Washington Post: Drug Companies Seek Billion-dollar Tax Deductions from Opioid Settlement
media mention“A settlement has not been reached, and, therefore, we applied significant judgment in estimating the ultimate amount of the opioid litigation settlement that would be deductible,” the company said.
Matthew Gardner, a senior fellow at the nonprofit Institute on Taxation and Economic Policy, said these disclaimers suggest the companies are making conservative estimates. “That’s one way of saying they are likely going to claim even bigger tax benefits in their tax returns than they are showing on their financial statements,” he said.
Whether the payments will be deductible may hinge on specific word choices in the final terms of the settlement. Though recent changes to the tax code have attempted to close loopholes that permit companies to deduct taxes when they have committed wrongdoing, many companies now push to make sure their settlements include a “restitution” payment for victims — the “magic word” that often qualifies them for deductions, Gardner said.