RI-Sen: Jack Reed (D) Introduces Bill To End Tax Breaks For Corporate Settlement Costs [View all]

[unhappycamper]

http://www.dailykos.com/story/2013/11/06/1253711/-RI-Sen-Jack-Reed-D-Introduces-Bill-To-End-Tax-Breaks-For-Corporate-Settlement-Costs



RI-Sen: Jack Reed (D) Introduces Bill To End Tax Breaks For Corporate Settlement Costs
poopdogcomedy
Wed Nov 06, 2013 at 08:00 PM PST

A pair of senators have introduced bipartisan legislation that would rescind tax write-offs for illegal corporate behavior in an effort to hold corporate wrongdoers accountable.

Senators Jack Reed, D-R.I., and Chuck Grassley, R-Iowa, introduced the Government Settlement Transparency & Reform Act, which aims to close a loophole that has allowed some corporations to reap tax benefits from payments made at government direction stemming from settling misdeeds.

Corporations accused of illegal activity routinely settle legal disputes with the government out of court because it allows both the company and the government to avoid the time, expense and uncertainty of going to trial, the senators noted. Federal law prohibits companies from deducting public fines and penalties from their taxable income. But under current law, offending companies may often write off any portion of a settlement that is not paid directly to the government as a penalty or fine for violation of the law. This allows some companies to lower their tax bill by claiming settlement payments to non-federal entities as tax deductible business expenses.

“A penalty is supposed to deter others because it causes pain to a company’s bottom line,” Reed said in a statement. “If a company is paying thousands, millions, or even billions in fines, it shouldn’t save money for those same misdeeds, it should be held accountable. The law needs to change to ensure the punishment fits the crime. Congress needs to close this settlement loophole.” - Accounting Today, 11/6/13