[Congressional Record Volume 168, Number 126 (Thursday, July 28, 2022)]
[Senate]
[Page S3784]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN (for herself, Mr. Padilla, and Mr. 
        Hickenlooper):
  S. 4666. A bill to amend the Internal Revenue Code of 1986 to 
establish a deduction for attorney fees awarded with respect to certain 
wildfire damages and to exclude from gross income settlement funds 
received with respect to such damages; to the Committee on Finance.
  Mrs. FEINSTEIN. Mr. President, I rise to speak in support of 
legislation that I introduced today along with Senators Alex Padilla 
and John Hickenlooper. This is a companion to the bipartisan bill that 
Representative Mike Thompson has introduced in the House of 
Representatives.
  In 2020, the Fire Victim Trust was established after Pacific Gas & 
Electric, PG&E, was found legally responsible for major California 
wildfires in 2015, 2017, and 2018. PG&E contributed about $13 billion 
to this fund to pay victims of these wildfires to cover losses they 
suffered.
  Unfortunately, the specific situations of each of these victims is 
different, and it is unclear to many whether they will need to pay 
Federal income tax on the amounts they receive. Moreover, it is unfair 
that these victims should have to worry about paying taxes on amounts 
that are simply intended to make them whole.
  In addition, about 30 percent of settlement payouts are devoted to 
attorney fees, for attorneys whom the victims did not hire. It appears 
that victims will even owe taxes on the full amount of the settlement, 
including these attorney fees.
  This is a problem now for wildfire victims in California. However, as 
the frequency and severity of wildfires grows across the Western United 
States due to climate change, it is more likely that this is a problem 
that California and other States will face again.
  Our legislation would do two things. First, it would clarify that 
such wildfire settlement fees are not taxable. Second, it would create 
an above-the-line tax deduction for relevant attorney fees. This would 
provide tax certainty and fairness to wildfire settlement victims now 
and into the future.
  With the incidence of wildfires rising, this is an important issue 
for Congress to address now to avoid victims having to worry about 
paying taxes on settlement payments that are meant to make them whole 
from devastating losses that many of them have suffered.
  I hope my colleagues will join me in support of this bill.
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