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(California News Service) Democrats in Congress reintroduced legislation this week to protect consumers who win lawsuits against big corporations from being overtaxed by the Internal Revenue Service. 

The bill would ensure people who win fraud cases receive the full amount of damages, rather than being unfairly taxed on fees awarded to their attorneys. 

While serving in the Navy, Mario Montemayor bought a BMW in San Diego ten years ago for $30,000. The seller failed to disclose structural damage. He sued and won his money back, plus attorneys' fees. 

Then the IRS came knocking.

"They already taxed my attorney on his winnings," said Montemayor. "And he said he paid taxes on his. Then the IRS comes back at me and tries to ask me for money on his winnings as well. So, it's basically a double-taxation deal."

The IRS demanded Montemayor pay $58,000 dollars in taxes, penalties and interest on the $162,000 that went straight to his attorney. 

This law would reverse a Trump-era policy that allows the IRS to tax plaintiffs on the full amount of the judgment in fraud cases - including money awarded to their attorneys. 

Opponents of the bill argue that it would incentivize litigation and reduce revenues to the IRS.

U.S. Sen. Catherine Cortez Masto, D-Nevada, is a co-sponsor of the bill.

"People who win their cases can end up owing more in taxes than they actually receive in compensation," said Cortez Masto. "It's not fair. My legislation will end double taxation and keep more money in the pockets of Americans who stand up against fraud and abuse."

Montemayor said this has been hanging over his family for too long.

"It's not just the actual financial aspect of it, and we don't make a lot of money," said Montemayor. "But it's also the fact that the IRS is constantly asking for the money. It's stressful."

A version of the bill, called the End Double Taxation of Successful Consumer Claims Act, has also been introduced in the U.S. House.