FEATURE ARTICLE

May 2004

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Complying More Cheaply—Reducing the Expense of Environmental Penalties and Fines

This article addresses methods by which a corporation facing environmental penalties or fines may reduce the ultimate cost of that expense. For years, conventional wisdom has been that a potentially responsible party (PRP) cannot deduct an environmental fine or sanction. Section 162(f) of the Internal Revenue Code would at first blush seem to support this conclusion (“no deduction shall be allowed under subsection (a) for any fine or similar penalty paid to a government for any violation of the law.”).