Senators Push To Close Penalty Payment Tax Loophole

Law360, New York (November 6, 2013, 1:53 PM EST) -- U.S. Sens. Jack Reed, D-R.I., and Chuck Grassley, R-Iowa, introduced legislation Wednesday to close a tax loophole that allows corporations to reap huge windfalls by deducting from taxable income fines and penalties paid to nonfederal entities.

The proposed legislation, called the Government Settlement Transparency and Reform Act, requires the government and any corporation that settles a lawsuit involving fines and penalties to reach a prefiling agreement on how the settlement payments will be treated for tax purposes.

Federal law currently prohibits companies from deducting public fines...
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