Level 11

Section 62(e)(18) was added as a very small part of the Jobs Creation Act of 2004, which had a wide range of broader objectives. The Conference Committee report explains the problem of how attorney fees were allowed as a deduction by some courts, and not others. It also explains how even if allowed as a miscellaneous itemized deduction, the benefit was limited or nonexistent. So the Act added a list of cases for which attorney fees are allowed as an adjustment to income. That is the “laundry list” of Section 62(e)(1) through Section 62(e)(17).

These were added as adjustments to income by Section 62(a)(20), which is headed “Costs involving discrimination suits, etc.” The “etc.” may refer to a couple other categories specified in 62(a)(20). In any case, 62(a)(20) limits the relief to cases involving “unlawful discrimination,” but that is a term of art, defined in 62(e).

Most of these cases related to violations of various forms of discrimination. However, the Conference Committee report explanation adds to the list, “or any provision of Federal, State or local law, or common law claims permitted under Federal, State, or local law providing for the
enforcement of civil rights or regulating any aspect of the employment relationship, including claims for wages, compensation, or benefits, . . .” This comes at the end of the list in the Conference Committee report, looking like an afterthought, which it might have been. After the “laundry list” of (e)(1) through (e)(17), 62(e)(18) becomes the “kitchen sink” that was intended to cover other claims not enumerated.

Was it Congressional intent, to include lawsuit for back pay and overtime in the definition of “unlawful discrimination”? The truth is probably that it didn’t matter to anyone but a staffer who managed to slip in the provision at the last moment.

There is an IRS letter ruling from 2005 that allowed a taxpayer to claim attorney fees under 62(e)(18) when he sued because his employer had miscalculated pension benefits. There seems to be a class action involved, but no claim of what we would normally view as “discrimination.” See PLR-108585-05.


The Conference Committee report is at


(You’ll have to do a word search, there are no page numbers.)

If your business partners are looking for discrimination as defined by Merriam-Webster, they won't find it.  But what they should be  looking for is "unlawful discrimination" as defined by Code Section 62(e).