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Washington, D.C. – Today, Senators Elizabeth Warren (D-MA) and James Lankford (R-OK) reintroduced the Truth in Settlements Act, a bill that would increase transparency around settlements reached between federal agencies and corporations accused of wrongdoing.
When federal agencies announce settlement agreements, they regularly tout the top-line dollar value made to resolve allegations of misconduct. However, the public value of these settlements is diminished when corporations are allowed to receive massive tax write-offs and credits from these payments. Many times, these agreements are deemed confidential and details are hidden from the American public. This legislation would require detailed and publicly accessible disclosures of these settlement agreements and the tax write-offs that accompany them. Last year, the bill passed unanimously through the Senate.
“Republicans and Democrats agree that the transparency of our government agencies is vital to ensuring public trust, a robust democracy, and fair settlement deals,” said Michelle Surka, advocate with U.S. Public Interest Research Group. “When government agencies strike settlement deals on behalf of the American public, we deserve to know the details.”
In recent years, some of the largest settlement agreements between corporations and federal government agencies included significant tax deductions for the corporation. British Petroleum, settling with the government for its role in the BP oil spill, earned a $15.3 billion tax write off for the deal. Though the tax code does state that fines and other penalties are not tax deductible, a consistent lack of specificity in settlement agreements has allowed companies to claim deductions nevertheless.
"Government accountability requires transparency, and that's what this bipartisan bill provides," Senator Warren said. "The Truth in Settlements Act will shut down backroom deal-making by shining a light on federal agency settlements with lawbreaking companies. More transparency means Congress, citizens and watchdog groups can better hold regulatory agencies accountable for enforcing laws so that everyone - even corporate CEOs - are equal under the law."
You can read U.S. PIRG’s research report on the tax implications of legal settlements here.
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