Proposed Regulations That Impact Environmental Enforcement Aim To Clarify 2017 Tax Act

As described in two previous Holland & Knight Energy and Natural Resources Blog posts, "Recent Changes Expected to Impact Environmental Enforcement" and "Tax Changes Impacting Government Enforcement: Comments Due November 13, 2018," the Tax Cuts and Jobs Act (TCJA) of 2017, P.L. 115-97 (Dec. 22, 2017), made changes to the long-standing rule precluding deductibility of "any fine or similar penalty paid to a government for the violation of any law." This blanket prohibition was changed by Section 13306, which revised 26 U.S.C. § 162(f) to state that "no deduction otherwise allowable shall be allowed under this chapter for any amount paid or incurred (whether by suit, agreement, or otherwise) to, or at the direction of, a government or governmental entity in relation to the violation of any law or the investigation or inquiry by such government or entity into the potential violation of any law" except in two circumstances when established by the taxpayer through the