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Regulators Disallow Tax Deduction for JPMorgan’s $1.7 Billion Settlement, Saving Taxpayers Close to $600 Million
Statement by Francisco Enriquez, U.S. Public Interest Research Group Tax and Budget Program Associate, on reports that the $1.7 billion JPMorgan will pay as part of the settlement surrounding the Madoff Ponzi scheme will not be tax deductible.
“U.S. PIRG applauds regulators for protecting taxpayers in their recent settlement with JPMorgan for the repeated failure to report the Madoff Ponzi scheme during the decades that JPMorgan served as Madoff's primary bank. By preventing JPMorgan from writing off its $1.7 billion payment, regulators saved taxpayers as much as $595 million.
“The next step is for Congress to clarify the law so that taxpayers can never again be put on the hook for corporate wrongdoing. Bipartisan legislation (S. 1654) has been introduced in the Senate by Sens. Jack Reed (D-RI) and Chuck Grassley (R-IA) that goes a long way toward achieving this end.
According to a copy of the settlement posted by the New York Times, “JPMorgan agrees that the Stipulated Forfeiture Amount shall be treated as a penalty paid to the United States government for all purposes, including all tax purposes. JPMorgan agrees that it will not claim, assert, or apply for a tax deduction or tax credit with regard to any federal, state, local or foreign tax for any portion of the $1,700,000,000 that JPMorgan has agreed to pay to the United States pursuant to this Agreement.”
You can read U.S. PIRG’s research report on the tax implications of legal settlements, “Subsidizing Bad Behavior: How Corporate Legal Settlements for Harming the Public Become Lucrative Tax Write-Offs.
See also U.S. PIRG’s fact sheet for more information about how companies like JPMorgan Chase take advantage of the settlement loophole.
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