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In negotiating FCA or similar settlements with the government, one key consideration is the tax treatment of any payment. While not in the context of deductibility, the Supreme Court this year, inKokesh v. SEC, analyzed whether disgorgement in an SEC enforcement action was punitive or compensatory.
In negotiating False Claims Act (FCA) or similar settlements with the government, one key consideration is the tax treatment of any payment. While business expenses (including compensatory damages) may be deducted, deductions may not be taken for fines or penalties paid to the government for a legal violation or for payments made to the government to settle such potential liability. See 26 U.S.C. § 162(a), (f); 26 C.F.R. § 1.162-21. Taxpayers and the Internal Revenue Service (IRS) have litigated the deductibility of settlement payments, with courts adopting differing approaches to determine if a payment is punitive and thus a nondeductible penalty.
By Marjorie Peerce and Mary K. Treanor
In Lagos v. United States, the U.S. Supreme Court ruled that corporate victims of criminal offenses cannot recover expenses incurred from internal investigations that the federal government has neither requested nor required under the Mandatory Victims Restitution Act of 1996,
By Harry Sandick and Jacqueline Bonneau
Part One of a Two-Part Article
The United States Supreme Court’s October Term 2017 was a good year for criminal defendants in areas as varied as the Fourth Amendment, obstruction of justice, the death penalty, and criminal restitution. There was only one major criminal law decision this term — Carpenter v. United States — but there were several decisions that defense counsel would do well to study.
By Ashley M. Drake and Joseph F. Savage, Jr.
In fiscal year 2017, the DOJ collected more than $3.7 billion dollars from False Claims Act (FCA) cases — part of the $86 billion it has collected from FCA cases since 1986. States and municipalities are aggressively pursuing FCA recoveries as well. Whether or not such payments are deductible as business expenses under the Internal Revenue Code is an important consideration when negotiating a settlement with the government.
By Ryan Lovelace
The FARA feeding frenzy had already been building in recent years, but it gained traction in the months since Manafort's indictment last fall.
The U.S. Justice Department’s aggressive enforcement of the Foreign Agents Registration Act (FARA) has drawn blood throughout the consultant class in Washington, with lawyers assessing the casualties and prowling for new business.