The collection covers the new information reporting requirements under IRC 162(f) and new 6050X, which was added by the Tax Cuts and Jobs Act (TCJA).
Generally, no deduction is allowed for any amount paid to, or at the direction of, a government or specified nongovernmental entity for the violation of any law. The general rule does not apply to the following exceptions:
• Amounts that constitute restitution (including remediation of property);
• Amounts paid to come into compliance with the law;
• Amounts paid or incurred as the result of certain court orders in which no government or specified nongovernmental agency is a party; and
• Amounts paid or incurred for taxes due.
To be deductible under an exception, the Taxpayer must establish that an amount required to be paid is for restitution, remediation or to come into compliance with the law, AND the amount must be specifically identified in the settlement agreement or court order as restitution, remediation or to come into compliance with the law.
Any amount paid or incurred as reimbursement to the Government for the costs of any investigation or litigation are not deductible under one of the exceptions (under prior law, these amounts were often considered compensatory and deductible).
The 2017 Tax Cuts and Jobs Act also enacted IRC section 6050X, which requires government agencies or specified nongovernmental regulatory entities to file an information return which identifies:
1. The amount required to be paid as a result of the suit or agreement to which IRC section 162(f)(1) applies;
2. Any amount required to be paid as a result of the suit or agreement that constitutes restitution or remediation of property; and
3. Any amount required to be paid as a result of the suit or agreement for the purpose of coming into compliance with any law that was violated or involved in the investigation or inquiry.
This reporting requirement will not be required with respect to amounts paid or incurred under a binding court order or agreement entered into before the date provided in the future proposed regulations, which will be no earlier than January 1, 2019.
Notice 2018-23 provides information for section 6050X and transitional guidance under IRC § 162(f).
Through Notice 2018-23, the IRS provided transitional guidance under §§ 162(f) and 6050X. Specifically, as provided in section 3.01 of this notice, to ensure efficient administration of this new provision, reporting will not be required under § 6050X until the date specified in the proposed regulations. The Department of the Treasury (“Treasury Department”) and the Internal Revenue Service (“IRS”) intend to publish proposed regulations under §§ 162(f) and 6050X. The IRS estimates an initial increase in burden of 200 responses and 24 hours per year.
$0
No
Yes
Yes
No
No
No
Uncollected
Christopher Wrobel 202 317-4612 christopher.wrobel@irscounsel.treas.gov
No
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
Form 1098-F Section 6050X- Reporting
Supporting Statement (1098-F).docx
Section 6050X- Reporting