James Tillen Discusses Tax Treatment of Facilitating Payments vs. Bribes Under the FCPA in Tax Notes

"News Analysis: Facilitating Payments vs. Bribes under the Tax Law"
Tax Notes
02.18.08James Tillen comments on the treatment of facilitating payments versus bribes under the FCPA and the tax implications of that difference. Because facilitating payments are lawful under the FCPA, a U.S. exporter making facilitating payments to the foreign inspector could deduct the amount of the payment as a business expense under section 162(a). However, "It's a fine line between what is a lawful facilitating payment and what is bribery under the FCPA," says Tillen. He adds that the amounts of facilitating payments are almost always in the range of $100 or less. Payments that are $1,000 or more "are less likely" to be facilitating payments and more likely to attract the enforcement agencies' scrutiny, he says.

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