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CCTP Updates – Important Developments: Criminal By Evan Davis and Claire Taylor

DEDUCTIBILITY AND INFORMATION REPORTING OF RESTITUTION PAYMENTS: TRANSITIONAL GUIDANCE ISSUED

The Tax Cuts & Jobs Act made significant changes to Section 162(f) with respect to the deductibility of certain fines, penalties, and other amounts, including restitution payments. Previously, Section 162(f) barred a deduction for fines or penalties paid to a government for the violation of any law. There was much debate over whether restitution payments for unpaid taxes were compensatory/remedial in nature/constituted reimbursement to government and therefore deductible versus punitive and therefore non-deductible.

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