Penalties Changed Under the Tax Cut and Jobs Act of 2018 relevant today

This post contains cocktail party killer one liners about how Penalties Changed Under the Tax Cut and Jobs Act of 2018 relevant today.

My editor also quipped that reading this post helps with insomnia as well. So if you are looking to either kill a party and/or for a sleep aide you’ve come to the right post.

If you are a tax practitioner however, you better know this stuff and with all due respect – most do NOT.

Four big changes are summarized as follows:

1. Paid income tax preparers must conduct due diligence for the Head of household filing status claim under Code Sec. 6695(g)
2. Denial of deduction for fines, penalties, etc., is broadened under Code Sec. 162(f), –the new provision denies deductions for payments to, or at the direction of, a government or governmental entity. There are generally 3 exceptions including:
   • amounts constituting restitution
   • certain court-ordered amounts
   • taxes due
3. Penalty imposed for employer’s failure to notify employee that stock is eligible for Code Sec. 83(i) election relevant to qualified equity grants
   • The amount of the penalty is $100 per failure, up to a maximum penalty of $50,000 for all failures by a person during a calendar year.
   • The penalty won’t be imposed for a failure that’s shown to be due to reasonable cause and not to willful neglect.
   • The penalty is paid in the same manner as tax, on notice and demand by IRS.
4. Information reporting requirements are added for government and other agencies that receive fines, penalties, etc., of $600 or more for law violations. Specifically, an ‘appropriate official’ of any government entity involved in a suit or agreement must file a return with IRS detailing:
   • the amount required to be paid as a result of a suit or agreement
   • any amount required to be paid as a result of the suit or agreement which constitutes restitution or remediation of property, and
   • any amount required to be paid as a result of the suit or agreement for the purpose of coming into compliance with any law which was violated or was involved in the investigation or inquiry.
   • The report must separately identify any amounts that are for restitution or remediation of property, or correction of noncompliance and applies.

For more on this please feel welcome to contact me at your convenience.