Blog: Spirit of Money, Financial Fluidity
by munificent

No Writedowns for Fines

Now you are talking, because ladies and gentlemen when these billions of dollars are paid to NY State and the IRS then they are written off-And guess WHO gets to make up the losses? Who-YOU!

Date:   10/21/2005 5:22:46 PM   ( 16 y ) ... viewed 1160 times

GAO Eyes Settlement Write-offs

''Letting companies deduct settlement payments from their income taxes takes away the sting,'' says the chairman of the Senate Finance Committee.

Stephen Taub,
October 21, 2005

The Internal Revenue Service and agencies that reach civil settlements with businesses should work more closely to ensure that companies give the proper tax treatment to their payouts, maintains a report from the Government Accountability Office.

Earlier this year, for example, Marsh & McLennan Cos. agreed to pay $850 million to settle charges of fraud and anti-competitive practices stemming from an investigation by New York State Attorney General Eliot Spitzer. Published accounts later suggested that as much as the entire settlement may be tax deductible, precisely because the payment is restitution to the company's clients rather than a fine or penalty.

The GAO report examined only the period from 2001 to 2002, and only the records of the four federal agencies that negotiated the largest settlements during that time. According to the congressional watchdog, officials at the four agencies — the Environmental Protection Agency, the Securities and Exchange Commission, the Department of Justice, and the Department of Health and Human Services — said that they do not negotiate with settling companies about whether settlement amounts are tax deductible. It is the IRS's role to determine deductibility, the officials added.

The GAO also received responses from companies that negotiated 34 civil settlements, totaling more than $1 billion, with one of the four agencies during that period. In 20 cases, companies reported deducting some portion or all of their payment from their federal income taxes.

The report conceded that it may not always be clear which payments are deductible, in part because the Internal Revenue Code does not address the deductibility of all types of payments that may be made pursuant to a civil settlement. Further, the statutes that impose the payments may be unclear regarding whether they are punitive, compensatory, or both.

Even so, the GAO observed that "the deterrence effect of monetary payments could be lessened if violators are able to deduct the civil settlement payments from their income taxes since deductions reduce the amount of tax violators would otherwise pay."

The Associated Press pointed out that the Senate Finance Committee intends to clarify the law and to require businesses to report settlement information to the IRS.

"Letting companies deduct settlement payments from their income taxes takes away the sting," said committee chairman Sen. Charles Grassley (R-Iowa), reported the AP. "It is galling that artfully crafted settlement agreements create loopholes that allow wrongdoers to escape the full impact of fines and water down any deterrent effect," said Sen. Max Baucus D-Mont.), according to the wire service.

Add This Entry To Your CureZone Favorites!

Print this page
Email this page
DISCLAIMER / WARNING   Alert Webmaster

CureZone Newsletter is distributed in partnership with

Contact Us - Advertise - Stats

Copyright 1999 - 2021

0.094 sec, (2)

Back to blog!
Add Blog To Favorites!
Add This Entry To Favorites!

Comments (15 of 48):
Thanks for your in… kermi… 15 y
I wonder about wom… 9thbo… 15 y
everybody knows... drofin… 15 y
Taiwan/China Next? Rikki-… 15 y
I am sorry to hear… 9thbo… 16 y
Re: I have a retir… #4933… 16 y
Nope, I don't make… 9thbo… 16 y
commercial pitch mark777 16 y
oh well... drofinnah 16 y
Yes this may well … kermi… 16 y
First hand experie… 9thbo… 16 y
Depends on age/ris… 9thbo… 16 y
10% of portfolio i… #1923… 16 y
Hi K-! Hope all i… 9thbo… 16 y
WOW who would thin… kermi… 16 y
All Comments (48)

Blog Entries (12 of 249):
No Writedowns for Fines  16 y
No Universal Jurisdiction  16 y
Health Savings Accounts  16 y
Greenspan retires & US $$  16 y
Insight Prison Project  16 y
x-KPMG CFO indicted  16 y
Spinning Gold into Dollars  16 y
Debtlacking Credit Worthiness  16 y
Big 5 Auditor's lament Control  16 y
KPMG & abusive 401kAccel  16 y
US Plan to Open China Markets  16 y
US Plan to Open China Markets  16 y
All Entries (249)

Blogs by munificent (10):
Yoga Path  15 y  (396)
Cold Water Blog  15 y  (269)
Quantum Intelligensia  15 y  (267)
Leadership  15 y  (67)
BaBaGee Blog  15 y  (16)
Breathwork  16 y  (16)
Desire  15 y  (5)
Sacred Sex  15 y  (4)
Apothegm  15 y  (3)
Breathwork for wholeness  16 y  (3)

Similar Blogs (10 of 185):
My Unusual Road of …  by kerminator  46 h
MeowEssay  by trouton  24 d
Absolute Truth Some…  by Kerminator  44 d
Chef Jemichel ~ The…  by chef jem  4 mon
Advices and tips on…  by Law Offices  4 mon
Manifestation Magic…  by magic44  5 mon
David Sanderson’ Ul…  by manifestation11  9 mon
Five steps on how t…  by drawmoney7  9 mon
willson 456  by kaviharshu99  11 mon
Mobile Notary  by mobile-notary  15 mon
All Blogs (1,019)

Back to blog!

Your Ad Here
Place your ad here !

Black Walnut Tincture
Hulda Clark Cleanse Kits