On Jan. 14, Goldman Sachs announced it had reached an agreement in principle with the U.S. Department of Justice to resolve civil claims relating to an investigation into the firm’s mortgage-related activities. Now, a consumer advocacy group is protesting tax laws that will minimize the punitive impact of that $5 billion settlement.

The agreement, yet to be fully finalized, would resolve actual and potential civil claims by the Justice Department, the New York and Illinois Attorneys General, the National Credit Union Administration, and the Federal Home Loan Banks of Chicago and Seattle, relating to the firm’s securitization, underwriting and sale of residential mortgage-backed securities from 2005 to 2007. Subprime mortgage bonds were among the catalysts of the 2008 financial crisis.

Under the terms of the agreement, Goldman Sachs will pay a $2.385 billion civil monetary penalty, make $875 million in cash payments, and provide $1.8 billion in consumer relief. That relief includes principal forgiveness for underwater homeowners and distressed borrowers; financing for construction, rehabilitation and preservation of affordable housing; and support for debt restructuring, foreclosure prevention and housing quality improvement programs.

The “silver lining” according to the U.S. Public Interest Research Group is that Goldman Sachs can minimize the pain of the penalty with a $936.25 million tax break. The civil monetary penalty is non-deductible as per the tax code, but the remaining $2.675 billion is entirely tax deductible for the bank as an ordinary business expense, it says.

By law, fines and penalties cannot be treated as regular business expenses, and therefore are not tax deductible. The cash payment and consumer relief portions of the payment, however, are not specifically designated as penalties and can therefore be deducted from Goldman’s taxes. The bank reported that the settlement would reduce its earnings in this period by roughly $1.5 billion on an after-tax basis.

The issue of post-settlement tax deductions has been on U.S. PIRG’s agenda for the past few years, a direct response to large post-crisis fines. The cause also has some support in Congress. The bipartisan Truth in Settlements Act (S.1109), unanimously voted through Senate in September, would require federal agencies to disclose the tax deductibility of future settlements and would require corporations to disclose when they deduct those settlements. The legislation is currently under debate in the House.