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Senate narrows scope of class actions for tax refunds, limits fees in targeted cases
Summary
The Senate adopted an amendment to SB250 that restricts contingency fees in class actions seeking tax refunds and requires claimants to exhaust administrative remedies before class inclusion; the first substitute passed 24–2 with several senators warning about reduced incentives for class representation.
The Utah Senate amended and passed first substitute Senate Bill 250 on March 1, a measure that changes how class actions for tax refunds may be handled in state courts.
Sponsor Senator Valentine described the legislation as an "anti‑pouncing" provision aimed at limiting opportunistic class actions that rely on administrative errors to generate large contingency awards for attorneys. The adopted amendment narrows the attorneys'‑fees restrictions to actions "brought under this section," preserving normal fee arrangements in other case types. The bill also conditions class inclusion on exhausting administrative remedies with the Tax Commission.
Opponents warned that the changes could effectively shut down contingency representation in tax‑refund class cases and limit access to class relief for small taxpayers. Senator Stevenson and others pressed sponsors about how the fee limits would interact with other statutes and whether legitimate class representation would survive the change.
After floor amendments and explanation from sponsors, the Senate approved the amended first substitute by roll call: 24 ayes, 2 nays, 3 absent. Sponsors said the bill protects taxpayers from predatory legal practices while still allowing remedies where appropriate; critics said it could reduce incentives for lawyers to represent small claimants on a contingency basis.
The measure is now referred to the House for further consideration.
