CCH Tax Day Report
Sens. Jack Reed, D-R.I., and Charles E. Grassley, R-Iowa on April 3 introduced the bipartisan Government Settlement Transparency & Reform Bill. The measure would amend the tax code to prohibit a tax deduction for amounts paid to any governmental entity relating to illegal conduct or the investigation of a potential violation.
The bill would also require the government and the settling party to establish how settlement payments will be treated for tax purposes. Additionally, it would specify which settlement payments are punitive and, thus, nondeductible under current law, according to Reed’s office.
“Federal agencies too often don’t consider the tax implications, but you can be sure the company does. This bill will ensure that government agencies think of the tax consequences in settlements going forward and increase transparency for the public,” Grassley said.
Reed previously introduced the bill in both the 113th and 114th Congress. Previously, the legislation was estimated to increase revenue by $218 over a 10-year budget window, according to a press release.
By Jessica Jeane, Wolters Kluwer News Staff