Fines, penalties, and legal settlements paid by foreign corporations to governments in the United States are classified in the national income and product accounts (NIPAs) as government current transfer receipts from the rest of the world on NIPA table 3.1. The NIPAs recognize these fines, penalties, and legal settlements received from foreign corporations as government transactions; this treatment ensures consistency with BEA’s international transactions accounts (ITAs).1 These transactions are measured on an accrual basis and recorded during the quarter in which a fine or penalty is levied or a settlement reached, rather than on a cash basis.


1 This treatment was introduced in the ITAs as part of its 2013 annual revision. For more information, see Christopher L. Bach, “BEA Briefing: Fines and Penalties in the U.S. International Transactions Accounts,” SURVEY 93 (July 2013): 55–60.