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Who really pays in a motor vehicle accident?

When most people think of a motor vehicle accident, there are always a few things that come to mine first. Aside from considering the cost of repairs and medical treatments, the first thing that comes to a lot of people's minds is whether or not they can seek compensation from the guilty party. Though in most cases, it ends up being the other driver, in some cases, it may be the manufacturer who is liable because of a defective part or an unsafe vehicle design.

Most of our Sacramento readers know that they can seek compensation from a manufacturer because of product liability laws here in California. Our readers also know that these settlements can be quite large, oftentimes in the millions of dollars, because cases can turn into class action lawsuits, involving many more victims than just the person filing the complaint.

But did you know that automotive manufacturers like Hyundai, who was ordered in 2014 to pay $73 million in punitive damages in a wrongful death case, can write off settlements as regular business expenses? This unique -- and perhaps frustrating -- loophole in tax law means that even though automotive companies are paying compensation to victims, it's really the taxpayer who is paying in the end.

Even though current tax law allows businesses to deduct damages from personal injury or wrongful death lawsuits, a push made by a democrat in another state could help eliminate what is called the corporate misconduct loophole. The hope is that by closing the loophole, businesses will no longer be able to write off settlements and force taxpayers to foot a portion of the bill for their own misconduct. As you can probably imagine, this may give accident victims and their families a better sense that justice is truly being served when a manufacturer is held accountable for its wrongdoing.

Source: The New York Times, "When Company Is Fined, Taxpayers Often Share Bill," Patricia Cohen, Feb. 3, 2015

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