The 2017 Tax Cuts and Jobs Act now requires State Agencies, such as state treasury departments or state revenue departments, to report amounts attributable to a suit, order, or agreement for fines, penalties, and other amounts.

Why did I get a 1098-F Form?

Congress enacted Code Section 6050X, which now requires governmental agencies to issue information returns (Form 1098-F) to report amounts for fines, penalties, and other amounts in connection with a suit, court order, or settlement agreement, if the total amount exceeds $50,000. Such governmental agencies include, but are not limited to, state treasury departments or revenue departments, for back taxes or tax disputes, or the EEOC, as part of employment suits.

In regards to amounts attributable to state taxes, such as income tax, sales, use, and withholding taxes, the total amount reported on Form 1098-F may have been written off by the state, but more likely than not, such amounts are still associated with a state tax lien. In some states, such as Michigan, state tax liens remain on file until settled. This means the state may have stopped their collection efforts, but the tax is still owed. If property such as real estate is sold, then the tax lien must be paid out of the proceeds.

Many states have an Offer in Compromise program to resolve back taxes, much like the IRS, based upon Doubt As To Liability or Doubt As To Collectability, or both. If an Offer in Compromise is successful, then all tax liens associated with the Offer are released.

What do I do if I get a 1098-F Form?

At a bare minimum, taxpayers who receive Form 1098-F will want to verify whether the amounts reported on Form 1098-F are still due, and whether there are any tax liens associated with such balances.

Lothamer Tax Resolution experts can help you determine any balances and the best options moving forward.

Information contained in this article is intended for informational purposes only and does not constitute legal or tax advice.