Grassley Accuses Justice Dept Of Ducking Boeing Tax Deductibility Issue

by Mike Godfrey, Tax-News.com, Washington

19 July 2006

Senate Finance Committee Chairman Chuck Grassley (R - Iowa) has issued a stinging rebuke to the Justice Department over its decision to remain on the fence with regard to the potential tax deductibility of Boeing's $615 million settlement of criminal and civil charges.

In a letter to Grassley made public last week, William E. Moschella, Assistant Attorney General, reiterated the Justice Department's long standing policy to remain "tax neutral" and to leave the "difficult issues of deductibility to the expertise of the tax lawyers and the Internal Revenue Service".

Moschella's letter came in response to concerns from Grassley and Senators John McCain (R - Ariz) and John Warner (R - Va) that Boeing may be able to deduct the record legal settlement for tax purposes.

Boeing agreed to settle with the government in June to resolve criminal and civil allegations that the company improperly used competitors’ information to procure contracts for launch services worth billions of dollars from the Air Force and the National Aeronautics and Space Administration.

However, Moschella's response angered Grassley, who accused the Justice Department of effectively undermining the work of other government agencies.

"The Justice Department's attitude of ‘it's not our job’ is irresponsible. It proves that the current system isn't working," Grassley observed in a statement.

Grassley has vowed to keep working on legislation clarifying what is and isn’t deductible in settlements. He also stated that he will ask OMB Director Portman to "end this problem and protect the taxpayers".

"This has gone on for years, and it has to stop," the Senate Finance Committee Chairman remarked.

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