White-collar defense attorneys should be aware of a provision in the recent Tax Cuts and Jobs Act that requires government agencies to report to the Internal Revenue Service civil settlements and criminal judgments and alters what types of costs commonly associated with a white-collar matter or other government enforcement matter are deductible.
In a nutshell, TCJA will make it more expensive on an after-tax basis for corporate clients to investigate and then settle enforcement actions brought by government agencies, including white-collar criminal matters. It also creates a duty on government agencies to both report to the IRS and to the taxpayer the amount of the settlement or order and separately identify the portions of that total amount that are attributable to restitution or remediation of property, or correction of noncompliance; however, the IRS has delayed these information-reporting requirements to no sooner than Jan. 1, 2019.
