- What is federal Form 1098-F?
- What constitutes a "violation of any law?"
- What amounts that are required to be paid are considered?
- How was the amount required to be paid calculated?
- Why did I receive a Form 1098-F?
- What do I do with my Form 1098-F?
1. What is federal Form 1098-F?
Recently, the Internal Revenue Service (IRS) created federal Form 1098-F, Fines, Penalties, and Other Amounts. Under new federal law, state government agencies, including state tax agencies like Maine Revenue Services (MRS), must file Form 1098-F with the IRS to report certain amounts required to be paid by persons for "violation of law" if the total amount at issue is at least $50,000. See Internal Revenue Code (Code) § 6050X; Treas. Reg. § 1.6050X-1.
March 7, 2023
2. What constitutes a "violation of any law?"
The IRS has specifically instructed state tax agencies that a "violation of law" must be determined under the laws of each respective state.
However, the IRS has also issued guidance to state tax agencies suggesting that a "violation of any law" could still occur under state law for amounts assessed as underpayments of tax and interest, even if no penalties are assessed or the penalties are abated. Therefore, until the IRS provides additional guidance, a "violation of any law," for Maine tax law purposes, could still occur if the amount assessed is at least $50,000 and consists only of tax and interest.
MRS will continue to monitor for additional guidance from the IRS.
March 7, 2023
3. What amounts that are required to be paid are considered?
Amounts that are required to be paid of at least $50,000 will be considered for reporting under Code § 6050X, if required to be paid in relation to the following non-exhaustive list of situations:
- Decisions by officials, such as assessments, that are administratively binding (e.g., assessment is final)
- Administrative adjudications, such as MRS's final decision on reconsideration, regardless of any further appeal rights at the Maine Board of Tax Appeals or the Maine Superior Court.
- Settlement agreements or judicial proceedings that establish a final liability.
See e.g., Treas. Reg. § 1.162(e)(5).
March 7, 2023
4. How was the amount required to be paid calculated?
MRS calculated the amounts shown in Box 1 of Form 1098-F, the total amount required to be paid during the calendar year at issue. The amount shown of at least $50,000 is the total tax, plus any penalties and interest.
March 7, 2023
5. Why did I receive a Form 1098-F?
In addition to issuing a Form 1098-F to the IRS, MRS is required to issue a copy of Form 1098-F to the persons at issue.
March 7, 2023
6. What do I do with my Form 1098-F?
MRS cannot provide federal tax advice, but the IRS has provided additional information at: www.irs.gov/forms-pubs/about-form-1098-f.
March 7, 2023