IRS Asks Wall Street to Stop Treating FINRA Fines as Tax Deductions

According to some rules in the present tax code, institutions were free to claim fines from any non-Government entity on taxes. Financial Industry Regulatory Authority (FINRA) regulated firms were free to find tax savings in their punishments. The IRS now is cracking down on that. According to the IRS: “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 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.”

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