What are Tax Costs?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 30 January 2020
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In a civil suit, the losing party is ordered to compensate the winning party for costs incurred during the suit. The winning party submits a claim outlining the costs and the losing party has an opportunity to submit a motion to tax costs. This means that the losing party disputes the claim and would like the judge to “tax,” or reduce, the costs. There are several grounds on which a motion to tax costs can be granted.

Court costs can stack up, especially during a prolonged trial. Most legal systems provide a list of the types of costs that a losing party can be ordered to pay. These can include filing fees, fees associated with obtaining copies of legal documents, and many other types of costs. The court costs are awarded separately from the damages in the case and the damages will not be increased or reduced in order to address costs.

In a motion to tax costs, the losing party argues that the claim submitted by the winning party is not reasonable. One of the most common reasons to tax costs is that some of the costs claimed are not legally allowable. For example, costs not directly associated with the lawsuit cannot be claimed. Likewise, the law may exclude certain types of costs, such as phone calls, from the list of allowable costs. In this case, the judge will tax costs because the submitted claim is a violation of the law.


People can also contest costs on the grounds that sufficient documentation of the costs is not provided. If the winner cannot show how costs were incurred, a motion to tax costs may argue that it is not reasonable to make the loser pay for those costs. The winner could be inventing costs or misstating costs in the claim with the hope of squeezing extra money out of the loser, which of course is not viewed as fair.

Losing parties are given time to review the claims made by the winning party. During the review, they can determine whether or not the costs are properly documented and find out whether the costs are allowable by law. If there is no dispute, the costs can be paid as claimed. If there is a dispute, a motion to tax costs must be filed to contest the claim and trigger a review of the claim by the judge. The judge will issue a ruling on the matter within a set period of time.


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Post 2

@Euroxati - While I can't say that I've had this experience before, I know that it can be very difficult. This can especially be the case if you're self employed. As an example, I have a friend who is an independent contractor. As you may already know, when you're in a position that like, taxes aren't withheld when you get paid, unlike a "normal" position. My friend wasn't aware of this at first, but had to learn the hard way when she started getting letters from the IRS.

Post 1

No matter what you own, or the kind of position that you have, it's always a very good idea to make sure that the taxes are paid, and that you get them in on time. Failure to do so may get the IRS involved with you. In fact, has anyone ever had an experience where the IRS was on them due to late taxes that needed to be paid?

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