II 

117TH CONGRESS 

2D SESSION S. 4666 

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. 

IN THE SENATE OF THE UNITED STATES 

JULY 28, 2022 

Mrs. FEINSTEIN (for herself, Mr. PADILLA, and Mr. HICKENLOOPER) introduced the following bill; which was read twice and referred to the Committee on Finance 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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•S 4666 IS

1 SECTION 1. ABOVE THE LINE DEDUCTION FOR ATTORNEY 

2 FEES RELATING TO AWARDS FOR PROPERTY 

3 DAMAGE DUE TO CERTAIN WILDFIRES. 

4 (a) IN GENERAL.—Section 62(a) of the Internal Rev5 enue Code of 1986 is amended by inserting after para6 graph (21) the following new paragraph: 

7 ‘‘(22) ATTORNEY FEES AND COURT COSTS RE8 LATING TO AWARDS WITH RESPECT TO CERTAIN

9 WILDFIRES.— 

10 ‘‘(A) IN GENERAL.—Any deduction allow11 able under this chapter for attorney fees and 

12 court costs paid by, or on behalf of, the tax13 payer in connection with any award with re14 spect to a qualifying wildfire disaster. The pre15 ceding sentence shall not apply to any deduc16 tion in excess of the amount includible in the 

17 taxpayer’s gross income for the taxable year on 

18 account of a judgment or settlement (whether 

19 by suit or agreement and whether as lump sum 

20 or periodic payments) resulting from such 

21 claim. 

22 ‘‘(B) QUALIFYING WILDFIRE DISASTER.— 

23 For purposes of subparagraph (A), the term 

24 ‘qualifying wildfire disaster’ means any forest 

25 or range fire that— 


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1 ‘‘(i) is a federally declared disaster (as 

2 defined in section 165(i)(5)(A)), 

3 ‘‘(ii) occurs in a disaster area (as de4 fined in section 165(i)(5)(B)), and 

5 ‘‘(iii) occurs in calendar year 2015 or 

6 later.’’. 

7 (b) EFFECTIVE DATE.—The amendment made by 

8 this section shall apply to attorney fees and court costs 

9 awarded after May 31, 2020. 

10 SEC. 2. EXCLUSION OF CERTAIN WILDFIRE SETTLEMENT 

11 PROCEEDS FROM GROSS INCOME. 

12 (a) IN GENERAL.—Part III of subchapter B of chap13 ter 1 of the Internal Revenue Code of 1986 is amended 

14 by inserting after section 139I the following new section: 

15 ‘‘SEC. 139J. CERTAIN WILDFIRE SETTLEMENT PROCEEDS. 

16 ‘‘(a) IN GENERAL.—Gross income shall not include 

17 amounts paid by a qualified settlement fund established 

18 to compensate victims for losses or damages in connection 

19 with a qualifying wildfire disaster (as defined in section 

20 62(a)(22)(B)). 

21 ‘‘(b) QUALIFIED SETTLEMENT FUND.—The term 

22 ‘qualified settlement fund’ has the meaning given such 

23 term in Treasury Regulation 1.468B–1.’’. 

24 (b) CLERICAL AMENDMENT.—The table of sections 

25 for part III of subchapter B of chapter 1 of such Code 


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•S 4666 IS

1 is amended by inserting after the item relating to section 

2 139I the following new item: 

‘‘Sec. 139J. Wildfire settlement proceeds.’’. 

3 (c) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to amounts paid after May 31, 

5 2020. 

Æ 


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