Pinpoint Policy Institute Joins Coalition Urging Congress to Close Third-Party Litigation Funding Tax Loophole

Pinpoint Policy Institute joined the American Energy Alliance and a coalition of 21 organizations urging House Speaker Mike Johnson and Senate Majority Leader John Thune to close the tax loophole that allows third-party litigation financiers to claim capital gains treatment on their profits. A copy of the letter was also sent to the U.S. House Ways and Means Committee and the U.S. Senate Finance Committee.

Third-party litigation funding has transformed U.S. civil litigation into a high-yield alternative asset class — and the American energy sector is squarely in the crosshairs. Under the current model, outside investors — including foreign sovereign wealth funds and entities tied to geopolitical rivals — supply capital to plaintiffs in exchange for a share of any settlement or judgment, then report those returns as long-term capital gains rather than ordinary income. Foreign nationals with no U.S. presence pay no withholding tax on these gains, effectively allowing offshore investors to extract tax-free profits from American court outcomes.

Congress has an opportunity to close this loophole now and put American taxpayers and energy producers first.

Read the full coalition letter here: