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Tax Considerations of FCPA Violations

BY Peter F.G. Schuur, Bruce E. Yannett, Steven S. Michaels
October 29, 2012

Last month, we began examination of some of the tax consequences of violations of the Foreign Corrupt Practices Act (FCPA). We continue with that discussion herein.

Civil Penalties

Civil penalties for improper deductions of payments that violate the FCPA's anti-bribery provisions can range from accuracy related-penalties to fraudulent filing penalties. Section 6662 of the Code establishes an accuracy-related penalty of 20% of an underpayment of tax that is attributable to various errors and omissions (26 U.S.C. ' 6662(a)), including negligence, disregard of IRS rules or regulations, or substantial understatement of income tax (26 U.S.C. ' 6663(a)).

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