No Tax Write-Offs For Wrongdoing

END WRITE OFFS FOR WRONGDOING

Paying for misdeeds shouldn’t be a tax write off. Unlike regular citizens and small businesses, large corporations accused of wrongdoing like oil spills and mortgage scams typically negotiate out-of-court settlements to resolve charges from government regulators. The company agrees to make a payment and the government agency agrees not to prosecute the alleged misdeed. Annually, billions of dollars are exchanged between corporations accused of crimes and government agencies attempting to hold them accountable.

These settlements shouldn’t just be another cost of doing business.

Unfortunately, that’s exactly what these payments often end up being. 

Unless agencies specify otherwise, these corporations usually deduct the costs of out-of-court settlements on their taxes as ordinary business expenses, leaving taxpayers to pick up the tab. 

Especially when Congress is struggling to reduce budget shortfalls, every dollar that corporate wrongdoers avoid paying by deducting a settlement must be made up for through higher tax rates for others, cuts to public programs, or an increase in the national debt.

The public often can’t even know when these settlement agreements come with a tax deduction because there are no standards for transparency. Government agencies aren’t required to publish the settlement agreements or publicly post the details, and corporations don’t disclose whether or not they deduct the payments from their taxes.

That’s how Bank of America, accused of consumer fraud that contributed to the financial crisis, can write off up to $11 billion of their recent settlement agreement and leave taxpayers to pick up the tab, with no one the wiser.

THERE IS A SOLUTION

We’re calling on Congress to pass bipartisan common-sense legislation to restrict write offs for wrongdoing. We are also supporting a bipartisan bill to make settlement agreements between government agencies and corporations more transparent, so that Americans can know the real value of the deals being signed on their behalf. In the meantime, we’re pushing agencies to update their settlement policies and deny tax deductions for corporate misbehavior. 

Issue updates

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The UK and Australia have already agreed to disclose the true owners of anonymous shell companies. It's time for the United States to get serious about incorporation transparency. 

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Following the Money 2016: New Report Ranks All Fifty States on Government Spending Transparency

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Report | U.S. PIRG Education Fund and Frontier Group | Budget, Tax

Following the Money 2016

State governments spend hundreds of billions of dollars each year through contracts for goods and services, subsidies to encourage economic development, and other expenditures. Public accountability helps ensure that state funds are spent as wisely as possible.

State-operated spending transparency websites provide checkbook-level detail on government spending, allowing citizens and watchdog groups to view payments made to individual companies, the goods or services purchased, and the benefits obtained in exchange for public subsidies.

 

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News Release | U.S. PIRG | Tax

U.S. PIRG Statement in Response to Finalized BP Oil Spill Settlement

A statement by Michelle Surka, U.S. Public Interest Research Group Program Associate, regarding the recently finalized BP Gulf Oil Spill Settlement:

 

“Though we are glad that the protracted settlement to address BP’s actions in relation to the 2010 Gulf Oil Spill has finally concluded, and injured parties can begin to be made whole again, we are disappointed that BP will yet again be able to claim its settlement payments as ordinary cost of doing business tax deductions.

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News Release | US PIRG Education Fund and Citizens for Tax Justice | Tax

STUDY: 72% OF FORTUNE 500 COMPANIES USED TAX HAVENS IN 2014

Nearly three-quarters of Fortune 500 companies booked profits to tax havens in 2014, with just 30 companies accounting for 62 percent of earnings stashed offshore, according to “Offshore Shell Games,” released today by the U.S. PIRG Education Fund and Citizens For Tax Justice. Collectively, the companies reported booking $2.1 trillion offshore for tax purposes.

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Deepwater Horizon Settlement Comes with $5.35 Billion Tax Windfall

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News Release | U.S. PIRG | Tax

U.S. PIRG COMMENDS THE PASSAGE OF THE BIPARTISAN TRUTH IN SETTLEMENTS ACT AS A WIN FOR AMERICAN TAXPAYERS

Yesterday, the U.S. Senate unanimously passed the bipartisan Truth in Settlements Act, sponsored by Senators James Lankford (R-OK) and Elizabeth Warren (D-MA).  This legislation would increase transparency around settlements reached between federal agencies and corporations accused of wrongdoing.  

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Media Hit | Tax

Corporate Accountability

Letter to the Editor in the New York Times calling on the Department of Justice to end write offs for corporate wrongdoing. 

"If the Justice Department wants to get serious about holding corporations accountable for their misconduct, the department should certainly use new tools like holding people personally accountable. But the old tools, like settlement payments, need some sharpening, too."

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News Release | U.S. PIRG | Tax

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Today, Representatives Bill Posey (R-FL) and Matt Cartwright (D-PA) reintroduced the Truth in Settlements Act.  This bill, which has already been reintroduced in the Senate by Senators James Lankford (R-OK) and Elizabeth Warren (D-MA), would increase transparency around settlements reached between federal agencies and corporations accused of wrongdoing.  

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Report | U.S. PIRG Education Fund | Budget, Tax

Subsidizing Bad Behavior

BP’s recent $4.5 billion legal settlement with the Justice Department for its misdeeds in the Gulf oil spill was historic for being the largest ever criminal settlement. But it was historic for another reason as well—none of it is allowed to be tax deductible. Unfortunately, too many settlements for wrongdoing end up as tax deductions.

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Report | U.S. PIRG Education Fund | Budget, Tax

What America Could Do With $150 Billion Lost to Offshore Tax Havens

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Rogues Gallery of Major Corporate Legal Settlements

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Report | U.S. PIRG | Tax

Picking Up the Tab

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Report | U.S. PIRG Education Fund | Budget, Democracy, Tax

Loopholes for Sale

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