UPDATE: New Bill Could Stop Fox News’ Defamation Tax Writeoff

Legislation just introduced by Rep. Brendan Boyle (D-Pa.) and inspired by The Lever’s reporting would revise an arcane line in the federal tax code that allows corporations to deduct the cost of defamation settlements from their income taxes.

The bill, titled the “No Taxpayer Bailout for Defamation Act,” comes after The Lever first reported that the provision would allow Fox News and its parent company Fox Corporation to use their recent record-breaking $787 million settlement with Dominion Voting Systems over the news channel’s 2020 election lies to score a tax break as large as $213 million.

“I thank The Lever for breaking this important story, which was one of the driving factors for my introduction of the ‘No Taxpayer Bailout for Defamation Act,’” said Boyle. “It is outrageous that taxpayers essentially subsidize large defamation suits, especially when the party acknowledges fault.”

Boyle’s bill would amend the tax code to prohibit taxpayers from writing off settlements and attorney’s fees related to defamation “if the taxpayer has admitted to guilt or culpability.” While Fox refused to retract or apologize for its claims that the 2020 election was rigged, it admitted in a statement that the court where the defamation trial was set to take place found “certain claims about Dominion to be false.”

As written, the legislation would apply to settlement payments beginning in 2023 — including the Fox settlement, which was announced in April.

The bill comes amid news that an Arizona man is preparing to sue Fox News over the fact that former Fox commentator Tucker Carlson repeatedly claimed he was a covert government agent who purposefully incited the Jan. 6, 2021, assault on the Capitol. The New York Times called the potential defamation suit “Fox’s Next Dominion.”

The Lever’s reporting on Fox’s potential tax writeoff generated international headlines. As The New Republic noted on the matter, “With a settlement, Fox had weaseled out of a potentially deeper inquiry into the lies undergirding its operation. And now the American taxpayer, whether they watch Fox or not, gets to help the crooked company wade through the costs of its own actions.”