Max Baucus: “today my good friends Senators Grassley and McCain and I are introducing the ``Government Settlement Transparency Act of…”

“today my good friends Senators Grassley and McCain and I are introducing the ``Government Settlement Transparency Act of 2005'', a bill that will put a stop to tax deductions for fines and penalties paid by companies to government agencies in connection with civil settlements. Over the past several years, we have become increasingly concerned about the approval of various settlements that allow penalty payments made to the government in settlement of a violation or potential violation of the law to be tax deductible. Our concerns were heightened this week upon the release of a Government Accountability Office Report that confirmed many companies deduct these settlements notwithstanding the tax code's prohibition against deducting fines and penalties. This abuse shifts the tax burden from the wrongdoer onto the backs of the American people. This is unacceptable. Many government agencies enter into these settlement agreements after investigating companies for violations of the law. Every year thousands of violations are resolved with settlements totaling tens of billions of dollars paid to the Federal Government. Civil settlements serve to punish past wrongdoing and to deter future wrongdoing without protracted court proceedings. For example, in the past several years settlements of various SEC investigations into violations or potential violations of the securities laws have been front and center in the news.…”