Federal agencies are taking greater steps to prevent companies from claiming tax deductions on settlements reached with the government, though loopholes in the tax code persist, according to a new study by the U.S. Public Interest Research Group.
In the past year, the government has exacted a series of multimillion-dollar settlements on companies that have rigged global interest rates, preyed on consumers or endangered the environment. Yet a number of these firms are entitled to write off as much as 35 percent of their payout as an ordinary business expense.
Consumer advocates and lawmakers have long pressed federal agencies to stop big corporations from receiving tax breaks on payments to victims. Researchers at U.S. PIRG say some agencies are heeding the call.
An early copy of the group’s report obtained by The Washington Post applauds the Justice Department for explicitly forbidding BP in November from deducting any of the $4 billion the oil company agreed to pay over the drilling disaster in the Gulf of Mexico.