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H.R. 7305House117th Congress (2021-2023)In Committee

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.

Sponsored by Mike ThompsonRep. Mike Thompson (D-CA)
Introduced March 30, 2022

AI-Generated Summary

Updated February 8, 2026 at 10:26 AM UTC

The bill changes the tax code to let people who receive awards for wildfire damage deduct the attorney fees and court costs they incur, and to keep settlement money from those wildfires out of their taxable income. It applies only to wildfires that are federally declared disasters, occur in designated disaster areas, and happened in 2015 or later. The changes take effect for awards and settlements made after May 31 2020 and affect any taxpayer receiving such wildfire-related awards.

Key Provisions

  • Adds an above‑the‑line deduction for attorney fees and court costs tied to awards from qualifying wildfire disasters, limited to the amount of the award that would be included in gross income.
  • Defines a “qualifying wildfire disaster” as a forest or range fire that is a federally declared disaster, occurs in a disaster area, and took place in calendar year 2015 or later.
  • Creates a new provision that excludes from gross income any payments from a qualified settlement fund that compensates victims of qualifying wildfire disasters.
  • Sets the effective date for both the deduction and the income exclusion to apply to amounts awarded or paid after May 31 2020.

Legislative Activity

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1 earlier action
HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

Ways and Means Committee

March 30, 2022

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HouseIntro Referral

Introduced in House

March 30, 2022

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

March 30, 2022

Floor Debate

2 members

What members said about H.R. 7305 on the floor

1 Republican1 Democrat
Doug LaMalfa
Rep. Doug LaMalfaR-CA-1 · Dec 7, 2022

Throughout California there are tens of thousands of residents who lost their homes, their belongings, and, for some, even their loved ones due to wildfires. In 2020, the fire victims trust was…

Record
Mike Thompson
Rep. Mike ThompsonD-CA-5 · Dec 7, 2022

Mr. Speaker, I rise today on behalf of thousands of California wildfire survivors. Following the disastrous wildfires in 2015, 2017, and 2018, a court- ordered trust was established to compensate…

Record

Bill Text

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Introduced in HouseIssued March 30, 2022

I

117th CONGRESS

2d Session

H. R. 7305

IN THE HOUSE OF REPRESENTATIVES

March 30, 2022

Mr. Thompson of California (for himself and Mr. LaMalfa) introduced the following bill; which was referred to the Committee on Ways and Means

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.

Above the line deduction for attorney fees relating to awards for property damage due to certain wildfires

(a)

In general

Section 62(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(22)

Attorney fees and court costs relating to awards with respect to certain wildfires

(A)

In general

Any deduction allowable under this chapter for attorney fees and court costs paid by, or on behalf of, the taxpayer in connection with any award with respect to a qualifying wildfire disaster. The preceding sentence shall not apply to any deduction in excess of the amount includible in the taxpayer's gross income for the taxable year on account of a judgment or settlement (whether by suit or agreement and whether as lump sum or periodic payments) resulting from such claim.

(B)

Qualifying wildfire disaster

For purposes of subparagraph (A), the term qualifying wildfire disaster means any forest or range fire that—

(i)

is a federally declared disaster (as such term is defined in section 165(i)(5)(A)),

(ii)

occurs in a disaster area (as such term is defined in section 165(i)(5)(B)), and

(iii)

occurs in calendar year 2015 or later.

.

(b)

Effective date

The amendment made by this section shall apply to attorney fees and court costs awarded after May 31, 2020.

2.

Exclusion of certain wildfire settlement proceeds from gross income

(a)

In general

Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new section:

139J.

Certain wildfire settlement proceeds

(a)

In general

Gross income shall not include amounts paid by a qualified settlement fund established to compensate victims for losses or damages in connection with a qualifying wildfire disaster (as defined in section 62(a)(22)(B)).

(b)

Qualified settlement fund

The term qualified settlement fund has the meaning given such term in Section 1.468B–1 of title 26, Code of Federal Regulations.

.

(b)

Clerical amendment

The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139I the following new item:

Sec. 139J. Wildfire settlement proceeds.

.

(c)

Effective date

The amendment made by this section shall apply to amounts paid after May 31, 2020.