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

News Release | U.S. PIRG Education Fund | Tax

Study: 73% of Fortune 500 Companies Used Tax Havens in 2015

In 2015, more than 73 percent of Fortune 500 companies maintained subsidiaries in offshore tax havens, according to “Offshore Shell Games,” released today by the U.S. PIRG Education Fund, Citizens for Tax Justice and the Institute on Taxation and Economic Policy. Collectively, multinationals reported booking $2.5 trillion offshore, with just 30 companies accounting for 66 percent of this total. By indefinitely stashing profits in offshore tax havens, corporations are avoiding up to $717.8 billion in U.S. taxes. 

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

Offshore Shell Games 2016

U.S.-based multinational corporations are allowed to play by a different set of rules than small and domestic businesses or individuals when it comes to paying taxes. Corporate lobbyists and their congressional allies have riddled the U.S. tax code with loopholes and exceptions that enable tax attorneys and corporate accountants to book U.S. earned profits to subsidiaries located in offshore tax haven countries with minimal or no taxes.

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News Release | U.S. PIRG | Tax

U.S. PIRG supports Rep. Pocan's New Legislation to Expose Multinational Tax Dodgers

Representative Mark Pocan (D-WI) introduced H.R. 6126, the Corporate Transparency and Accountability (CTA) Act which addresses rampant corporate tax evasion. The bill will require multinational corporations to provide the Securities and Exchange Commission with income and tax information on a country-by-country basis, and will make that offshore financial information available to the public.

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Blog Post | Tax

Statement on the latest release of Panama Paper documents | Michelle Surka

The International Consortium of Investigative Journalists, which in April released the “Panama Papers”, today shared a new set of data which again highlights the web of anonymous shell companies that enables everything from white collar tax evasion, secret campaign spending, and consumer scams to money laundering by drug dealers and corrupt foreign leaders. U.S. PIRG’s Tax and Budget Advocate Michelle Surka, made a statement about the latest leaks:

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Blog Post | Tax

It’s Time for the U.S. to Lead on Public Registries for Anonymous Shell Companies | Jeremy Flood

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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News Release | U.S. PIRG | Tax

U.S. PIRG supports Rep. Pocan's New Legislation to Expose Multinational Tax Dodgers

Representative Mark Pocan (D-WI) introduced H.R. 6126, the Corporate Transparency and Accountability (CTA) Act which addresses rampant corporate tax evasion. The bill will require multinational corporations to provide the Securities and Exchange Commission with income and tax information on a country-by-country basis, and will make that offshore financial information available to the public.

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News Release | U.S. PIRG Education Fund and Frontier Group | Tax

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

Government spending transparency is improving, but many states still lag far behind, according to “Following the Money 2016: How the 50 States Rate in Providing Online Access to Government Spending Data,” the sixth annual report of its kind by the U.S. Public Interest Research Group Education Fund. Some states have improved their spending transparency web portals significantly, earning perfect scores in this year’s report, while others are still barely achieving the minimum standards.

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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 | U.S. PIRG | Tax

U.S. PIRG Opposes Congressional Deal to Extend and Make Permanent Tax Breaks Costing $830 Billion Without Paying for Them

U.S. PIRG urges the Congress to reject the proposed budget and tax break deal announced late Tuesday. The deal extends or makes permanent about 50 tax breaks that add $830 billion to the deficit over 10 years. The proposed deal does not pay for any of these new costs. 

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News Release | US PIRG Education Fund | Tax

Government Agencies Allow Corporations to Write Off Billions in Federal Settlement Payments

A new study by United States Public Interest Research Group Education Fund (U.S. PIRG) analyzes which federal agencies allow companies to write off out-of-court settlements as tax deductions and which agencies are transparent about these deals. The study found that five of the largest government agencies that sign settlement agreements with corporations rarely specify the tax status of the resulting payments. Billions of dollars are allowed to be written off as cost of doing business tax deductions. Additionally, the report found that major government agencies do not consistently disclose the details of corporate settlement agreements.

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

Picking Up The Tab 2015: Small Businesses Pay the Price for Offshore Tax Havens

Every year, corporations and wealthy individuals use complicated gimmicks to shift U.S. earnings to subsidiaries in offshore tax havens – countries with minimal or no taxes – in order to reduce their federal and state income tax liabilities by billions of dollars. While tax haven abusers benefit from America’s markets, public infrastructure, educated workforce, security and rule of law – all supported in one way or another by tax dollars – they continue to avoid paying for these benefits.

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Report | U.S. PIRG Ed Fund & Citizens for Tax Justice | Budget, Tax

Offshore Shell Games 2014

Tax loopholes encouraged more than 70 percent of Fortune 500 companies to maintain subsidiaries in offshore tax havens as of 2013, according to “Offshore Shell Games,” released today by the U.S. PIRG Education Fund and Citizens For Tax Justice. Collectively, the companies reported booking nearly $2 trillion offshore for tax purposes, with just 30 companies accounting for 62 percent of the total, or $1.2 trillion.

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Report | U.S. PIRG | Tax

Picking Up the Tab 2014

How much would ordinary tax filers in your state need to pay to pick up the tab for federal and state taxes lost as the result of tax dodgers using offshore tax havens? How about small businesses picking up the tab for multinational corporations' abuse of tax havens?

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

Following the Money 2014

The fifth annual report card evaluating how well each of the 50 states provide public access to data about government spending shows ongoing advances in transparency across the nation but some states far ahead of others.

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Report | U.S. PIRG | Tax

Closing the Billion Dollar Loophole

New report tells how some states have found a simple reform to reclaim significant revenue lost to offshore tax havens. Includes estimates of how much each state loses in state revenue to offshore tax haven abuse and how much each state would gain by closing the "water's edge" loophole.

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Blog Post | Budget, Tax

The Country Has Spoken | Jaimie Woo

While the dust is still settling from the mid-term elections and the pundits are trying to figure out what it all means, the American people have made their collective voices heard and delivered a message that they do not like the country's direction. Exit polling data from Election Day showed clear majorities in against growing corporate influence on the political process and in favor of greater corporate accountability. The message is clear: inversions must stop, corporate tax avoidance must end, and special corporate loopholes must close.

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Blog Post | Budget, Tax

It's Not Over Yet | Jaimie Woo

There are 12 days left before the 2014 election, and campaign efforts have hardly let up. Last-minute donations are flooding in, canvassers are knocking on doors, and organizations are registering young people to vote.

But after November 4, Congress will reconvene, and their work will be far from over.

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Blog Post | Budget, Tax

Recent Inversion Wave Brings on Slew of Outrage - What's Next? | Jaimie Woo

 

Ten years ago, Republicans and Democrats agreed that corporate tax dodging was a problem, and came together to fix it. But large U.S. corporations got trickier — they sought out new ways to get around paying their taxes on U.S. profits, hiring thousands of tax accountants to take advantage of loopholes in our tax code. The recent fix? Corporate inversions.

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Blog Post | Tax

CFPB Gets Results for Consumers...And Taxpayers, Too | Ed Mierzwinski

The CFPB's latest enforcement action against Bank of America resulted in $727 million of consumer refunds for unfair credit card practices. But taxpayers also benefited, since CFPB told BofA it could not take a tax writeoff on the $25 million civil penalty fine it also was required to pay.

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Blog Post | Budget, Tax

Webinar for State Officials on Spending Transparency

U.S. PIRG Education Fund conducted a webinar with officials from 31 states on ways to improve online spending transparency.

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