On Monday, Senators Elizabeth Warren (D-Mass.) and Tom Coburn (R-Okla.) introduced “The Truth in Settlements Act,” a requirement that federal agencies publicly disclosure the terms of settlements negotiated with corporations to resolve violations of criminal or civil law.

The past year saw a record-breaking number of settlements, but the details of many of them remain undisclosed to the public, Warren and Coburn said in a statement. A particular concern is that companies often claim tax deductions and credits against the amount levied.

"Since agencies are not currently required to disclose the financial structure of government settlements, too often the true value of those settlements is not known because often companies are allowed to deduct part of the payment," Coburn said.

While federal law forbids companies from deducting public fines and penalties from their taxes, those that resolve charges through a legal settlement often manage to deduct the penalties as a tax write-off unless specifically forbidden from doing so. "In essence, companies are allowed to receive a tax break for their wrongdoing without the public ever knowing it," said U.S. PIRG, the federation of state Public Interest Research Groups, in a statement supporting the legislation.

“Anytime an agency decides that an enforcement action is needed, but it is not willing to go to court, that agency should be willing to disclose the key terms and conditions of the agreement," Warren said. "Increased transparency will shut down backroom deal-making and ensure that Congress, citizens and watchdog groups can hold regulatory agencies accountable for strong and effective enforcement that benefits the public interest.”

The bill would require federal agencies to detail in written public statements, and post online, what the settlement amount is and whether any portion is potentially tax deductible. Any settlement deemed confidential by an agency will require a written reason for its confidentiality.

Additionally, the bill mandates that agencies specifically address credits for routine conduct, as happened in 2012 when a $25 billion national mortgage settlement that included $17 billion in credits for activities such as demolishing homes. Credits represented nearly 70 percent of the settlement value.

The Justice Department's $1.7 billion settlement with JPMorgan Chase over its dealings with convicted fraudster Bernard Madoff, announced on Tuesday, includes language that bars it from seeking any tax breaks for that payment to the government.

Senators Jack Reed (D-R.I.) and Chuck Grassley (R-Iowa) have also sponsored legislation to prohibit post-settlement tax deductions, S.1654, “The Government Settlement Transparency and Reform Act.”