IRS Gently Asks Wall Street To Please Stop Treating FINRA Fines As Tax Deductions Because That's Not How Punishment Works - Dealbreaker

IRS Gently Asks Wall Street To Please Stop Treating FINRA Fines As Tax Deductions Because That's Not How Punishment Works

But nice try, you scamps.
Author:
Updated:
Original:

Time was that gettin' fined by FINRA came with a silver lining.

IRS.FINRA

Sure, it was embarrassing to have to write a check after being publicly called out for sucking at handling customer data, or firing people, but at least you could take the pain from that fine and write it off on your taxes every quarter. That sure did take the sting out of handing over your hard-won profits to those greedy G-Men.

But, thanks to a ruling from the IRS, them days are over.

According to some fun little rules deep int eh tax code, institutions were free to claim fines from any non-Government entity when the tax man came a-calling. Because of FINRA's weird construction, FINRA-regulated firms were free to find tax savings in their punishments. That, sayeth the IRS, is actually a load of bullsh!t.

"Congress concluded that self-regulation with federal oversight would be more efficient and less costly to taxpayers. Under this system, privately funded nongovernmental entities, commonly referred to as self-regulatory organizations (SRO), such as national securities exchanges and associations, perform much of the day-to-day oversight of the securities markets and broker-dealers under their jurisdiction. SROs are primarily responsible for establishing standards under which members conduct business; monitoring how that business is conducted; and bringing disciplinary actions against members for violating applicable federal statutes, SEC rules, and SRO rules. SEC oversees SROs to ensure that they carry out their regulatory responsibilities."

Basically, FINRA is doing the SEC's job here so the IRS would like you to take FINRA fines like a bunch of grown-ups and actually let them hurt. That's how punishment is supposed to work and the IRS wants your money to have more than just a time out.

Related

By JHG (Julien29) (Own work) [Public domain], via Wikimedia Commons

IRS Fines Swiss Bank For Being A Bank In Switzerland

The US Government contemplating cracking down on leopards for having spots.

E*Trade Fined $900K For Handling Customer Data Like Actual Babies

It's awesome to create internal safety committees but FINRA kind of prefers that you, like, make them do stuff.

DOJ Finds That The IRS Is Terrible And Stupid But Not Criminal

The Justice Department is not impressed, tax nerds.