, just like the Left. Worse yet, they are possibly taking dark foreign money to do so. Serious conservatives don’t need to double their money to do the right thing, nor do they need financial backing from foreign sovereign wealth funds, Russian oligarchs, or eccentric globalists.
What Conservatives Are Saying
As one former deputy national security advisor has noted about the opposition spreading lies about the TPLF Act, “Beware. Having analyzed many disinformation campaigns and their impact on capturing a population through nefarious means, the tactics being used here appear very familiar… astroturfing, flooding the information environment. devising and amplifying conspiracy theories, exploiting information gaps, spreading targeted content. Check, check and check.” To learn more about what other conservatives are saying about closing the TPLF tax loophole and the TPLF Act, click here.