IRS Guidance on Deductibility of Fines and Penalties; The Internal Revenue Service (IRS) issued proposed regulations for the deductibility of fines, penalties, and certain other amounts. Under the Tax Cuts and Jobs Act (TCJA), IRS Guidance on Deductibility of Fines and Penalties provide guidance to taxpayers as well as governments with respect to fines, penalties in addition to certain other amounts.
IRS Guidance on Deductibility of Fines and Penalties
The proposed regulations issued by the Internal Revenue Service provide guidance on the deductibility and reporting of certain amounts paid to, or at the direction of, governments. As per the details, any deduction for the payment of fines, penalties, and certain other amounts is disallowed by the Tax Cuts and Jobs Act (TCJA). Particularly, taxpayers may not deduct amounts that, pursuant to court orders or settlement agreements, are paid to, or at the direction of, governments regarding the breach of any law or the inquiry or investigation into the potential disobedience of any law.
Under the Tax Cuts and Jobs Act (TCJA), this disallowance may perhaps not apply to the amounts that are established by the taxpayers, and identified by the court orders or settlement agreements, are paid as restitution, remediation, or to come into conformity with a law so long as the amounts otherwise meet the criteria of ‘deductible’ under the Internal Revenue Code.
IRS guidance on deductibility of fines and penalties is issued that describes how taxpayers may meet these requirements. Not only this, key terms and phrases such as restitution, remediation, and paid to come into compliance with a law are also described in the proposed regulations. The governments are also required by the Tax Cuts and Jobs Act (TCJA) for reporting these amounts to the Internal Revenue Service and taxpayers. IRS guidance on deductibility of fines and penalties also provide regulations related to these reporting requirements to governments.
The Internal Revenue Service also released New Guidance for Estates and Trusts for Itemizing Deductions. If you need any further help regarding proposed regulations providing IRS guidance on deductibility of fines and penalties, you can reach our representative at Black Ink. We are here to help you regarding complete tax reform issues as well as other TCJA provisions.
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