IRS Issues Final Regulations On Deduction For Certain Fines And Penalties Under Section 162(f)

On January 12, 2021, the IRS issued final regulations on Internal Revenue Code section 162(f), as amended by the TCJA,¹ concerning the deduction of certain fines, penalties, and other amounts.²  The final regulations revise Treas. Reg. section 1.162‑21, clarify the scope of IRC section 162(f), and add Treas. Reg. section 1.6050X, which covers new section 6050X information related to reporting requirements.  The final regulations affect taxpayers that pay or incur amounts to, or at the direction of, governments, governmental entities, or certain nongovernmental entities treated as governmental entities (collectively, "governmental entities") in relation to the violation of a law or investigations or inquiries by these governmental entities into the potential violation of a law (collectively, "violation of a law").